Conference Agenda

Shortly before expiration, Robinhood submits trades to close out the options positions of its customers who do not have the cash or shares to exercise their options or accept assignment. These liquidations result in bursts of customer trades at known times, and allow us to identify the underlying symbols and options positions popular with Robinhood customers. The liquidating trades face adverse execution, as options prices move in unfavorable directions. Underlying equity and ETF prices move in directions consistent with price pressure in the equity and ETF markets as options market makers execute delta hedge trades as they absorb the Robinhood order flow. Our results reveal how brokerage frictions in retail options trading impact options and underlying prices.