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Does anyone know why options broker fees are so high? A typical cost is ~$0.25/contract for a $1.00 SPY 0DTE, eg: https://www.interactivebrokers.com/en/pricing/

by verteu 1y ago

Does anyone know why options broker fees are so high? A typical cost is ~$0.25/contract for a $1.00 SPY 0DTE, eg: https://www.interactivebrokers.com/en/pricing/commissions-options.php https://www.interactivebrokers.com/en/pricing/commissions-op... Does this reflect brokers' cost of technology (many tickers to keep track of)? Regulatory fees? Lack of competition? edit: Perhaps it's largely profit. Seems https://public.com/invest/options-trading https://public.com/invest/options-trading is trying to undercut on price.

boringg 1y ago
Profit and settlement risk
quamserena 1y ago
Regulatory fees for options is negligible. Even with $1 or $2 per contract, the quality of fill that you get matters a lot more. Robinhood has “no commission” but they have terrible fills that are a hidden cost, taking this into account the $1 or $2 charge makes more sense. You’re also paying indirectly for the UI, real time data, margin, and API, none of which are free for the brokerage. Robinhood again skimps in this regard by offering no API (except for crypto…) and a terrible UI (but at least it has confetti!).
- verteu 1y ago
  Thanks, I found some evidence for poor fill quality here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4951825 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4951825
OutOfHere 1y ago
Robinhood's advertised fee per contract is 4c to buy and the same to sell.