Can you explain how you think closing options positions a few minutes early can magically generate profit for Robinhood?
The OP complained that with the benefit of hindsight the options went up in value after being sold, but given that all retail traders are degenerate gamblers with zero actual alpha there was a 50/50 chance the options could have gone in the entirely opposite direction, and selling them early could just as easily have saved the commenter thousands of dollars.
It’s the same game as a bank which reorders transactions after the fact to maximize overdraft fees. Rather than a small profit on 100% of transactions they make significant profit on some low percentage of transactions. Making 10k on 1 in 1,000 transactions = making 10$ on every transaction.
If closing early generates more profit then they don’t win or lose, just executing the trade at close for the customer.
However, if waiting generates more profit then they can always say they executed early while waiting and then pocket the difference.
They could even even pick a mid point at time X, then compare some random time period before and after the transaction looking for a hypothetical less profitable execution time.
> However, if waiting generates more profit then they can always say they executed early while waiting and then pocket the difference.
Do you have an explanation that doesn't involve making up wild, evidence-free conspiracy theories? I can claim that Robinhood secretly makes most of their revenue from selling their users to human traffickers if I want, but that's not an actual reasonable criticism of their business model.
I just provided evidence both in the linked example and the stated policy of “anywhere from 60-90 minutes before close”. Sure, it’s not beyond a reasonable doubt, but the given example is both plausible and there is at least some evidence in favor of the practice.
Anyway, the existence or not of this policy is kind of secondary to the idea that indirect profit can be more expensive to the users. Clearly they need to be generating some revenue, and if you don’t know where it is that’s often a very bad deal. 401k hidden fees for example can sometimes exceed the tax savings.
The OP complained that with the benefit of hindsight the options went up in value after being sold, but given that all retail traders are degenerate gamblers with zero actual alpha there was a 50/50 chance the options could have gone in the entirely opposite direction, and selling them early could just as easily have saved the commenter thousands of dollars.