If regulators are really concerned about helping retail investors manage their risk in the market they should make it easier to buy fractional shares and fractional options. Let's say a retail investor has 1 position in her account. She bought 100 shares of LABU @ $4.93. It rose to $5.93 today so she's gained $100. LABU is the 3x ETF for Biotech Bull. The best protection vs an LABU fall is LABD (Biotech Bear). She can only afford $10 right now in that effort. Allow her to buy 0.10 sh of LABD for $6.10. Now she has a see-saw portfolio. If LABU falls LABD will rise reducing her risk. If LABU continues to rise, she can continue to build LABD with fractional share purchases to further reduce her risk. Right now too many Americans are wagering $1's, $10's, $100's on lotteries and sports betting. That money is better spent on fractional share purchases in Bear based ETFs. So when LABU rises to $60, she will have gained $5500. If she maintains her discipline of spending at least $5 on fractional shares of LABD for every $100 gain in LABU, she will likely have over 30 shares of LABD then. That means 30% of her LABU postiion is fully protected. LABD will likely be $6 then so she can over-protect her entire LABU position by simply selling 7 sh of LABU and converting that into 70 share of LABD. She'll have 100 sh of LABD then and 93 sh of LABU. Her entire LABD position cost her less $600 to protect $5500 in gains on LABU. With the over-protection she can now start buying fractional shares of LABU @ $60 and up with no risk until her # of shares in LABU match LABD. I'm sure you have access to how much is spent weekly by Americans on lottery tickets and sports betting/gambling. Imagine if that money was spent in a see-saw manner on fractional share purchases of leveraged ETFs instead.
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John Hanley Comment On Regulatory Notice 22-08
If regulators are really concerned about helping retail investors manage their risk in the market they should make it easier to buy fractional shares and fractional options. Let's say a retail investor has 1 position in her account. She bought 100 shares of LABU @ $4.93. It rose to $5.93 today so she's gained $100. LABU is the 3x ETF for Biotech Bull. The best protection vs an LABU fall is LABD (Biotech Bear). She can only afford $10 right now in that effort. Allow her to buy 0.10 sh of LABD for $6.10. Now she has a see-saw portfolio. If LABU falls LABD will rise reducing her risk. If LABU continues to rise, she can continue to build LABD with fractional share purchases to further reduce her risk. Right now too many Americans are wagering $1's, $10's, $100's on lotteries and sports betting. That money is better spent on fractional share purchases in Bear based ETFs. So when LABU rises to $60, she will have gained $5500. If she maintains her discipline of spending at least $5 on fractional shares of LABD for every $100 gain in LABU, she will likely have over 30 shares of LABD then. That means 30% of her LABU postiion is fully protected. LABD will likely be $6 then so she can over-protect her entire LABU position by simply selling 7 sh of LABU and converting that into 70 share of LABD. She'll have 100 sh of LABD then and 93 sh of LABU. Her entire LABD position cost her less $600 to protect $5500 in gains on LABU. With the over-protection she can now start buying fractional shares of LABU @ $60 and up with no risk until her # of shares in LABU match LABD. I'm sure you have access to how much is spent weekly by Americans on lottery tickets and sports betting/gambling. Imagine if that money was spent in a see-saw manner on fractional share purchases of leveraged ETFs instead.