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20yo Robinhood Customer Commits Suicide After Seeing $730K Negative Balance

192 points by xoxoy 6y ago

AcerbicZero 6y ago
Remember ~6 months ago, when RH had that little "glitch" that let traders access essentially unlimited leverage? Stuff like that is why RH is a meme, and options trading has become wallstreetbets favorite game. Its not like RH even makes it particularly easy to setup these kinds of trades, or has any useful tools that make it a better platform. If you want to setup a put spread, or an iron condor, or any other fancy options trading strategy on e-trade its a few clicks away. On RH? Not a chance, you're going to have to build those strategies yourself, one leg at a time. I still love gambling on RH, but you have to know its gambling before you start. I feel bad for this kid, getting caught up in the hype and throwing away his life over a few dollars that really never existed anyway.
- rytill 6y ago
  You can actually set up any of those strategies in a single trade with multi-option select if you know how how they are composed.
- alexbanks 6y ago
  The reason (probably only reason) RH is successful/popular is because of their $0 transaction fee. I wouldn't use it if I had to pay for anything.
  - samfisher83 6y ago
    Pretty much all the big brokers are at 0 now.
    - alexbanks 6y ago
      I suppose it might be worth reexamining. Last time I used etrade it was a flat 10 dollar txn fee, which was absolutely ridiculous for people like me who just play around with funmoney. Robinhood was perfect for my needs.
      - basch 6y ago
        The mobile app is a true mobile first app, but other than the UX theres no reason to stick with RH over Schwab, Fidelity, Etrade, Merrill, Ally.
        alexbanks 6y ago
        But, is there any value add to casual investors like myself vs. RH?
        basch 6y ago
        Depends what you consider value. Better customer support? Trust? Price improvement. A suite of more products. Being able to call and get any issue resolved immediately, with strikingly intelligent answers for customer service, and a customer first attitude, is priceless.
    - shmoogy 6y ago
      Not for options, I think it's only Robinhood, tastyworks, and webull.
  - high_derivative 6y ago
    I never understand why people are _so_ desperate to save a few bucks when risking their life savings versus using a professional tool if they desire to trade options (say, interactive brokers). You save fees and then get screwed when Robinhood is down on expiration day.
    - Sohcahtoa82 6y ago
      For someone like me who's only tossing $2,000 into stocks to play around with, having zero fees is the #1 selling point, otherwise, the fees add up to a significant fraction.
    - alexbanks 6y ago
      I was speaking less about options trading and more about general adoption. I've never done options trading, just small-ish buys and sells. My experience with e-trade was a flat 10 dollar txn fee, which was totally unreasonable for the amount of money I was investing.
    - toast0 6y ago
      If you're trading in small amounts, the comissions add up pretty quickly, a $10 comission on a $1000 purchase of stock ends up being 2% of the price, considering you have to pay to buy and to sell. That's way better than a $30 comission from the before times, but it's still big. That said, we can all thank RobinHood for driving comissions down to zero, and then do business at brokerages that work. I personally wouldn't trade at IB, because I only do a tiny amount of trading, and don't want to go into the rabbit hole of individually routing my orders; it's great that it's available, but I don't need that, nor do I want an API or stuff.
  - rexreed 6y ago
    Schwab, TD Ameritrade, and Fidelity all now offer commission-free trading
- johnbellone 6y ago
  When you are trading options on some of the more popular underlying, e.g. weekly expirys, there are strategies such as iron condor, credit spreads, strangles, straddles, etc. This doesn't seem to appear on the web application and only the mobile.
  - CameronNemo 6y ago
    It's weird how much functionality is missing from the web client. I could not even find my account and routing number, I had to use the mobile application.
    - mywittyname 6y ago
      Lots of companies are moving away from full featured web clients. I think Venmo recently removed the ability to send money -- you know, the entire purpose of Venmo -- from the web client.
chrisco255 6y ago
This is really tragic. For one, he never ended up that much in the hole and two, even if one finds themselves bankrupt at 20, it's not the end of the world, you simply file bankruptcy and it's difficult to borrow money for the better part of a decade...but other than that your life goes on as normal. I opened a business at a young age and was bankrupt by the time I was 24. It was sad and painful, but it is far from tragedy or hopelessness.
- seph-reed 6y ago
  Depression is a serious problem these days. I imagine this was just the last straw. But if not... that would also really suck.
  - skinnymuch 6y ago
    The last straw even if they knew the loss was how much they put in too? For now, we don’t know if the person knew they weren’t that much in the hole or relatively speaking, how benign a huge debt would be at a young age without dependents.
- skinnymuch 6y ago
  Is it that difficult even after 5 years if you’re making a solid income etc? I’ve heard differing tales. On one hand it sucks for close to or about 7 years. On the other, you can start to get back to being normal after close to 5 years or so. My memory remembers something like it’s not the same, but likely better than someone with a 5XX credit score.
  - selectodude 6y ago
    Generally you can start getting credit pretty quickly in the form of secured credit cards. You’re going to pay a pretty high interest rate on things like cars but after a few years, the fact that you can’t file for bankruptcy again for seven years overrides the fact that you filed for bankruptcy.
- autokad 6y ago
protomyth 6y ago
Kearns may not have realized that his negative cash balance displaying on his Robinhood homescreen was only temporary and would be corrected once the underlying stock was credited to his account. Indeed it’s not uncommon for cash and buying power to display negative after the first half of options are processed but before the second options are exercised—even if the portfolio remains positive. “Tragically, I don’t even think he made that big of a mistake. This is an interface issue, they have slick interfaces. Confetti popping everywhere,” says Brewster referring to the shower of colorful confetti Robinhood routinely deploys after customers make trades. “They try to gamify trading and couch it as investment.” Am I reading this correctly and he really wasn't in the hole badly, but a crappy presentation of information broke him? Firstly, if someone reading this is in the same situation, take a breath and know this is not Student Loans, you are young and bankruptcy is about as bad as its going to get. If you are the interface designer, well, I don't know what to say to you other that sort your damn self out. Its your job not only to convey the truth, but show what the final result is approximately going to be. Conveying just the current facts is as misleading as outright lying.
- deleted 6y ago
  [deleted]
- birdyrooster 6y ago
  Yes, he could only lose as much as he bought for the contract price. I don't see how someone's cash balance should ever be affected by the strike price of an unexecuted contract. Can someone correct me?
  - bmh100 6y ago
    It's just a weird thing that some online brokers seem to do. I once had exercised contracts for 200 shares put me "in debt" for $4mm. Then the shares settled, and everything in my account went back to normal.
  - greatjack613 6y ago
    correct, unless he bought on margin, which should have triggered a margin call when he was unable to cover his position, but still unclear.
orthecreedence 6y ago
