![]() In many ways, the Reddit trade is a page from the hedge fund strategy playbook. The Reddit Wolf Pack delights in finding heavily shorted stocks, especially those shorted by hedge funds, buying bullish calls, and then buying stock to increase the value of their options. Thanks to the lure of free trading, the boredom of a pandemic, and the popularity of stock message boards like Reddit, many John and Jane Investors have merged into a wolf pack not at all unlike how institutional traders have long behaved. This “payment for order flow” arrangement is why Robinhood and others can offer commission-free trading, which is a big part of the reason retail traders are now beating the holy hell out of Wall Street’s sophisticated traders. Online brokerage firms emerged and sold dealers-such as Citadel Securities and Susquehanna Investment Group-the right to trade against customer flow first, provided they execute orders at the national best bid or offer.
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