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Short Trading Options. Call options are contracts to buy a stock, while put options are contracts to sell. A trader can begin the options trade by either buying — “going long” — or selling ...
Margin loan interest and options fees account for 39.5% of Robinhood's total revenue through nine months of 2024. These types of speculative activities dry up during market downturns.
Box spreads' name derives from the fact that the prices for the underlying options form a rectangular box in two columns of a quotation. An alternate name is "alligator spread," derived from the large number of trades required to open and close them "eating" one's profit via commission fees.
The similar situation works among currency forwards, in which one party opens a forward contract to buy or sell a currency (e.g. a contract to buy Canadian dollars) to expire/settle at a future date, as they do not wish to be exposed to exchange rate/currency risk over a period of time.
PFOF is a controversial practice that has been called a "kickback" by its critics. [4] Policymakers supportive of PFOF and several people in finance who have a favorable view of the practice have defended it for funding new investment apps, low-cost trading, and more efficient execution.
Through the first three quarters of 2024, Robinhood's transaction-based revenue, driven primarily by options trading, reached $975 million, equating to a year-over-year growth of 35%.
When options have large open interest, they have a large number of buyers and sellers. An active secondary market will increase the odds of getting option orders filled at good prices. All other things being equal, the larger the open interest, the easier it will be to trade that option at a reasonable spread between the bid and ask.
It's been a fantastic year for stock market investors. At the time of this writing, the S&P 500 index has returned 28% thus far in 2024 amid a resilient macroeconomic backdrop and record corporate ...