It can be much better, but a quick glance at what a lot of retail investors are actually doing with options (basically just buying calls) shows a lot of high-risk and reckless gambling. While I'm fine with people choosing whichever risk level they desire, some of the images I've seen of e.g Robinhood UI's are pushing it far beyond what I'd say is reasonable (and perhaps even to the point of illegality), for example https://pbs.twimg.com/media/EtfOof8XIAMhaX6?format=jpg&name=...
Buying a three (?) month call which is out of the money by 4.8% is "medium risk" ?!?.
Too bad there isn't a date on that image so I can figure out what the black scholes probability of expiring worthless they consider 'medium risk' is exactly. -- Assuming it's 90 days, they consider a 63% probability of total loss "medium risk".
I'm not really sure where I'd draw the line but anything where my best model said total loss was more likely than not is certainly past the high risk line.
And high risk investments can be totally fine, treated as such. Presumably most users won't go broke losing one contract worth though it might hurt some (I'm assuming that isn't a mini option or some kind of split contract-- so we're talking about a $788 loss for one contract if it expires worthless). But if they call it "medium risk" I'm guessing people are going to buy more than one.
