Robinhood 20yo trader with no income loses 700k on options, takes life

There are firms that do exactly this. Robinhood's business model is to sell the order-flow data of its users to HFT hedge funds, who then take the opposite side of the trade. It's proven very profitable both for Robinhood and for funds that do this.

The efficient market hypothesis says nothing of the sort. Upside and downside with options aren't symmetrical.

Unlike when purchasing long positions in stocks, when trading options it's possible to lose many times more money than you initially put in. You also really can't ignore the spreads. Market makers win pretty consistently and everyone else is playing a worse than zero-sum game.

>Is that what robinhood is supposed to be?

Their idea is that they give everyone access to the financial markets, and that allows them access to wealth. My point is their name is playing on... Robin Hood who "took from the rich and gave to the needy".

But in reality it's just become another way for the rich to milk people who don't have that much money to lose anyways.

It completes the stated part of the mission, but completely forsakes the implied part of it.

> The reason why they wouldn't "get into" the other brokerages is because they transact in such small amounts that they'll lose most of their capital on trading fees. I don't see anything wrong with letting people make small trades that they wouldn't have otherwise been able to make.

My point is, they won't lose most of their capital unless they're day trading, or at least trading very aggressively. And that's wholly at odds with actually making money if you don't know what you're doing. If their goal was to create a gambling app, we already have Draft Kings...

I mean, take their options trading for example. First off, the mobile app has a guided view for people who don't really get options to trade options. Ignoring the... strangeness there. It will actively recommend options that are just pure fucking insanity. So far out of the money, with such insane expiry dates, that your odds are literally worse than the lottery. And to top it off, half of them don't even have volume! So even if you do somehow start to approach any semblance of profit, you can't sell!

They're so far OTM and with such low volume that they don't even make sense as "YOLO"s, they are literally recommending losing money for no reason. And it'll characterize them as "short term, high risk" when there are OTM options that are short term high risk, for marginally more money, with infinitely higher chances of profit! Why would you take someone who literally needs to be explained that puts are bearish, and show them this as the first option?!

These people are told options are risky, see these incredibly stupid positions, get no mention of the Greeks, no mention of volume (it won't even show any of this unless you drill down into another view!), and take Robinhood's suggestion "I came here for risky, it says this is risky, must be what I'm looking for".

> How about we let the users take personal responsibility?

How on earth is that at odds with warning users they should be ready to leave their money in the stock market for long periods of time, are you daft?

Thanks for posting that.

The idea that DeVos, whose family owns a school lending company, is in the administration is not just a conflict of interest, but an indictment of our entire political system.

Wait, is it possible to "owe" money to Robinhood? I have never used them but I was under the assumption that you can only lose the money you deposited, because of the leverage, but you can not go negative.

The tweet seems to imply that too, but a lot of the comments here look misinformed.