Poor kid. Even if the ending balance was -730K he could declare bankruptcy. Most college kids don't have a lot of assets so it's not like starting from 0 will set him back 10 years, although maybe his situation was different. Either way, this is really unfortunate. The way we treat debt, especially in regard to our younger population, is kind of despicable. But hey, whatever keeps the wheels turning, right?
- jbverschoor 6y ago
  Most people on RH are fully aware what they're doing. Even filing for bankruptcy in such a case seems unfair to me. Why would you allow someone to gamble for almost 1m? It's the same logic that if an underage kid shouldn't go to jail if he kills someone.
  - stu2b50 6y ago
    To be fair, they wouldn't allow a random kid to be that leveraged. This was because he had an options spread. His long options would cover most of the 770k... It just doesn't show immediately. Not sure if that makes it better or worse
  - orthecreedence 6y ago
    > Even filing for bankruptcy in such a case seems unfair to me I have a debt, I cannot pay the debt. What do you suggest as an alternative to bankruptcy? Indentured servitude? > Why would you allow someone to gamble for almost 1m? My point exactly. The lender is responsible for lending to people who can make good on their bets. > It's the same logic that if an underage kid shouldn't go to jail if he kills someone. I think it's more about finding a sweet spot between lender/borrower responsibility. If you're giving some kid who's day trading after watching a few youtube videos $1M, you're irresponsible and deserve to lose your $1M. The system shouldn't protect these people. I would apply the same logic and processes to student loans as well.
    - derision 6y ago
      > I have a debt, I cannot pay the debt. What do you suggest as an alternative to bankruptcy? Indentured servitude? wage garnishment. take some $ from each paycheck automatically deducted from payroll. i believe credit card companies and other debtors can do this
gooseus 6y ago
> In fact a screenshot from Kearns’ mobile phone reveals that while his account had a negative $730,165 cash balance displayed in red, it may not have represented uncollateralized indebtedness at all, but rather his temporary balance until the stocks underlying his assigned options actually settled to his account. This makes it even more sad, better UI could have saved a life. Putting a notification with a link to call the National Suicide Prevention Lifeline on an account that moves that far and fast into the red might not be a bad addition either.
- vorpalhex 6y ago
  That's a bit like saying "People in your situation often commit suicide. Would you like me to dial the Suicide Prevention Lifeline for you?" isn't it? You risk causing it by suggesting it when it may have never entered the persons mind to begin with.
  - ceejayoz 6y ago
    That's a harmful myth. https://www.bbc.com/future/article/20140112-is-it-bad-to-talk-about-suicide https://www.bbc.com/future/article/20140112-is-it-bad-to-tal... https://www.nami.org/Blogs/NAMI-Blog/September-2018/5-Common-Myths-About-Suicide-Debunked https://www.nami.org/Blogs/NAMI-Blog/September-2018/5-Common...
    - boomboomsubban 6y ago
      I would view this kind of notification as different than discussing suicide. You presumably just encountered something very shocking, and are likely considering what options are available to you. There's no real need to mention suicide in the notification, "feeling distressed? Call" would work fine.
    - vorpalhex 6y ago
      The BBC itself offers conflicting accounts: https://www.bbc.com/news/entertainment-arts-49001246 https://www.bbc.com/news/entertainment-arts-49001246 https://www.bbc.com/news/entertainment-arts-44170473 https://www.bbc.com/news/entertainment-arts-44170473
twostorytower 6y ago
Kearns may not have realized that his negative cash balance displaying on his Robinhood homescreen was only temporary and would be corrected once the underlying stock was credited to his account. Indeed it’s not uncommon for cash and buying power to display negative after the first half of options are processed but before the second options are exercised—even if the portfolio remains positive. “Tragically, I don’t even think he made that big of a mistake. This is an interface issue, they have slick interfaces." I think this is the saddest part. This definitely is entirely Robinhood's fault. Saying so is basically saying a casino is at fault for somebody committing suicide because of a gambling loss. But a better UX could have helped in this case.
- awinder 6y ago
  It’s probably a little weirder than that, because what (seems to / likely may have) happened wasn’t even a loss, just a state in the clearing of 2 options. So what if you thought your life savings vanished but they really hadn’t? I’m not even positing an answer but what a horrible incident.
- electricviolet 6y ago
  I don't think it's fair to say this "definitely" isn't Robinhood's fault. They deliberately market to beginning traders and make these kinds of complex trades available to them. If they're going to do that, they need to make the interface crystal clear even to someone who doesn't know what they're doing.
- jrumbut 6y ago
  If he had gambled and lost $700+k then I'm kind of with you, but he hadn't. When it all shook out he might have secured a small profit or taken a loss proportional to his original stake ($16k). It's showing the life changing loss without giving the user sufficient context or insight into what's happening that's the problem.
- Agathos 6y ago
  A casino is a funny comparison here. I doubt Robinhood wants to be regulated the way casinos are. Casinos in most jurisdictions are mandated to take at least minimal steps to address the risks of problem gambling. For example, posting hotline numbers to help problem gamblers, training employees to spot problem gamblers, and in some cases even banning known problem gamblers. If a casino was found to be doing none of those things, when a suicide occurred, I suspect it would be in deep trouble.
floatingatoll 6y ago
US casinos post signs warning about gambling addiction and and post phone numbers for 24/7 help lines. Does this ethical obligation exist for trading apps as well?
- tathougies 6y ago
  > All investments involve risks, including the possible loss of capital. From the robinhood website.
_bxg1 6y ago
Robinhood has had a lot of screwups lately. At what point are they legally liable? Are they not held to a higher standard of accountability than normal tech companies due to being a financial institution?
- ceejayoz 6y ago
  I can't really imagine a scenario where they're legally liable. Hospitals send six figure bills all the time to people without any legal repercussions.
- theincredulousk 6y ago
  They have several extra responsibilities: ensuring your trades are handled fairly, the price information you're provided is reasonably accurate, and reasonably ensuring that you are generally capable of understanding what you're doing and the risks involved. Ensuring you don't lose money, or overreact to numbers on a screen, are not among them. I feel terrible for the kid. Even though he should have been well aware of what to expect in this situation, it seems like common sense that RH (or any trading software) should have some UI indication when the balance shown is a partially settled trade. It is an accounting reality - yes for a bit his account is really -$700k - but even if you know that, opening the screen and seeing it without some caveat is like a prank. Got you! You're actually not bankrupt. Seems unnecessary.
  - _bxg1 6y ago
    > ensuring that you are generally capable of understanding what you're doing and the risks involved It seems to me that they blatantly failed at this responsibility in this case
    - theincredulousk 6y ago
      He had to answer a small questionnaire/set of affirmative responses to be able to trade these option strategies. If he lied on them that is not their responsibility anymore (unfortunately).
mmhsieh 6y ago
to avoid things like this, robinhood might be better off if it literally operated as a bucket shop. you take bets on stocks but don't actually buy or sell them.
