Thanks to the increase of consumer-level technologies, much of the capital markets have been democratized. Perhaps most notably, the Robinhood app brought investing to a new generation. By a similar principle, Gatsby promotes “open source” trading. But the key difference in why you may wish to invest in Gatsby stock on the SeedInvest equity crowdfunding platform is its specialty: options.
If you are not familiar with investing principles, Gatsby goes over the basics. Essentially, corporations sell an allocation of ownership to the general public in exchange for their money. The more established a company, the likelier it is that their valuation will grow, providing returns for investors. But at the same time, the reward potential is limited for well-known entities.
On the other hand, investors can elect lesser-known names or even penny stocks. However, that comes with the ultimate risk of the company going under. Further, the smaller the company, the more likely it is that its equity shares will be prone to manipulation. At that point, all the fundamental analysis in the world may not matter.
And what about bear markets? Under the traditional approach of set it and forget it, investors will see red ink in their portfolio in a downturn. But what if there was a way to both increase the reward potential of blue-chip stocks and take negative bets on the markets, otherwise known as shorting? With options, you can do this and much more.
Plus, by attracting new participants to options trading, the case to invest in Gatsby stock only grows stronger. That is why you’ll want to pay close attention to this private investing opportunity.
Invest in Gatsby Stock for the Growth in Options Trading
As most investors know, options are one categories of derivatives. By the textbook definition, they “give the holder the right, but not the obligation to buy or sell the underlying asset.”
If that sounds dry, imagine what it’s like for the current generation of prospective investors. Remember, younger people have grown up in the world of streamlined digitalization. Processes are quick and intuitive, not cumbersome and jargon-laden like most tutorials on options trading.
And that’s really the beauty underlining the thesis for why you want to invest in Gatsby stock. Here, the app does away with the convoluted lingo and gets down to the brass tacks in a clear, concise manner, using language that millennials and Generation Z can appreciate.
While traditionalists might argue that Gatsby is giving an impressionable audience a CliffsNotes version of an important topic, it is crucial to realize that options trading is growing at a rapid pace. In 2013, the number of options contracts traded worldwide amounted to 9.42 billion. By 2019, this figure ballooned to 15.23 billion, more than a 60% increase.
This is the reality: People are interested in derivative markets. Further, younger people will especially be tempted to trade options — even more so during this novel coronavirus mania where everyone is a day trader. At least Gatsby provides an accessible platform which will give new participants a better chance at profitability.
In addition, the app allows investors of all stripes to appreciate bear markets. Under a traditional long-side approach, you’re limited to selling your shares before a downturn. With options, you can profit from one. Also, certain options strategies allow you to hedge against possible volatility without having to touch your core holdings.
Risks to Watch
While many are keen to invest in Gatsby stock for its democratization and empowerment, it’s not without risks. First, I mention this with every equity crowdfunding opportunity: Being an early bird investor gives you the most potential for profitability, but it also exposes you to significant threats to your principal.
Primarily, private investing opportunities don’t feature much information. Therefore, you must perform your due diligence, much more so than with investing in a blue-chip stock. It’s also important to note that a majority of startups fail. That’s just a harsh reality of this business.
Operationally, one of the biggest risks I see is potential PR dilemmas. A few months back, a young Robinhood trader took his own life after he mistakenly thought that he accrued $730,000 in liabilities. Such a tragedy shined an ugly spotlight on the popular trading app.
In my opinion, focusing on options at least exposes the Gatsby app to these terrible misunderstandings. To be fair, Gatsby currently only supports Level 2 options trading, protecting young traders from the truly exotic derivative strategies. Still, it is something to think about before you decide to invest in Gatsby stock.
Finally, the company has competitive risks. Yes, it distinguishes itself by specializing in options trading. But this distinction is largely tied to its interface and educational tools. These attributes can be duplicated, somewhat clouding the narrative for this equity crowdfunding opportunity.
Opening the Field for Everyone
Ultimately, Gatsby represents a necessary evolution in the slow-to-change financial world. And as I mentioned earlier, demand for options trading is strong and will only get stronger during these pandemic-impacted months. Thus, there is a place for an options specialist that can demystify the space.
If you’d like to invest in Gatsby stock, head on over to its SeedInvest profile. The minimum investment is $999 for its preferred equity shares.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
Investing through equity and real estate crowdfunding or asset tokenization requires a high degree of risk tolerance. Despite what individual companies may promise, there’s always the chance of losing a portion, or the entirety, of your investment. These risks include:
1) Greater chance of failure
2) Risk of fraudulent activity
3) Lack of liquidity
4) Economic downturns
5) Dearth of investor education
Read more: Private Investing Risks