Robinhood 20yo trader with no income loses 700k on options, takes life
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Re: Robinhood 20yo trader with no income loses 700k on options, takes life
#2This is obviously tragic, but there's a reason options have a reputation as risky investments and probably not a great choice for most beginning investors. In any case, this market is incredibly risky and difficult for most any trader to predict. Most established brokerages have tighter rules around margin trading precisely for this reason, and I wonder how many 700k losses robin hood will eat before implementing similar restrictions. He probably didn't actually owe 700k in any case; I'm guessing it was just some delay or glitch.
Re: Robinhood 20yo trader with no income loses 700k on options, takes life
#3I'm aware options are complicated, but is someone able to expand on how this is possible?
I guess if you short calls you have unlimited downside, no?
but it was my understanding that the entire point of options was to cap downside (don't exercise) and maintain upside
Re: Robinhood 20yo trader with no income loses 700k on options, takes life
#4Young folks: remember, you can always declare bk after a bad options investment. Unlike student loans.
Re: Robinhood 20yo trader with no income loses 700k on options, takes life
#5This is obviously tragic, but there's a reason options have a reputation as risky investments and probably not a great choice for most beginning investors. In any case, this market is incredibly risky and difficult for most any trader to predict. Most established brokerages have tighter rules around margin trading precisely for this reason, and I wonder how many 700k losses robin hood will eat before implementing sim…
Schwab makes this based on levels you're allowed to do it at. Also it has limits based on what you're cleared to cover.
Re: Robinhood 20yo trader with no income loses 700k on options, takes life
#6From stories I heard growing up, a debt like $700k USD would get somebody killed by their bookies. But Robinhood isn't a bookie, I think, so what would have happened to this unfortunate soul instead? Bankruptcy and garnishing?
Re: Robinhood 20yo trader with no income loses 700k on options, takes life
#7Robinhood is one of those Silicon valley companies that feels that the rules don't apply to them you. People have been yelling for years that "HEY THERE IS A REASON YOU SHOULDN"T BE DOING THAT."
The tide has been coming in, and this is ABSOLUTELY no surprise.
Re: Robinhood 20yo trader with no income loses 700k on options, takes life
#8I'm aware options are complicated, but is someone able to expand on how this is possible? I guess if you short calls you have unlimited downside, no? but it was my understanding that the entire point of options was to cap downside (don't exercise) and maintain upside
RH doesn’t let you short naked calls, you have to hold shares as collateral, I’m not sure what happened.
Re: Robinhood 20yo trader with no income loses 700k on options, takes life
#9Young folks: remember, you can always declare bk after a bad options investment. Unlike student loans.
Why should a bad options investment be better protected than studying?
Re: Robinhood 20yo trader with no income loses 700k on options, takes life
#10Young folks: remember, you can always declare bk after a bad options investment. Unlike student loans.
Why should a bad options investment be better protected than studying?
Because lobbying!
https://www.google.com/amp/s/www.politico.com/amp/story/2019...