- throwawaygh 6y ago
  Buying and selling stocks is not a big deal. Worst case you go to $0. It’s the options. Many brokers require you to jump through lots of hoops before trading options. And even then limit you to simple contracts first. Maybe rh should do the same,
  - swimfar 6y ago
    You do have to answer some questions and wait for approval before Robinhood will let you trade options. It's not available by default.
    - cromantic 6y ago
      I've done it, takes less than a minute and is akin to accepting a EULA (which of course no one reads). On the flip side, TD Ameritrade had me go through a somewhat lengthy process and required a 2,000 deposit. They even shipped me a technical booklet on options trading. I wouldn't be surprised if they shorten that process though. Robinhood spawned an entire generation of 18-35 year old high risk & low info options traders. Everyone else probably wants a piece of that.
  - mmhsieh 6y ago
    buying options is no big deal as well; the most you lose is your investment. when you sell options, either naked, covered, or in a spread, the rules are much more complex. should be left to expert marketmakers or full time prop traders. very bad idea for amateurs.
- gruez 6y ago
  Isn't that illegal? Or at least, makes them subject to a bunch of gambling regulations they wouldn't otherwise be subject to? https://en.wikipedia.org/wiki/Bucket_shop_(stock_market) https://en.wikipedia.org/wiki/Bucket_shop_(stock_market)
deleted 6y ago
[deleted]
threatofrain 6y ago
Recent big discussion: https://news.ycombinator.com/item?id=23523246 https://news.ycombinator.com/item?id=23523246
- dang 6y ago
  Also https://news.ycombinator.com/item?id=23523379 https://news.ycombinator.com/item?id=23523379
abellerose 6y ago
I'm unsure what to really make of this tragic incident. Does the social factors in the US make bankruptcy an extreme embarrassment? Should someone not even at the legal drinking age be able of gambling to such a debt. One thing I'm certain is the US needs better social programs for young adults. Everyday I think the current generation of young adults are being robbed by the ones in power because nothing has positively changed in the past decades. We instead have increase in rent, homes, cost of food, requirement of university becoming the norm with insane tuition costs and while wages have typically stayed motionless.
- rossdavidh 6y ago
  Probably there was something else going on. The current U.S. President has used bankruptcy for some of his companies, and this came up during the Republican primary season in 2016 when he and Carly Fiorina, one of the other Republican candidates, were both called failed businesspeople because they had both used bankruptcy. So I wouldn't say that the U.S. culture is particularly one of bankruptcy being an extreme embarrassment; we elected a President who has used bankruptcy. Now granted, occasionally HE says something that is an extreme embarrassment, but that's a whole different issue. I do wonder how suicide rates have been trending during the pandemic lockdown with social isolation and such. No idea if it was a factor here, but I wonder.
subsubzero 6y ago
Not really a fan of RH at all, used it for a few months and the interface seemed 'slick' but lacked detailed information I care about similar to schwab etc. I made one trade, then closed out the account. As for options I always felt like it was mostly gambling, serious long term investors should probably stay away unless they have a very detailed understanding of strike prices and all that goes into it. I would like to see a bit of training or a certification of understanding before anyone opens a margin account and starts trading options, as it seems irresponsible and scenarios like this will happen in the future.
superfrank 6y ago
For anyone who doesn't understand what happened, he didn't actually over 700k. He got assigned one side of a put spread which took his balance negative and it takes 24h to exercise the other side. As an analogy, imagine you owe friend A money (one side of the spread) and friend B owes you money (other side of the spread). Friend A calls and says pay me back, so you venmo them money, and then you call friend B and ask them to pay you back. Basically, he was caught in that period where the money to friend A left your account, but the money from friend B hadn't settled yet. While it's easy to be mad at Robinhood and blame bad UI, I think it's important to note, that every platform I've traded options on has displayed this situation in the exact same way. I've traded on Schwab in the past and currently use Robinhood and Tastyworks for options trading and all three have given me massive margin calls for this exact same situation that iron themselves out 24 hours later. While Robinhood is the platform in question here, this same thing would have happened almost anywhere else, so I have a hard time blaming Robinhood's UI. Additionally, the negative balance actually triggers the exercise of the second side of the spread, and there's nothing that says the second side of the spread needs to be exercised if his balance was still positive. Because of that, it's not possible (or doesn't make sense) to just say something like, "well if one side is exercised, just do the other right away". Maybe the UI could be improved, but unless a user fundamentally understands what is going on, you're more than likely going to run confusing situations. What I DO blame Robinhood is having pretty much no standard for who they give options trading to. It's been 7 or so years since I had to apply for options trading on Schwab, but the process was fairly in-depth to get anything beyond level 1 options trading (maybe things have changed). When I applied for options trading on Robinhood, it was a few clicks and I had level 3 trading permissions (the highest they allow) with almost no information being verified. Again, I'm sure Robinhood isn't alone in their lax policies around options account approval, but between the way they've built their platform to feel like a game, their targeting of younger investors, and the fact that /r/wallstreetbets talks about them constantly, they have become THE platform for investors who don't fully know what they are doing and they need to take extra precautions to protect their users from themselves.
flazzarino 6y ago
I remember the gate-keeping options questionnaire (SEC mandated?) from RH, comparing to E-Trade: * RH feels like accepting a TOS or a EULA; * E-Trade makes it that you are reporting net-worth and are willing to risk it. Can RH be held liable for misrepresenting the regulations? This might have been settled without any loss of life.
- drtillberg 6y ago
  The explanation in the article is reassuring and all that, but even still RH was allowing $700k+ margin on a $16k account. Maybe they feel the risk is low for covered-options writing-- and justifiably. However, last I checked (some time ago) a purely cash account would have required literally $700k+ to execute this trade. Because, you know, stuff happens.
brianzelip 6y ago
Recently saw my main checking account show a negative balance, with lots of red all over the calendar for the coming week, after logging in some time before 7am. It created a major sense of "OH SHIT", and took up a half hour of working and re-working out the ledger to come to my own conclusion that the web app was having some kind of problem. Logged in two hours later to confirm my math that everything was alright. So fucked up.
tathougies 6y ago
Okay look... it's really terrible and robinhood can improve their interface. However, this kid also probably had some kind of anxiety problem. Most people in this situation would panic, but most would not take their own life. We cannot expect companies (or anyone) to insulate us from the realities of life. The lesson of the story is ultimately that... if you can't handle the heat, please, for the love of everything good, don't enter the kitchen. Options are a gamble. Everyone knows that. It's written in every article on options trading.
