Trading

Payment for Order Flow (PFOF)

By Ryan Silk & Lawrence Polatchek · Reviewed April 2026 · Options Trading Glossary

Broker compensation for routing orders to market makers

What is Payment for Order Flow (PFOF)?

Payment for Order Flow (PFOF) The practice where brokers receive compensation from market makers for routing customer orders to them. Common in commission-free brokerages. In options, PFOF can result in slightly wider effective spreads or slower fills compared to direct exchange routing. Understanding PFOF helps traders evaluate true execution costs.

Complete Definition

The practice where brokers receive compensation from market makers for routing customer orders to them. Common in commission-free brokerages. In options, PFOF can result in slightly wider effective spreads or slower fills compared to direct exchange routing. Understanding PFOF helps traders evaluate true execution costs.

Related Terms

Market Maker Bid Ask Spread Fill High Frequency Trading

Written by

ApexVol Research Team

Quantitative options research

All calculations use live ORATS institutional data — the same source used by professional volatility desks.

Technical reviewer

Ryan Silk, ApexVol Founder

Reviewed for technical accuracy

10+ years trading options. Built ApexVol's pricing engine, Greeks model, and IV-rank methodology.

This guide is updated as market conditions and ORATS data change. Last revised 2026-05-12. How we research →

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