Robinhood is making more than most on their orderflow Robinhood's apples weigh more than Schwab's oranges, because Robinhood encourages users to do options tra

Robinhood is making more than most on their orderflow Robinhood's apples weigh more than Schwab's oranges, because Robinhood encourages users to do options trading (and be more active on it) and Schwab does not. Spreads are wider in options, because they're less liquid, because they're (mechanically) larger trades [+], and because the degree of volatility in options prices is higher than therefore market makers have to charge higher spreads to justify the risk. High spreads mean happy market makers, so the amount you can charge a market maker for "Here's a retail order; would you like to collect the spread on it?" is higher. [+] Options contracts represent, typically, 100 shares. The notional exposure of 1 options contract on e.g. Google at a strike price of their current price is high. If you measure the other way, by transacted trade size, the spread on a $500 order of Google should be denominated in pennies and the spread of a $500 order of Google options will could be hundreds of dollars for a sufficiently illiquid strike/date combination. (e.g. Consider a put on Google at a strike price of $100 in late October. Google currently costs ~$1,200 a share. If you believe it is likely that Google declines by over 90% in October, and want to express that belief in an instrument, the financial industry can assist you in doing that, but the spread on that particular product will probably be wide. Without checking the quotes at all, I'd predict no buyers at any price and ample sellers at 5 cents a share. If you put in a $500 order expressing that view, you are paying ~$0.01 for the instrument and $499.99 for liquidity.)