isoskeles 6y ago
> The note found on his computer by his parents on June 12, 2020, asked a simple question. “How was a 20 year old with no income able to get assigned almost a million dollars worth of leverage?” Sounds like this guy wanted to kill himself regardless of any debts.
oarabbus_ 6y ago
Very tragic, but at the age of 20, it's not like you have much capital as it is - one would declare bankruptcy and continue onwards. It's not like Robinhood was going to send the mafia after his family if he didn't come up with the money.
reidjs 6y ago
Does anyone else think that in an awful way this story is incredible advertising for Robinhood? How many young people are going to read this story and think they can trade 730K on margin? If you’re already broke there isn’t much downside, but relatively unlimited upside.
- fullshark 6y ago
  I wonder if Robinhood lost any users really after their outages. I know they have a ton more cause of so many retail investors flooding the market but what really was the consequence of that even for them?
  - kumarm 6y ago
    In early days of twitter, they used to go down almost everyday and showed failed whale. Every day media covered news that twitter went down again and thus creating more publicity resulting in more users.
  - stu2b50 6y ago
    Nope, they gained a huge amount of users after the outage actually. It's why they managed to have an upround of funding in the middle of the pandemic. I guess some people were scared off, but way more people saw the news and had a "oh, so Robinhood exists, cool!" moment.
jsnider3 6y ago
What a senseless waste of life.
dcftoapv 6y ago
I love options trading, but I used to work for an options exchange. I don't write uncovered positions because I can't afford the tail risk. /r/wsb, on the other hand, loves tail risk, long or short. That subreddit needs to be shutdown by the SEC. It's serving as an investment advisor for a significant number of young people, whether it masquerades as satire or not.
- brockwhittaker 6y ago
  This is why we in theory have regulations preventing uninformed traders from using options, which RH has effectively skirted around. RH is taking the same advantage that Juul got – free marketing and a lot of young people abusing the product. Wondering if they'll get the same crackdown as well.
  - beervirus 6y ago
    > This is why we in theory have regulations preventing uninformed traders from using options Do we? It's not like you have to be an accredited investor to buy and sell options.
- mattbeckman 6y ago
  I don't frequent /r/wsb, but the onus should not be on the SEC to clamp down on a community, it should be on the service the "significant young people" are using to execute satirical investment advice. For example, if Robinhood wants to gamify everything, then advanced trading opportunities should be part of some built-in experience-based level up system. E.g. you can't trade options until you have made X classic trades, or after you've completed X days of simulated advanced trading.
  - filoleg 6y ago
    > advanced trading opportunities should be part of some built-in experience-based level up system It already is a thing on all brokerages, including RH. If you go into your portfolio in the app, there are different option trading levels (which is standardized across the industry), and you can get upgraded to the next level as you do trades over time. You cannot just jump to level 3 as soon as you install the app. While I cannot comment on how their algorithms for upgrade eligibility work, it already exists in the same shape and form as on all other brokerage services.
1e-9 6y ago
Very sad. The extraordinary push by firms such as Robinhood to encourage unprepared individuals to participate in day trading is a troubling development. They can call it "investing" all they want, but it is clear that unlimited commission-free trading without any meaningful vetting encourages uninformed day trading. The markets benefit from having a highly diverse set of entities, each with its own particular area of expertise that gets pooled together. The markets are damaged by high rates of uninformed trading, which only promote instability and general disfunction. More importantly, these traders have overwhelming odds of getting hurt. The only ones who benefit from such trading are 1) firms like Robinhood who get paid for their unsophisticated order flow, 2) market makers, and 3) informed entities pushing markets back towards efficiency. Speaking as one who benefits, I can say that we would all be better off as a society without this particular order flow. I think there should be a limit on the rate of commission-free trading until an individual can demonstrate a reasonable level of proficiency. A firm like Robinhood could do some good if they provided a great paper trading environment and tools that allowed users to evaluate expected profit and variance in particular strategies they want to pursue. Once a trader demonstrates profit beyond random noise, commission-free trades could be gradually increased. I think this would encourage people to learn how to provide services of real value to markets through their trading or else recognize they are unable to be profitable. Unfortunately, I doubt Robinhood would ever do this as it would significantly undermine their current business model.
alexandercrohde 6y ago
This is cherry-picked, emotional, and an anecdote. How about some happy stories of all the 20-year-olds who became millionaires from unregulated bitcoin trading to show the other side of the coin? I guess I have a rather libertarian view on this, that it's worse to outlaw the knife than for a fraction of knife users to accidentally cut themselves. That said, I'm entirely in support of more educational resources on the topic, but don't hold anybody accountable for that.
- warent 6y ago
  Do you really think that organizations which are equipped to provide educational resources on the topic (e.g. Robinhood) are going to do so out of the goodness of their hearts? No, someone must be held accountable for it to happen, and I wouldn't hold my breath delegating this responsibility to the public sector. Unregulated bitcoin trading is completely different from this situation. We're not talking about hucksters and gambling. Tons of kids look up to legitimate, wealthy people who say "investing is the best thing for your future" and the only way the young folk know how to do this is to get on Robinhood because of its marketing/branding/ease-of-use. How many more kids are going to try to take well-meaning advice recklessly due to lack of experience / unfinished brain development, and find themselves in a void of inescapable depression leading to suicide because nobody is being held accountable?
  - cheald 6y ago
    > Tons of kids look up to legitimate, wealthy people who say "investing is the best thing for your future" This is fair, but if you continue to listen to those same people, you'll hear them say "put your money in VTSAX and forget about it for 30 years", not "go trade options".
hcarvalhoalves 6y ago
Tragic, and worse due to the misunderstanding. Related: https://www.amazon.com/Set-Phasers-Stun-Design-Technology/dp/0963617885 https://www.amazon.com/Set-Phasers-Stun-Design-Technology/dp...
boto3 6y ago
This is sad. If the report is correct, Robinhood might be negligent here. I don't know if there's security law required, but Schwab has 4 levels of option tradings [0], and you'd need to apply and get approved. I've investing/trading for more than 10 years now, but they've only given level 0, and rejected my level 1 application. It seems this guy's trade is at level 2. [0] https://help.streetsmart.schwab.com/pro/4.36/Content/Option_Approval_Levels.htm https://help.streetsmart.schwab.com/pro/4.36/Content/Option_...
m3kw9 6y ago
If he sold it the next trading day he would have 1-2 thousand of losses. The amount that was Negative is the temporary Balance when the stock was sold because of the put contract he sold, so he was obligated to buy it at that strike price.

