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To be honest, people will eventually return. RH is the cost leader by a wide margin and its very unique to its business model via data arrangement with Citadel.

To be honest, people will eventually return. RH is the cost leader by a wide margin and its very unique to its business model via data arrangement with Citadel. In aggregate, total savings they pass down to retail traders is in the billions. With options trading at all time high, savings for 2020 was likely in tens of billions. Edit: upon looking at some aggregate data via OCC, appears I overestimated savings.

koolba 6y ago
Don’t Fidelity, E*TRADE, Ameritrade, and just about it everyone else have zero commission trades now?
- TuringNYC 6y ago
  Not on options
  - alasdair_ 6y ago
    While technically true, I wonder if people care much about a $1 fee on an entire contract (100 shares).
    - koolba 6y ago
      I guess if you’re buying lottery tickets at $.01-$.02 per contract it’s be a 50-100% change in costs.
    - jb1991 6y ago
      Most of the time you'd be trading more than one contract, though. Say you want bet on cheap out of the money options, you could easily see a commission of $10 - $50 on a single trade if you buy up a bunch of them.
    - ll931110 6y ago
      The fee can still be very significant, especially once you engage into complex options strategy (e.g. call spread / put spread / iron condor). That tends to trade in significantly larger quantity (e.g. you can have a 50x call spread), in which the fee is now $100 ($50 for buying a call and $50 for selling another call).
endisneigh 6y ago
I don’t use Robinhood so forgive my ignorance, but what savings are you referring to?
- didibus 6y ago
  That trading stocks on it and all of its features are free, no fees and no commission.
  - Tenoke 6y ago
    You are still getting a hidden fee on most transactions due to the sold order flow. Rh itself earns 17 cents per 100 shares and 58 cents for options. The loss for the user is certainly much higher though and as the cost is hidden they likely make more trades. https://www.google.com/amp/s/www.cnbc.com/amp/2020/08/13/how-robinhood-makes-money-on-customer-trades-despite-making-it-free.html https://www.google.com/amp/s/www.cnbc.com/amp/2020/08/13/how...
iaabtpbtpnn 6y ago
What costs are they leading in? Stock, ETF, and mutual fund trades cost nothing on all the major platforms. (Maybe not options, but most people shouldn't be trading options, as they all just learned.)
goatinaboat 6y ago
RH is the cost leader by a wide margin and its very unique to its business model via data arrangement with Citadel It’s free right up until the point they decide to charge you 100% of your money.
alasdair_ 6y ago
Almost every single broker offers commission-free trading now. And some of them (Fidelity, Vanguard etc.) didn’t pull trading when it got volatile. They also have far more stable platforms.
- DLay 6y ago
  I think it’s also important to mention that Robinhood also has the most brain dead simple UI out of all the trading platforms I’ve seen. The brokers you’ve listed have more complicated user interfaces than the casual trader would care to learn about. Fidelity and Vanguard also probably care way more about their reputations than to gamify their platform like RH does.

koolba 6y ago

Don’t Fidelity, E*TRADE, Ameritrade, and just about it everyone else have zero commission trades now?

TuringNYC 6y ago
Not on options
- alasdair_ 6y ago
  While technically true, I wonder if people care much about a $1 fee on an entire contract (100 shares).
  - koolba 6y ago
    I guess if you’re buying lottery tickets at $.01-$.02 per contract it’s be a 50-100% change in costs.
  - jb1991 6y ago
    Most of the time you'd be trading more than one contract, though. Say you want bet on cheap out of the money options, you could easily see a commission of $10 - $50 on a single trade if you buy up a bunch of them.
  - ll931110 6y ago
    The fee can still be very significant, especially once you engage into complex options strategy (e.g. call spread / put spread / iron condor). That tends to trade in significantly larger quantity (e.g. you can have a 50x call spread), in which the fee is now $100 ($50 for buying a call and $50 for selling another call).

endisneigh 6y ago

I don’t use Robinhood so forgive my ignorance, but what savings are you referring to?

didibus 6y ago
That trading stocks on it and all of its features are free, no fees and no commission.
- Tenoke 6y ago
  You are still getting a hidden fee on most transactions due to the sold order flow. Rh itself earns 17 cents per 100 shares and 58 cents for options. The loss for the user is certainly much higher though and as the cost is hidden they likely make more trades. https://www.google.com/amp/s/www.cnbc.com/amp/2020/08/13/how-robinhood-makes-money-on-customer-trades-despite-making-it-free.html https://www.google.com/amp/s/www.cnbc.com/amp/2020/08/13/how...

iaabtpbtpnn 6y ago

What costs are they leading in? Stock, ETF, and mutual fund trades cost nothing on all the major platforms. (Maybe not options, but most people shouldn't be trading options, as they all just learned.)

goatinaboat 6y ago

RH is the cost leader by a wide margin and its very unique to its business model via data arrangement with Citadel It’s free right up until the point they decide to charge you 100% of your money.

alasdair_ 6y ago

Almost every single broker offers commission-free trading now. And some of them (Fidelity, Vanguard etc.) didn’t pull trading when it got volatile. They also have far more stable platforms.

DLay 6y ago
I think it’s also important to mention that Robinhood also has the most brain dead simple UI out of all the trading platforms I’ve seen. The brokers you’ve listed have more complicated user interfaces than the casual trader would care to learn about. Fidelity and Vanguard also probably care way more about their reputations than to gamify their platform like RH does.