High-speed trading firms are paying brokers billions of dollars a year to execute options orders, a flood of money that has helped fuel a lucrative boom in risky trades by small investors.
The practice, called payment for order flow, has made options a cash cow for brokerages such as Robinhood Markets Inc. and TD Ameritrade. They can make twice as much or more from selling customers’ options orders as they do from selling order flow for stocks.