192 points by xoxoy 6y ago

Remember ~6 months ago, when RH had that little "glitch" that let traders access essentially unlimited leverage? Stuff like that is why RH is a meme, and options trading has become wallstreetbets favorite game. Its not like RH even makes it particularly easy to setup these kinds of trades, or has any useful tools that make it a better platform. If you want to setup a put spread, or an iron condor, or any other fancy options trading strategy on e-trade its a few clicks away. On RH? Not a chance, you're going to have to build those strategies yourself, one leg at a time. I still love gambling on RH, but you have to know its gambling before you start. I feel bad for this kid, getting caught up in the hype and throwing away his life over a few dollars that really never existed anyway.

rytill 6y ago
You can actually set up any of those strategies in a single trade with multi-option select if you know how how they are composed.
alexbanks 6y ago
The reason (probably only reason) RH is successful/popular is because of their $0 transaction fee. I wouldn't use it if I had to pay for anything.
- samfisher83 6y ago
  Pretty much all the big brokers are at 0 now.
  - alexbanks 6y ago
    I suppose it might be worth reexamining. Last time I used etrade it was a flat 10 dollar txn fee, which was absolutely ridiculous for people like me who just play around with funmoney. Robinhood was perfect for my needs.
    - basch 6y ago
      The mobile app is a true mobile first app, but other than the UX theres no reason to stick with RH over Schwab, Fidelity, Etrade, Merrill, Ally.
      - alexbanks 6y ago
        But, is there any value add to casual investors like myself vs. RH?
        basch 6y ago
        Depends what you consider value. Better customer support? Trust? Price improvement. A suite of more products. Being able to call and get any issue resolved immediately, with strikingly intelligent answers for customer service, and a customer first attitude, is priceless.
  - shmoogy 6y ago
    Not for options, I think it's only Robinhood, tastyworks, and webull.
- high_derivative 6y ago
  I never understand why people are _so_ desperate to save a few bucks when risking their life savings versus using a professional tool if they desire to trade options (say, interactive brokers). You save fees and then get screwed when Robinhood is down on expiration day.
  - Sohcahtoa82 6y ago
    For someone like me who's only tossing $2,000 into stocks to play around with, having zero fees is the #1 selling point, otherwise, the fees add up to a significant fraction.
  - alexbanks 6y ago
    I was speaking less about options trading and more about general adoption. I've never done options trading, just small-ish buys and sells. My experience with e-trade was a flat 10 dollar txn fee, which was totally unreasonable for the amount of money I was investing.
  - toast0 6y ago
    If you're trading in small amounts, the comissions add up pretty quickly, a $10 comission on a $1000 purchase of stock ends up being 2% of the price, considering you have to pay to buy and to sell. That's way better than a $30 comission from the before times, but it's still big. That said, we can all thank RobinHood for driving comissions down to zero, and then do business at brokerages that work. I personally wouldn't trade at IB, because I only do a tiny amount of trading, and don't want to go into the rabbit hole of individually routing my orders; it's great that it's available, but I don't need that, nor do I want an API or stuff.
- rexreed 6y ago
  Schwab, TD Ameritrade, and Fidelity all now offer commission-free trading
johnbellone 6y ago
When you are trading options on some of the more popular underlying, e.g. weekly expirys, there are strategies such as iron condor, credit spreads, strangles, straddles, etc. This doesn't seem to appear on the web application and only the mobile.
- CameronNemo 6y ago
  It's weird how much functionality is missing from the web client. I could not even find my account and routing number, I had to use the mobile application.
  - mywittyname 6y ago
    Lots of companies are moving away from full featured web clients. I think Venmo recently removed the ability to send money -- you know, the entire purpose of Venmo -- from the web client.

chrisco255 6y ago

This is really tragic. For one, he never ended up that much in the hole and two, even if one finds themselves bankrupt at 20, it's not the end of the world, you simply file bankruptcy and it's difficult to borrow money for the better part of a decade...but other than that your life goes on as normal. I opened a business at a young age and was bankrupt by the time I was 24. It was sad and painful, but it is far from tragedy or hopelessness.

seph-reed 6y ago
Depression is a serious problem these days. I imagine this was just the last straw. But if not... that would also really suck.
- skinnymuch 6y ago
  The last straw even if they knew the loss was how much they put in too? For now, we don’t know if the person knew they weren’t that much in the hole or relatively speaking, how benign a huge debt would be at a young age without dependents.
skinnymuch 6y ago
Is it that difficult even after 5 years if you’re making a solid income etc? I’ve heard differing tales. On one hand it sucks for close to or about 7 years. On the other, you can start to get back to being normal after close to 5 years or so. My memory remembers something like it’s not the same, but likely better than someone with a 5XX credit score.
- selectodude 6y ago
  Generally you can start getting credit pretty quickly in the form of secured credit cards. You’re going to pay a pretty high interest rate on things like cars but after a few years, the fact that you can’t file for bankruptcy again for seven years overrides the fact that you filed for bankruptcy.
autokad 6y ago

protomyth 6y ago

Kearns may not have realized that his negative cash balance displaying on his Robinhood homescreen was only temporary and would be corrected once the underlying stock was credited to his account. Indeed it’s not uncommon for cash and buying power to display negative after the first half of options are processed but before the second options are exercised—even if the portfolio remains positive. “Tragically, I don’t even think he made that big of a mistake. This is an interface issue, they have slick interfaces. Confetti popping everywhere,” says Brewster referring to the shower of colorful confetti Robinhood routinely deploys after customers make trades. “They try to gamify trading and couch it as investment.” Am I reading this correctly and he really wasn't in the hole badly, but a crappy presentation of information broke him? Firstly, if someone reading this is in the same situation, take a breath and know this is not Student Loans, you are young and bankruptcy is about as bad as its going to get. If you are the interface designer, well, I don't know what to say to you other that sort your damn self out. Its your job not only to convey the truth, but show what the final result is approximately going to be. Conveying just the current facts is as misleading as outright lying.

