Something seems off here. The person would have had to have significant assets or collateral to end up negative; regardless of age and income.
It just doesn’t work like that.
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
#32From 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?
They had no income; nothing to garnish. They'd enter bankrupcy and discharge the debt. Their credit would suck for 7 years and they'd lose assets that can be taken in bankrupcy (if they had any).
Re: Robinhood 20yo trader with no income loses 700k on options, takes life
#33Something seems off here. The person would have had to have significant assets or collateral to end up negative; regardless of age and income. It just doesn’t work like that.
You're right, but due to Robinhood's terrible UI/UX, when you hold a spread and the short leg gets assigned, it shows your account as owing an astronomical amount. In reality, you have an opposite leg that gets exercised and you're only out the difference in the spread (which that risk is based on your account balance/margin/etc).
This kid didn't lose $700k, his account just shows -$700k until Monday morning when it will update with the other leg being exercised and he probably lost a few grand instead. Here's a similar situation where someone thought they lost $172k, when in reality they lost $2k. [1]. It's a combination of a shitty UI and people not understanding option spreads.
[1] https://old.reddit.com/r/wallstreetbets/comments/aohvow/hi_t...
Re: Robinhood 20yo trader with no income loses 700k on options, takes life
#34Earlier quoted context omitted.
Because you need to qualify for margin and the person who lent you the money agreed to lend it to you knowing that you could BK it. With student loans, the student usually doesn't have an income or assets so there needs to be more incentives to convince lenders to lend money.
I don't see how that reasoning applies to one, but not the other circumstance.
Student loans are cheap and available because they can't be defaulted on. If lenders don't get those guarantees, they won't want to lend at the lower rates or approve people as easily.
Re: Robinhood 20yo trader with no income loses 700k on options, takes life
#35Imagine: "A 20 yo runs across highway in heavy truck traffic, dies". Well, yes. There is an obvious risk, and you either acknowledge this risk and act accordingly, or get struck. Fortunately, if you do a very bad investment, you can sell all your assets, go bankrupt, and keep your life. Too bad the poor guy chose to take his life. But this again looks like not doing enough homework. This is very sad. I wish these thi…
I know others who make profit from borrowing leverage and bet that Robionhood is doing same.
What you propose is nice, but against platform financial interests.
Re: Robinhood 20yo trader with no income loses 700k on options, takes life
#36Robinhood 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.
Is it really Robinhoods fault that someone made a poor decision? If the individual in question had paid $4 to execute that transaction would that have been fine?
Robinhood is in the business of encouraging poor investment decisions among the less-informed. Even outside of leverage and options, trading single stocks is extremely foolish for most investors.
Re: Robinhood 20yo trader with no income loses 700k on options, takes life
#37Imagine: "A 20 yo runs across highway in heavy truck traffic, dies". Well, yes. There is an obvious risk, and you either acknowledge this risk and act accordingly, or get struck. Fortunately, if you do a very bad investment, you can sell all your assets, go bankrupt, and keep your life. Too bad the poor guy chose to take his life. But this again looks like not doing enough homework. This is very sad. I wish these thi…
This is pretty tone-deaf.
Please notice how highways are full of warning signs and barriers that prevent you from accidentally running across them. Same with construction sites, or heavy industrial plants.
Maybe other risky places should have more warning signs, so that an optimistic 20-yo would have to stop and think before acting.
Re: Robinhood 20yo trader with no income loses 700k on options, takes life
#38Does anyone know who this is and if there is a way to verify what he is saying is true? I don’t know much about Robin Hood but people here seem to be indicating that it’s not possible to end up owing money like that. The tweets also seem to advertise for two other twitter accounts that give investing advice.
Let me just tell it is possible to make that kind of loss on Robinhood. Weather the tweets are real IDK.
Re: Robinhood 20yo trader with no income loses 700k on options, takes life
#39Imagine: "A 20 yo runs across highway in heavy truck traffic, dies". Well, yes. There is an obvious risk, and you either acknowledge this risk and act accordingly, or get struck. Fortunately, if you do a very bad investment, you can sell all your assets, go bankrupt, and keep your life. Too bad the poor guy chose to take his life. But this again looks like not doing enough homework. This is very sad. I wish these thi…
> But this again looks not doing enough homework.
It seems naive to read a tweet with a little information about someone completing suicide, and then assume that if they had known (more) about bankruptcy they would not have done it.
There are other things that we can't read out of the tweet that are really important in these situations, like access to social support.
Re: Robinhood 20yo trader with no income loses 700k on options, takes life
#40From 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?
Hell if a kid owed me 700k, I would seriously consider putting them through college just to increase the chances of ever seeing that money again.
As they say: you owe the bank $100, it's your problem. If you owe the bank $100mil, it's the bank's problem.