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"Gross margin" is not the same as "hold" here. Options pricing is reasonably competitive. Even a gambly thing like a Tesla zero day option has a spread of 1-2%
by dmurray 1y ago
"Gross margin" is not the same as "hold" here.
Options pricing is reasonably competitive. Even a gambly thing like a Tesla zero day option has a spread of 1-2%, so someone trading it at random loses 0.5-1% per trade. And Robinhood is a brokerage, not an options market maker, so it doesn't capture all of that 0.5-1%.
You'd have to read Robinhood's financials to see what they mean by gross margin. Possibly it means if a customer deposits $1,000 and trades options, the customer eventually on average loses $900 of it? Even that seems too much TBH.
- parodysbird 1y agoIt is not a good idea for retail investors to get heavily involved in zero-sum derivatives trading against much more sophisticated algorithmic trading models.
- nradov 1y agoIt's not a good idea for punters to go to the casino and bet it all on black. Some percentage of the population is always going to be degenerate gamblers. We can try to reduce the harm a bit but ultimately this is just a reality we need to accept.
- OutOfHere 1y agoIt's just not for you to judge. Those with sophisticated models usually have a lot more capital to manage. Also, it's not a zero sum game because alignment with the underlying's price drives it. Long term share holders are the foundation that makes it not be zero sum. As a retail account grows, its approach too can become slightly sophisticated over time.