deleted 6y ago
[deleted]
birdyrooster 6y ago
Yes, he could only lose as much as he bought for the contract price. I don't see how someone's cash balance should ever be affected by the strike price of an unexecuted contract. Can someone correct me?
- bmh100 6y ago
  It's just a weird thing that some online brokers seem to do. I once had exercised contracts for 200 shares put me "in debt" for $4mm. Then the shares settled, and everything in my account went back to normal.
- greatjack613 6y ago
  correct, unless he bought on margin, which should have triggered a margin call when he was unable to cover his position, but still unclear.

orthecreedence 6y ago

Poor kid. Even if the ending balance was -730K he could declare bankruptcy. Most college kids don't have a lot of assets so it's not like starting from 0 will set him back 10 years, although maybe his situation was different. Either way, this is really unfortunate. The way we treat debt, especially in regard to our younger population, is kind of despicable. But hey, whatever keeps the wheels turning, right?

jbverschoor 6y ago
Most people on RH are fully aware what they're doing. Even filing for bankruptcy in such a case seems unfair to me. Why would you allow someone to gamble for almost 1m? It's the same logic that if an underage kid shouldn't go to jail if he kills someone.
- stu2b50 6y ago
  To be fair, they wouldn't allow a random kid to be that leveraged. This was because he had an options spread. His long options would cover most of the 770k... It just doesn't show immediately. Not sure if that makes it better or worse
- orthecreedence 6y ago
  > Even filing for bankruptcy in such a case seems unfair to me I have a debt, I cannot pay the debt. What do you suggest as an alternative to bankruptcy? Indentured servitude? > Why would you allow someone to gamble for almost 1m? My point exactly. The lender is responsible for lending to people who can make good on their bets. > It's the same logic that if an underage kid shouldn't go to jail if he kills someone. I think it's more about finding a sweet spot between lender/borrower responsibility. If you're giving some kid who's day trading after watching a few youtube videos $1M, you're irresponsible and deserve to lose your $1M. The system shouldn't protect these people. I would apply the same logic and processes to student loans as well.
  - derision 6y ago
    > I have a debt, I cannot pay the debt. What do you suggest as an alternative to bankruptcy? Indentured servitude? wage garnishment. take some $ from each paycheck automatically deducted from payroll. i believe credit card companies and other debtors can do this

gooseus 6y ago

> In fact a screenshot from Kearns’ mobile phone reveals that while his account had a negative $730,165 cash balance displayed in red, it may not have represented uncollateralized indebtedness at all, but rather his temporary balance until the stocks underlying his assigned options actually settled to his account. This makes it even more sad, better UI could have saved a life. Putting a notification with a link to call the National Suicide Prevention Lifeline on an account that moves that far and fast into the red might not be a bad addition either.

vorpalhex 6y ago
That's a bit like saying "People in your situation often commit suicide. Would you like me to dial the Suicide Prevention Lifeline for you?" isn't it? You risk causing it by suggesting it when it may have never entered the persons mind to begin with.
- ceejayoz 6y ago
  That's a harmful myth. https://www.bbc.com/future/article/20140112-is-it-bad-to-talk-about-suicide https://www.bbc.com/future/article/20140112-is-it-bad-to-tal... https://www.nami.org/Blogs/NAMI-Blog/September-2018/5-Common-Myths-About-Suicide-Debunked https://www.nami.org/Blogs/NAMI-Blog/September-2018/5-Common...
  - boomboomsubban 6y ago
    I would view this kind of notification as different than discussing suicide. You presumably just encountered something very shocking, and are likely considering what options are available to you. There's no real need to mention suicide in the notification, "feeling distressed? Call" would work fine.
  - vorpalhex 6y ago
    The BBC itself offers conflicting accounts: https://www.bbc.com/news/entertainment-arts-49001246 https://www.bbc.com/news/entertainment-arts-49001246 https://www.bbc.com/news/entertainment-arts-44170473 https://www.bbc.com/news/entertainment-arts-44170473

twostorytower 6y ago

awinder 6y ago
It’s probably a little weirder than that, because what (seems to / likely may have) happened wasn’t even a loss, just a state in the clearing of 2 options. So what if you thought your life savings vanished but they really hadn’t? I’m not even positing an answer but what a horrible incident.
electricviolet 6y ago
I don't think it's fair to say this "definitely" isn't Robinhood's fault. They deliberately market to beginning traders and make these kinds of complex trades available to them. If they're going to do that, they need to make the interface crystal clear even to someone who doesn't know what they're doing.
jrumbut 6y ago
If he had gambled and lost $700+k then I'm kind of with you, but he hadn't. When it all shook out he might have secured a small profit or taken a loss proportional to his original stake ($16k). It's showing the life changing loss without giving the user sufficient context or insight into what's happening that's the problem.
Agathos 6y ago
A casino is a funny comparison here. I doubt Robinhood wants to be regulated the way casinos are. Casinos in most jurisdictions are mandated to take at least minimal steps to address the risks of problem gambling. For example, posting hotline numbers to help problem gamblers, training employees to spot problem gamblers, and in some cases even banning known problem gamblers. If a casino was found to be doing none of those things, when a suicide occurred, I suspect it would be in deep trouble.

floatingatoll 6y ago

US casinos post signs warning about gambling addiction and and post phone numbers for 24/7 help lines. Does this ethical obligation exist for trading apps as well?

tathougies 6y ago
> All investments involve risks, including the possible loss of capital. From the robinhood website.

_bxg1 6y ago

Robinhood has had a lot of screwups lately. At what point are they legally liable? Are they not held to a higher standard of accountability than normal tech companies due to being a financial institution?

ceejayoz 6y ago
I can't really imagine a scenario where they're legally liable. Hospitals send six figure bills all the time to people without any legal repercussions.
theincredulousk 6y ago
They have several extra responsibilities: ensuring your trades are handled fairly, the price information you're provided is reasonably accurate, and reasonably ensuring that you are generally capable of understanding what you're doing and the risks involved. Ensuring you don't lose money, or overreact to numbers on a screen, are not among them. I feel terrible for the kid. Even though he should have been well aware of what to expect in this situation, it seems like common sense that RH (or any trading software) should have some UI indication when the balance shown is a partially settled trade. It is an accounting reality - yes for a bit his account is really -$700k - but even if you know that, opening the screen and seeing it without some caveat is like a prank. Got you! You're actually not bankrupt. Seems unnecessary.
- _bxg1 6y ago
  > ensuring that you are generally capable of understanding what you're doing and the risks involved It seems to me that they blatantly failed at this responsibility in this case
  - theincredulousk 6y ago
    He had to answer a small questionnaire/set of affirmative responses to be able to trade these option strategies. If he lied on them that is not their responsibility anymore (unfortunately).

