The elephant in the room that I don't see much discussion about is the use of options by small retail accounts.
There are piles of rules around trading in accounts < $25,000.
But then those same guys are allowed to trade options.
An option has a 100x built in leverage.
A simple solution to this problem is to require the underlying amount of margin or cash in the account to purchase the option. ie. If you want to buy a $3 option for BBBY (costing $300) then this will take $2800 from your initial cash or margin.
Yes, this effectively puts options out of reach to small investors, but... maybe that's a good thing.
There are piles of rules around trading in accounts < $25,000.
But then those same guys are allowed to trade options.
An option has a 100x built in leverage.
A simple solution to this problem is to require the underlying amount of margin or cash in the account to purchase the option. ie. If you want to buy a $3 option for BBBY (costing $300) then this will take $2800 from your initial cash or margin.
Yes, this effectively puts options out of reach to small investors, but... maybe that's a good thing.