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Someone else can probably answer if Robinhood allows you to sell options short, but if you do, you can lose more than your initial purchase/deposit if the price
by marvin 6y ago
Someone else can probably answer if Robinhood allows you to sell options short, but if you do, you can lose more than your initial purchase/deposit if the price moves faster than Robinhood can forcibly liquidate your position.
You would almost expect this to happen occasionally, if you’re not super careful, due to the massive volatility of options.
Being short out-of-the-money call options will expose you to a ridiculous downside if the stock makes an unexpected upwards move. Easily 10x-100x your deposit.
- dogma1138 6y agoThat can happen on quite a few other platform in theory but not in practice basically the platforms assume the risk in that case I remember that form the good ole days of online FX options and binary option trading in the late 2000’s. Basically you always had forced liquidation or some sort of a hedge on the opposite leg that made sure you couldn’t lose more than the leveraged amount you’ve bet on.