mmhsieh 6y ago

to avoid things like this, robinhood might be better off if it literally operated as a bucket shop. you take bets on stocks but don't actually buy or sell them.

throwawaygh 6y ago
Buying and selling stocks is not a big deal. Worst case you go to $0. It’s the options. Many brokers require you to jump through lots of hoops before trading options. And even then limit you to simple contracts first. Maybe rh should do the same,
- swimfar 6y ago
  You do have to answer some questions and wait for approval before Robinhood will let you trade options. It's not available by default.
  - cromantic 6y ago
    I've done it, takes less than a minute and is akin to accepting a EULA (which of course no one reads). On the flip side, TD Ameritrade had me go through a somewhat lengthy process and required a 2,000 deposit. They even shipped me a technical booklet on options trading. I wouldn't be surprised if they shorten that process though. Robinhood spawned an entire generation of 18-35 year old high risk & low info options traders. Everyone else probably wants a piece of that.
- mmhsieh 6y ago
  buying options is no big deal as well; the most you lose is your investment. when you sell options, either naked, covered, or in a spread, the rules are much more complex. should be left to expert marketmakers or full time prop traders. very bad idea for amateurs.
gruez 6y ago
Isn't that illegal? Or at least, makes them subject to a bunch of gambling regulations they wouldn't otherwise be subject to? https://en.wikipedia.org/wiki/Bucket_shop_(stock_market) https://en.wikipedia.org/wiki/Bucket_shop_(stock_market)

deleted 6y ago

[deleted]

threatofrain 6y ago

Recent big discussion: https://news.ycombinator.com/item?id=23523246 https://news.ycombinator.com/item?id=23523246

dang 6y ago
Also https://news.ycombinator.com/item?id=23523379 https://news.ycombinator.com/item?id=23523379

abellerose 6y ago

I'm unsure what to really make of this tragic incident. Does the social factors in the US make bankruptcy an extreme embarrassment? Should someone not even at the legal drinking age be able of gambling to such a debt. One thing I'm certain is the US needs better social programs for young adults. Everyday I think the current generation of young adults are being robbed by the ones in power because nothing has positively changed in the past decades. We instead have increase in rent, homes, cost of food, requirement of university becoming the norm with insane tuition costs and while wages have typically stayed motionless.

rossdavidh 6y ago
Probably there was something else going on. The current U.S. President has used bankruptcy for some of his companies, and this came up during the Republican primary season in 2016 when he and Carly Fiorina, one of the other Republican candidates, were both called failed businesspeople because they had both used bankruptcy. So I wouldn't say that the U.S. culture is particularly one of bankruptcy being an extreme embarrassment; we elected a President who has used bankruptcy. Now granted, occasionally HE says something that is an extreme embarrassment, but that's a whole different issue. I do wonder how suicide rates have been trending during the pandemic lockdown with social isolation and such. No idea if it was a factor here, but I wonder.

subsubzero 6y ago

Not really a fan of RH at all, used it for a few months and the interface seemed 'slick' but lacked detailed information I care about similar to schwab etc. I made one trade, then closed out the account. As for options I always felt like it was mostly gambling, serious long term investors should probably stay away unless they have a very detailed understanding of strike prices and all that goes into it. I would like to see a bit of training or a certification of understanding before anyone opens a margin account and starts trading options, as it seems irresponsible and scenarios like this will happen in the future.

superfrank 6y ago

For anyone who doesn't understand what happened, he didn't actually over 700k. He got assigned one side of a put spread which took his balance negative and it takes 24h to exercise the other side. As an analogy, imagine you owe friend A money (one side of the spread) and friend B owes you money (other side of the spread). Friend A calls and says pay me back, so you venmo them money, and then you call friend B and ask them to pay you back. Basically, he was caught in that period where the money to friend A left your account, but the money from friend B hadn't settled yet. While it's easy to be mad at Robinhood and blame bad UI, I think it's important to note, that every platform I've traded options on has displayed this situation in the exact same way. I've traded on Schwab in the past and currently use Robinhood and Tastyworks for options trading and all three have given me massive margin calls for this exact same situation that iron themselves out 24 hours later. While Robinhood is the platform in question here, this same thing would have happened almost anywhere else, so I have a hard time blaming Robinhood's UI. Additionally, the negative balance actually triggers the exercise of the second side of the spread, and there's nothing that says the second side of the spread needs to be exercised if his balance was still positive. Because of that, it's not possible (or doesn't make sense) to just say something like, "well if one side is exercised, just do the other right away". Maybe the UI could be improved, but unless a user fundamentally understands what is going on, you're more than likely going to run confusing situations. What I DO blame Robinhood is having pretty much no standard for who they give options trading to. It's been 7 or so years since I had to apply for options trading on Schwab, but the process was fairly in-depth to get anything beyond level 1 options trading (maybe things have changed). When I applied for options trading on Robinhood, it was a few clicks and I had level 3 trading permissions (the highest they allow) with almost no information being verified. Again, I'm sure Robinhood isn't alone in their lax policies around options account approval, but between the way they've built their platform to feel like a game, their targeting of younger investors, and the fact that /r/wallstreetbets talks about them constantly, they have become THE platform for investors who don't fully know what they are doing and they need to take extra precautions to protect their users from themselves.

flazzarino 6y ago

I remember the gate-keeping options questionnaire (SEC mandated?) from RH, comparing to E-Trade: * RH feels like accepting a TOS or a EULA; * E-Trade makes it that you are reporting net-worth and are willing to risk it. Can RH be held liable for misrepresenting the regulations? This might have been settled without any loss of life.

drtillberg 6y ago
The explanation in the article is reassuring and all that, but even still RH was allowing $700k+ margin on a $16k account. Maybe they feel the risk is low for covered-options writing-- and justifiably. However, last I checked (some time ago) a purely cash account would have required literally $700k+ to execute this trade. Because, you know, stuff happens.

brianzelip 6y ago

Recently saw my main checking account show a negative balance, with lots of red all over the calendar for the coming week, after logging in some time before 7am. It created a major sense of "OH SHIT", and took up a half hour of working and re-working out the ledger to come to my own conclusion that the web app was having some kind of problem. Logged in two hours later to confirm my math that everything was alright. So fucked up.

tathougies 6y ago

Okay look... it's really terrible and robinhood can improve their interface. However, this kid also probably had some kind of anxiety problem. Most people in this situation would panic, but most would not take their own life. We cannot expect companies (or anyone) to insulate us from the realities of life. The lesson of the story is ultimately that... if you can't handle the heat, please, for the love of everything good, don't enter the kitchen. Options are a gamble. Everyone knows that. It's written in every article on options trading.

