(We originally posted this in 2020. You can read more of our original ideas in our archive.)
Problem: It’s difficult to trade equities options that are not listed on the Chicago Board Options Exchange. This is especially true if the companies are private and/or pre-IPO.
Solution: A private market for buying and selling options of private companies (similar to Forge or Sharespost, which does this for pre-IPO stocks). This marketplace would allow members to buy or sell call and put options with a particular strike price. Though much riskier (one would have to be correct on both the direction of the stock and strike price to make significant amounts of money), it would be an innovation on finance that could help surface more accurate valuations of ballooning unicorn companies. For example, the ability to short WeWork before their S1 paperwork filing could have given more investors insight into the true value of the private corporation. As described by MIT Sloan finance professor Andrew Lo, the best way to discover the price of a commodity or security is to “ask the market” (take a look at this great 5 minute example from his 2008 lecture).
Monetization: Marginal fee per trade (aka the Coinbase model).
Contributed by: Billion Dollar Startup Ideas