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I think it's unlikely that Robinhood (or any brokerage) would compensate people for losses on hypothetical trades that could have been made during an outage. S
by throwsprtsdy 7y ago
I think it's unlikely that Robinhood (or any brokerage) would compensate people for losses on hypothetical trades that could have been made during an outage. Such a policy would allow customers to pick their entry and exit points, and extract money from the brokerage at will.
Even if the trades were well-defined at the time the outage occurred, there would still be an asymmetry between people demanding compensation on their profitable trades while eschewing losses on their bad trades. It's doubtful any brokerage would be willing to eat that.
Execution risk is a risk.
- asah 7y agoAre expiring in-the-money options a "hypothetical trade" ?
- benmanns 7y agoThose are automatically exercised at expiration.
- Itsdijital 7y agoIf the holder can afford to exercise, and I can assure you that most RH users cannot afford to exercise a single contract(at least on most commonly traded stocks). Otherwise it's on the broker to sell it at close to someone who can afford to exercise. And who knows if RH pulled that off or not.
- benmanns 7y agoI haven't seen official statement, but I did see a couple reddit threads where Robinhood exercised ITM calls without enough funding in the account, then collected the shares and paid the cash difference. https://www.reddit.com/r/wallstreetbets/comments/fcqkmo/so_robinhood_just_excercised_my_spy_call/ https://www.reddit.com/r/wallstreetbets/comments/fcqkmo/so_r... There's also some threads where it looks like it did not go so well... https://www.reddit.com/r/wallstreetbets/comments/fd2eko/update_yesterday_i_said_i_lost_400_a_day_thats/ https://www.reddit.com/r/wallstreetbets/comments/fd2eko/upda...
- itake 7y agoIf their systems are down, were they actually exercised or is that managed by another brokerage?
- deleted 7y ago[deleted]
- throwsprtsdy 7y agoThat's an interesting question. I suppose it's hypothetical in the sense that they now have to look at "what if" those options had been exercised; but unlike a spot trade that someone "would have" done, Robinhood might already have had obligations on its end of the original options trade.
- hcknwscommenter 7y agoAbsolutely. Why wouldn't they be?
- topherpalmtree 7y agoYeah seriously if you have > a few hundred in options on robinhood. And you’re waiting until the day they expire to unload them. You’re dumb or don’t care about your money.