We investigate the hypothesis that the same investors trade differently in different markets. More precisely, we discuss the hypothesis that the same investors trade derivatives differently than stocks. We use a proprietary database containing the transaction records of 129,461 investors over a 10-year period, and we select investors holding both stocks and warrants in their portfolios. We compare the trading behavior of these investors in the stock market and in the warrant market, controlling for investors’ sociodemographic characteristics and behavioral biases (overconfidence, the disposition effect and pursuit of the pleasure of gambling). Even though investors are the same in both markets, our results clearly show that the determinants of the trading activity in stocks and in warrants are not all the same, implying that investors trade stocks differently than warrants. More precisely, overconfident investors have higher warrant trading activity and lower domestic stock trading activity, and investors who are pursuing gambling pleasure or are prone to the disposition effect trade warrants more frequently (but do not more frequently trade stocks).

This study’s main objective was to identify which of gamblers’ demographic, geographic and socioeconomic characteristics correlate with more frequent lottery playing and stock market trading. The data were collected from two unrelated cross-sectional samples of equity investors and lottery players from a European country. Based on a multiple correspondence analysis of both samples, higher levels of spending on central state lotteries and stocks with lottery features were found to be associated with individuals who have similar socioeconomic characteristics.