Robinhood Suicide Over Bug?

Jun 20, 2020 13 Comments

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TOP 13 Comments
  • Google
    riph1b

    Go to company page Google

    riph1b
    Not a bug. I think he misunderstood some number in the UI.
    Jun 20, 2020 2
  • Indeed
    pr0fess0r7

    Go to company page Indeed

    pr0fess0r7
    It wasn't a bug or debt. It is just voodoo accounting. I see the same or similar on other trading platforms.

    Suppose you buy or sell a put option spread. Let's say you sold it with the higher strike 100 and the lower strike 95. Your actual exposure is $500 (100 shares times the difference in strikes). Anyway, so during raining the position your account will quickly be assigned the shares before you then sell them off at a loss. During the assignment phase, it can show your buying power as negative that amount, in my example $10k ($100 x 100 shares), and so your account looks wrecked. If you could see when you actually get the shares (not likely here), your account will still have negative buying power but it will look like you gained $10k in shares. These are offsetting, but your buying power will remain negative until you sell the shares to close the position. In this case the other option leg is exercised and you sell the shares for a $500 loss. So, your account will be net minus $500 after a day or two, not minus $10k.

    There is a little more trickiness, but that is the gist. Buying power was impacted since his sold put spreads were exercised.
    Jun 20, 2020 1
    • OP
      This is a really great technical explanation. Thanks for this - and definetly I feel if you are trading options - that you do it with caution
      Jun 21, 2020
  • Sad. Hoping he will have a better experience in his next life...
    Jun 20, 2020 0
  • Tableau / Eng
    MrPlague

    Go to company page Tableau Eng

    PRE
    Microsoft
    MrPlague
    Can you actually carry debt in Robinhood? Or is the worst case getting to zero?
    Jun 20, 2020 4
  • Any lawsuit coming ?
    Jun 20, 2020 1