> Options were 26% of Robinhood’s revenue in 2024 with an implied gross margin of over 90%.
Wow. For comparison, slot machine RTP (payout ratio) usually hovers around 91-93%, meaning a "hold" of 7-9%.
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.
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 is trying to undercut on price.