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Robinhood raises $323M at a $7.6B valuation

reuters.com

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Re: Robinhood raises $323M at a $7.6B valuation

#111

Post by steven2012 »

hbosch wrote: post #79
AznHisoka wrote: post #9

I've been using Robinhood for the past year, and I hope they add basic features such as: - The ability to short a stock, which I still can't believe isn't available. - Price Alerts Everything else is gravy, IMO, especially if they keep the same basic, sleek interface, which I actually like.

> The ability to short a stock, which I still can't believe isn't available. Honest question: is having access to shorting THAT much different than having the ability to buy puts/sell calls? Shorting isn't the only way to profit in a bear position

Yes, a pure short position is much cheaper than buying puts. You pay a lot of premium with options and almost no premium with shorts, depending on what the rate to borrow is. Also, liquidity is much better as are spreads. It makes a huge different to the profitability of a trade.

Re: Robinhood raises $323M at a $7.6B valuation

#112

Post by steven2012 »

throwaway5752 wrote: post #30
AznHisoka wrote: post #9

I've been using Robinhood for the past year, and I hope they add basic features such as: - The ability to short a stock, which I still can't believe isn't available. - Price Alerts Everything else is gravy, IMO, especially if they keep the same basic, sleek interface, which I actually like.

Is there a way to allow shorts without having to manage margin and having to carry risk on the balance sheet? They have to deal with two counterparties (you, and whomever is lending you the shares). I am not sure how they could economically offer free short trades.

For a brokerage managing short position risks are exactly the same as managing long positions. And the implementation is the same too. Do real-time checks and once a position has lost more than X%, sell the position immediately.

The biggest problem presumably for Robinhood is managing the borrowing of the shares. They're probably not large enough to have a pool of shares to consistently borrow from like other larger brokerages.

Re: Robinhood raises $323M at a $7.6B valuation

#113

Post by steven2012 »

brianchu wrote: post #45
AznHisoka wrote: post #9

I've been using Robinhood for the past year, and I hope they add basic features such as: - The ability to short a stock, which I still can't believe isn't available. - Price Alerts Everything else is gravy, IMO, especially if they keep the same basic, sleek interface, which I actually like.

Shorting a stock is not a basic feature, it's an advanced feature for power users. You can buy put options on Robinhood already.

It's absolutely a basic feature. It's the opposite of buying a share, and your profit/loss is easy to calculate. With options, you need to worry about premium, time decay, spreads and lower liquidity, etc.

Re: Robinhood raises $323M at a $7.6B valuation

#114

Post by simula67 »

tomp wrote: post #81
H8crilA wrote: post #76

Earlier quoted context omitted.

That makes sense too (avoiding competition). But it's not what the quoted article says. Institutional trading (like mutual funds) certainly is a problem for market makers: > Sometimes, when a customer buys 100 shares at $100.01, it then buys another 100 shares at $100.02, and another 100 shares at $100.03, and keeps going until it has bought 10,000 shares and pushed the price up dramatically. The market maker who sol…

Indeed, this isn't a comment on your summary (which I have no reason to not believe to be accurate). I'm commenting on the ideas behind the article itself. Still, I disagree. Even a large order won't "move" the market by itself (unless you're the Fed). At best, it might trigger a flash crash (we've seen a few of these in the past few years), where liquidity temporarily dries up (HFT market makers remove their passive…

Does Robinhood sell data on various order types like limit, stop-loss, etc to High-Frequency Traders? That would allow the HFTs to extract profits out of Robinhood's users since this information does not appear to be non-public and hence can be used for front-running.

Re: Robinhood raises $323M at a $7.6B valuation

#115

Post by [deleted] »

SergeAx wrote: post #94
rolltiide wrote: post #72

Earlier quoted context omitted.

well the money is clean now and Sequoia followed the lead, so nobody important cares about that, lets stop spending resources on whitelisting monetary transactions to begin with. the audacity to try to limit capital flows based on owner behavior was always misguided. if you disagree with something Alisher did, then you have to indict the people that actually did it. vilifying money is just lazy.

Of course the money is clean now, that's the sole purpose of DST Global.

[deleted]

Re: Robinhood raises $323M at a $7.6B valuation

#116

Post by rolltiide »

SergeAx wrote: post #94
rolltiide wrote: post #72

Earlier quoted context omitted.

well the money is clean now and Sequoia followed the lead, so nobody important cares about that, lets stop spending resources on whitelisting monetary transactions to begin with. the audacity to try to limit capital flows based on owner behavior was always misguided. if you disagree with something Alisher did, then you have to indict the people that actually did it. vilifying money is just lazy.

Of course the money is clean now, that's the sole purpose of DST Global.

and how many six figure salaries has that provided for? how much contribution to FOSS by for-profit company employee participation?

Re: Robinhood raises $323M at a $7.6B valuation

#117

Post by stephengoodwin »

stephengoodwin wrote: post #36
throwaway5752 wrote: post #30

Earlier quoted context omitted.

Is there a way to allow shorts without having to manage margin and having to carry risk on the balance sheet? They have to deal with two counterparties (you, and whomever is lending you the shares). I am not sure how they could economically offer free short trades.

Not that I'm aware of. The only alternative would be to permit shorting if the user has a Long Put for defined risk protection. You could always to a synthetic short through buying a Long Put, but time (and often volatility) decay become a factor (for shorter term trades).

Correction: Should be Long Call for the first scenario: defined risk protection (for shorting), not Long Put.

Re: Robinhood raises $323M at a $7.6B valuation

#118

Post by alinspired »

AznHisoka wrote: post #9

I've been using Robinhood for the past year, and I hope they add basic features such as: - The ability to short a stock, which I still can't believe isn't available. - Price Alerts Everything else is gravy, IMO, especially if they keep the same basic, sleek interface, which I actually like.

you can approximate short with inverse funds, like SH, PSQ

Re: Robinhood raises $323M at a $7.6B valuation

#119

Post by tanderson92 »

rconti wrote: post #93
bjacokes wrote: post #83

Earlier quoted context omitted.

When you sell shares, cost basis is reported to the IRS by the brokerage. The parent comment suggests that RH always reports the FIFO cost basis, i.e. price of the first shares you bought as opposed to the last shares. There are places on tax forms where you can adjust your cost basis up or down from the one reported by your brokerage, but (without doing any research into it) I doubt that "I don't want to use my brok…

I really have no idea, but it's a VERY new thing that brokerages even report this information. The 1099-B can't be more than a decade old. You used to have to track it all yourself. I suspect you can use your own cost basis method. (subject to rules; of course you have to be consistent) That said, this is definitely not tax advice, and even if it's legal/allowable, you're almost certainly more likely to be audited if…

This is why Form 8949 (column (f)) exists.

Re: Robinhood raises $323M at a $7.6B valuation

#120

Post by nodesocket »

hbosch wrote: post #79
AznHisoka wrote: post #9

I've been using Robinhood for the past year, and I hope they add basic features such as: - The ability to short a stock, which I still can't believe isn't available. - Price Alerts Everything else is gravy, IMO, especially if they keep the same basic, sleek interface, which I actually like.

> The ability to short a stock, which I still can't believe isn't available. Honest question: is having access to shorting THAT much different than having the ability to buy puts/sell calls? Shorting isn't the only way to profit in a bear position

Everytime I've bought PUTS its been a losing proposition; Kodak and Beyond Meat (don't want to talk about it). So, I made a hard and steady rule for myself, no more buying PUT options. Instead, just find high quality companies I want to go long on. It's much easier to pick winners than trying to predict losers and the timeframe. I am a big opponent of shoring and buying PUT options.
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