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If you read down into the Twitter thread, it seems like the -$700k net balance ("debt") may have simply been a display "error" within Robinhood's system: "The

by nugget 6y ago

If you read down into the Twitter thread, it seems like the -$700k net balance ("debt") may have simply been a display "error" within Robinhood's system: "The unfortunate thing is there are certain situations where RH will show this kind of amount due, but it is an anomaly for 24 to 48 hours as things process when selling calls and puts. Uneducated traders think they actually owe these amounts which is not close to accurate[.]" That explanation would make more sense; I don't see how Robinhood could allow inexperienced traders such amounts of unsecured margin and survive as a business.

hogFeast 6y ago
Yep, but try explaining how a supposedly firm made up of "SV Ivy League geniuses" show clients that number. Things that should make sense often don't. (Just FYI, if you go on r/wallstreetbets, you will see this countless times...the software not showing the correct position, the software not showing the correct position and then forcing users to trade such that they lose money, it goes on and on and on...this business isn't complicated, you had men and women with high school level educations running these positions for decades without these problems...one touch from the "geniuses", kaboom...again, very little about what Robinhood do makes sense, it is baffling that they are even regulated to handle money.)
- manigandham 6y ago
  Because it's the real number. Every broker does this and they can't misrepresent the market or your account. The issue is that some people don't understand how option trades work, in this case a credit spread with 2 legs of a trade. One side was exercised and would have been offset by the other side when the broker got around to it, but it's not incorrect data. It's up to the trader to understand their trades.
tedmiston 6y ago
This glitch showing a massively incorrect balance sounds absurd. Is there a logical explanation? Is it a bug?
- stu2b50 6y ago
  No, it's just how it works. Like if you front for food for a big party, you might have a -1000 charge on your CC, but then you get paid back. The - 1000 is "real", just temporary. Specifically, in a spread he might have lost 770k on his short but up 760k on his long, so his actual loss at the end was just 10k.
manigandham 6y ago
It's not a display error. It's an options trade with different leg. One side was exercised before the other and will show the large discrepancy until you or the broker executes the other side.

by nugget 6y ago

hogFeast 6y ago

Yep, but try explaining how a supposedly firm made up of "SV Ivy League geniuses" show clients that number. Things that should make sense often don't. (Just FYI, if you go on r/wallstreetbets, you will see this countless times...the software not showing the correct position, the software not showing the correct position and then forcing users to trade such that they lose money, it goes on and on and on...this business isn't complicated, you had men and women with high school level educations running these positions for decades without these problems...one touch from the "geniuses", kaboom...again, very little about what Robinhood do makes sense, it is baffling that they are even regulated to handle money.)

manigandham 6y ago
Because it's the real number. Every broker does this and they can't misrepresent the market or your account. The issue is that some people don't understand how option trades work, in this case a credit spread with 2 legs of a trade. One side was exercised and would have been offset by the other side when the broker got around to it, but it's not incorrect data. It's up to the trader to understand their trades.

tedmiston 6y ago

This glitch showing a massively incorrect balance sounds absurd. Is there a logical explanation? Is it a bug?

stu2b50 6y ago
No, it's just how it works. Like if you front for food for a big party, you might have a -1000 charge on your CC, but then you get paid back. The - 1000 is "real", just temporary. Specifically, in a spread he might have lost 770k on his short but up 760k on his long, so his actual loss at the end was just 10k.

manigandham 6y ago

It's not a display error. It's an options trade with different leg. One side was exercised before the other and will show the large discrepancy until you or the broker executes the other side.