isoskeles 6y ago

> The note found on his computer by his parents on June 12, 2020, asked a simple question. “How was a 20 year old with no income able to get assigned almost a million dollars worth of leverage?” Sounds like this guy wanted to kill himself regardless of any debts.

oarabbus_ 6y ago

Very tragic, but at the age of 20, it's not like you have much capital as it is - one would declare bankruptcy and continue onwards. It's not like Robinhood was going to send the mafia after his family if he didn't come up with the money.

reidjs 6y ago

Does anyone else think that in an awful way this story is incredible advertising for Robinhood? How many young people are going to read this story and think they can trade 730K on margin? If you’re already broke there isn’t much downside, but relatively unlimited upside.

fullshark 6y ago
I wonder if Robinhood lost any users really after their outages. I know they have a ton more cause of so many retail investors flooding the market but what really was the consequence of that even for them?
- kumarm 6y ago
  In early days of twitter, they used to go down almost everyday and showed failed whale. Every day media covered news that twitter went down again and thus creating more publicity resulting in more users.
- stu2b50 6y ago
  Nope, they gained a huge amount of users after the outage actually. It's why they managed to have an upround of funding in the middle of the pandemic. I guess some people were scared off, but way more people saw the news and had a "oh, so Robinhood exists, cool!" moment.

jsnider3 6y ago

What a senseless waste of life.

dcftoapv 6y ago

I love options trading, but I used to work for an options exchange. I don't write uncovered positions because I can't afford the tail risk. /r/wsb, on the other hand, loves tail risk, long or short. That subreddit needs to be shutdown by the SEC. It's serving as an investment advisor for a significant number of young people, whether it masquerades as satire or not.

brockwhittaker 6y ago
This is why we in theory have regulations preventing uninformed traders from using options, which RH has effectively skirted around. RH is taking the same advantage that Juul got – free marketing and a lot of young people abusing the product. Wondering if they'll get the same crackdown as well.
- beervirus 6y ago
  > This is why we in theory have regulations preventing uninformed traders from using options Do we? It's not like you have to be an accredited investor to buy and sell options.
mattbeckman 6y ago
I don't frequent /r/wsb, but the onus should not be on the SEC to clamp down on a community, it should be on the service the "significant young people" are using to execute satirical investment advice. For example, if Robinhood wants to gamify everything, then advanced trading opportunities should be part of some built-in experience-based level up system. E.g. you can't trade options until you have made X classic trades, or after you've completed X days of simulated advanced trading.
- filoleg 6y ago
  > advanced trading opportunities should be part of some built-in experience-based level up system It already is a thing on all brokerages, including RH. If you go into your portfolio in the app, there are different option trading levels (which is standardized across the industry), and you can get upgraded to the next level as you do trades over time. You cannot just jump to level 3 as soon as you install the app. While I cannot comment on how their algorithms for upgrade eligibility work, it already exists in the same shape and form as on all other brokerage services.

1e-9 6y ago

Very sad. The extraordinary push by firms such as Robinhood to encourage unprepared individuals to participate in day trading is a troubling development. They can call it "investing" all they want, but it is clear that unlimited commission-free trading without any meaningful vetting encourages uninformed day trading. The markets benefit from having a highly diverse set of entities, each with its own particular area of expertise that gets pooled together. The markets are damaged by high rates of uninformed trading, which only promote instability and general disfunction. More importantly, these traders have overwhelming odds of getting hurt. The only ones who benefit from such trading are 1) firms like Robinhood who get paid for their unsophisticated order flow, 2) market makers, and 3) informed entities pushing markets back towards efficiency. Speaking as one who benefits, I can say that we would all be better off as a society without this particular order flow. I think there should be a limit on the rate of commission-free trading until an individual can demonstrate a reasonable level of proficiency. A firm like Robinhood could do some good if they provided a great paper trading environment and tools that allowed users to evaluate expected profit and variance in particular strategies they want to pursue. Once a trader demonstrates profit beyond random noise, commission-free trades could be gradually increased. I think this would encourage people to learn how to provide services of real value to markets through their trading or else recognize they are unable to be profitable. Unfortunately, I doubt Robinhood would ever do this as it would significantly undermine their current business model.

alexandercrohde 6y ago

This is cherry-picked, emotional, and an anecdote. How about some happy stories of all the 20-year-olds who became millionaires from unregulated bitcoin trading to show the other side of the coin? I guess I have a rather libertarian view on this, that it's worse to outlaw the knife than for a fraction of knife users to accidentally cut themselves. That said, I'm entirely in support of more educational resources on the topic, but don't hold anybody accountable for that.

warent 6y ago
Do you really think that organizations which are equipped to provide educational resources on the topic (e.g. Robinhood) are going to do so out of the goodness of their hearts? No, someone must be held accountable for it to happen, and I wouldn't hold my breath delegating this responsibility to the public sector. Unregulated bitcoin trading is completely different from this situation. We're not talking about hucksters and gambling. Tons of kids look up to legitimate, wealthy people who say "investing is the best thing for your future" and the only way the young folk know how to do this is to get on Robinhood because of its marketing/branding/ease-of-use. How many more kids are going to try to take well-meaning advice recklessly due to lack of experience / unfinished brain development, and find themselves in a void of inescapable depression leading to suicide because nobody is being held accountable?
- cheald 6y ago
  > Tons of kids look up to legitimate, wealthy people who say "investing is the best thing for your future" This is fair, but if you continue to listen to those same people, you'll hear them say "put your money in VTSAX and forget about it for 30 years", not "go trade options".

hcarvalhoalves 6y ago

Tragic, and worse due to the misunderstanding. Related: https://www.amazon.com/Set-Phasers-Stun-Design-Technology/dp/0963617885 https://www.amazon.com/Set-Phasers-Stun-Design-Technology/dp...

boto3 6y ago

This is sad. If the report is correct, Robinhood might be negligent here. I don't know if there's security law required, but Schwab has 4 levels of option tradings [0], and you'd need to apply and get approved. I've investing/trading for more than 10 years now, but they've only given level 0, and rejected my level 1 application. It seems this guy's trade is at level 2. [0] https://help.streetsmart.schwab.com/pro/4.36/Content/Option_Approval_Levels.htm https://help.streetsmart.schwab.com/pro/4.36/Content/Option_...

m3kw9 6y ago

If he sold it the next trading day he would have 1-2 thousand of losses. The amount that was Negative is the temporary Balance when the stock was sold because of the put contract he sold, so he was obligated to buy it at that strike price.