Every generation has its bubble, and this time it is about options, Ed Harrison told Real Vision during today’s Daily Briefing.
Harrison discussed the phenomenon of small traders buying bullish call options, a trend that was on the rise before the pandemic and is now being amplified by it. Options are an attractive instrument to investors because they offer non-recourse leverage; you can control a larger notional position with a smaller premium. When interest rates are extremely low, the cost of carry on these options is much lower, which is undoubtedly driving retail investor enthusiasm.