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Prediction Markets Surge to Rival Leveraged ETPs Among Retail Traders

Prediction market platforms have emerged as a major draw for retail investors, with monthly notional volumes now comparable to high-risk leveraged exchange-traded products, according to Barclays analysis. Trading activity accelerated sharply following the 2024 presidential election, with particularly robust growth last fall. The platforms have attracted significant retail participation seeking high-risk speculative positions. However, prediction markets still lag behind zero-day-to-expiration options on the S&P 500 Index, which remain the dominant choice for retail derivatives traders. These ultra-short-dated options account for over half of all S&P options volume. Barclays noted that retail participation in derivatives markets has expanded considerably in recent years, driven by investor appetite for speculative positions across alternative asset classes.