Robinhood announced on Monday it would begin offering U.S. presidential election event contracts as demand for speculative trading products grows among retail investors, according to Reuters.
The new feature allows users to profit from speculating on the race between Vice President Kamala Harris and former President Donald Trump, with recent polls showing that Harris is within the margin of error. is shown to be in the lead by a small margin.
Robinhood shares rose 4% following the announcement. The company said it would begin rolling out the U.S. election deal to a limited number of users, who must be U.S. citizens.
Event derivatives trading allows traders to buy and sell contracts that speculate on specific outcomes such as elections, economic indicators, or policy changes. Although event derivatives are relatively new and generally considered risky, they have grown in popularity in recent years.
Robinhood expanded its services earlier this month by introducing futures and index options trading to its mobile app, Reuters reported.
Prediction platforms like PredictIt, which allows users to trade stocks on potential future outcomes, are also seeing increased activity in the run-up to the election, the news report added.
Interactive Brokers Group (IBKR) and Kalsi also offer contracts that allow investors to bet on the outcome of the November 5 US election.
Robinhood continues to evolve from a platform for individual investors to a comprehensive financial services provider, aiming to compete with established brokerages that serve institutional clients. Robinhood, which is committed to expanding margins and prioritizing “profitable growth” in 2024, has seen its stock price rise more than 100% year-to-date.
In September, a federal judge ruled that Americans can use derivatives for event gambling, frustrating the U.S. Commodity Futures Trading Commission (CFTC), which had sought to block such activity. The ruling was upheld by an appeals court in October, Reuters reported.
(Information provided by Reuters)
