Short read: Gen Z trades stocks the same way it gambles

This piece might as well have been written with an Indian context of the Jane Street saga. Last week, we featured a piece by the great Warren Buffett about the stock market as a casino. As this author writes, trading driven manias (think Tulip mania, South Sea bubble) have existed for centuries. Yet certain conditions that exist today make it even more prevalent. First, the fact that you can punt on anything anytime on your mobile device allows anyone and everyone to partake. Second and the crux of the article is around the demographic – the youth with their penchant for excitement and comfort with risk. This is particularly enhanced in the Indian context as we are home to the largest population of youth all of whom are equipped with mobiles and cheap data. The author refers to the behavioural aspect of the youth through a venture capitalist’s view on gaming:

““Gen Z’s approach to gaming is clear. They gravitate toward formats that are fast, emotionally charged, and offer the chance at a meaningful payoff. Traditional, slow-paced gameplay is losing ground to experiences that deliver instant feedback and the possibility of an outsized win.

This is why crash games, meme stocks, and parlay bets have gained so much traction with this generation. These formats share a common formula: low-cost entry, high potential upside, and just enough unpredictability to keep things exciting. A recent Morgan Stanley survey found that 60% of bettors aged 21 to 34 have placed parlays, a rate nearly 30% higher than the overall population. Similarly, around 30% of US stock investors aged 18 to 24 have invested in meme stocks compared to 12% of investors ages 45-54.

It’s not just the payout that attracts Gen Z. It’s the emotional volatility, the rush of possibility, and the shareable nature of “just-missed” or jackpot moments. The appeal is simple: put down a small amount, take a swing, and hope to hit it big. Most of these bets won’t pay off, but the ones that do tend to go viral. Social media elevates these wins, creating a sense of FOMO that draws others in. It becomes a feedback loop of visibility, aspiration, and repeat behavior, which keeps Gen Z highly engaged and emotionally invested in the experience.””

He then relates this to the options market, where millions of Indians, many of them Gen Z, are rendering themselves prey to the Jane Streets of the world:

“To riff on this conception of a “common formula” between parlays and meme stock punts, which often take place through the options market to access embedded leverage:

Both parlays and short-term options punts are examples of things where you need multiple things to go right to win. In parlays, it’s discrete (usually sports-related) outcomes; in options, you need to get the direction and magnitude right by a certain point in time.

This is why I love the use of options as a storytelling device: they are always and everywhere a greed, fear, or complacency play built around a specific date by which something needs to either happen or not happen. There’s a subject, verb, and time.”

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Note: The above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. The information provided is intended for educational purposes only. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India (SEBI) and is also an FME (Non-Retail) with the International Financial Services Centres Authority (IFSCA) as a provider of Portfolio Management Services. Additionally, Marcellus is also registered with US Securities and Exchange Commission (“US SEC”) as an Investment Advisor.