Before Meme Stocks, WallStreetBets Traders Mainlined Options

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Nathaniel Popper is the author of 'Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money' as well as 'The Trolls of Wall Street: How the Outcasts and Insurgents Are Hacking the Markets.'

The crypto boom in the final months of 2017 woke up millions of people to the idea that you could get rich from your phone. In December alone, three million people downloaded the app for Coinbase, the main American crypto exchange. Coinbase had been much smaller and less popular than Robinhood, but in December, it got about six times more downloads."Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money.

“I’ve never seen an influx of noobs like there is right now,” one Reddit old-timer wrote. “It’s obviously because of RH.” Jordan had disagreed with Jaime on other things, but when it came to options, they found common ground. Like Jaime, Jordan warned users to stay away from options unless they had a very clear idea of what they were doing.But these voices of caution and the early posts about losses only seemed to rev up the appetite for risk on the subreddit. One user mentioned losing 93% of his portfolio.

Jordan explained his belief that the attitudes on the site were a coping mechanism. “People lose a bunch of money, they come laugh about it with others who lost a bunch of money, and everyone is happy. What’s better, to lose money and be bitter, or to lose money and feel like you fit in with the other guys? People take the path of least resistance emotionally.”

Once people got going, the internal feedback loop that got kicked off by trading often sucked them in further. The excitement of watching your portfolio go up stimulates the same neurotransmitters associated with other addictive activities, creating jolts of dopamine that can quickly generate a desire for more.

But long before Robinhood showed up with its gamified version of options trading, young men were coming to WallStreetBets seeking the kind of risk and drama that the subreddit put on display, even when it involved losing money. Social media had, of course, played a role in this. Researchers have found that young men are more willing to take bigger risks when they are in the company of other young men, and the crowds on Reddit certainly egged each other on.

Jordan had continued to struggle to make any money from his own efforts in the markets, despite all the advice he had gotten from lakai and outsquare. He knew that his nervous energy haunted his best trades.“how often are you right but you don’t wait for it to go sideways and then do what you expected,” he said in the chat room.

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