Does anyone know the actual position? From what I gather it was 3 contracts AMZN Credit Put Spread. How many strikes apart? He killed himself on June 12 - and from June 10 to June 12 AMZN dropped $100. June 12 was a Friday - I assume his trade was the June12 options. On reddit people have speculated the Robinhood trading platform showed only the potential loss of the short puts - and did not take into account the long puts or the fact it was a spread.
https://www.cnbc.com/2020/06/19/rob...rading-in-the-wake-of-a-customer-suicide.html Robinhood increases guardrails on options trading in the wake of a customer suicide Published Fri, Jun 19 20204:42 PM EDT Updated Fri, Jun 19 20205:47 PM EDT Kate Rooney@Kr00ney Key Points Robinhood is making multiple changes to its platform, including making it more difficult to access to its options offering, in the wake of a customer’s death last week. On Friday, 20-year old Alex Kearns, a Robinhood customer, died by suicide and in a note to his family, cited $730,000 losses on the trading platform. “It is not lost upon us that our company and our service have become synonymous with retail investing in America, and that this has led to millions of new investors making their first investments through Robinhood,” the CEOs say. Robinhood is making it more difficult to get access to its options offering in the wake of a customer’s suicide last week. In a blog post Friday, Robinhood’s co-CEOs outlined multiple changes to the free-trading app. Robinhood will increase eligibility requirements, and “consider additional criteria” for customers for level three options authorization “to help ensure customers understand more sophisticated options trading.” The company will also change its user interface. Robinhood said it would roll out improvements to in-app messages and emails associated with options spreads, and add more educational content related to that type of trading. “Over the past week, our team at Robinhood has been focused on identifying how we can improve Robinhood’s customer experience, specifically around our option flows involving multi-leg exercise and assignment,” Robinhood’s co-CEOs Vlad Tenev and Baiju Bhatt said in a blog post. “We are personally devastated by this tragedy.” Last Friday, 20-year old Alex Kearns, a Robinhood customer, died by suicide and in a note to his family, cited $730,000 losses on the trading platform. Alex, a sophomore at University of Nebraska at Lincoln, was studying management and had a growing interest in financial markets, according to his family. In the note to his family seen by CNBC, Alex accused Robinhood of allowing him to pile on too much risk. He claimed the puts he bought, and the shares sold “should have cancelled out” but in hindsight, he said he had “no clue” what he was doing. But Alex may have misunderstood the Robinhood financial statement, according to a relative. The $730,000 amount could have been reflecting the other side of an options trade not settled yet and the value of stocks tied to those options. The free-trading app he was using has become a popular entry point to the stock market for first-time investors. Robinhood has grown from 1 million users in 2016, to 10 million at the start of this year, with a loyal following on social media. “It is not lost upon us that our company and our service have become synonymous with retail investing in America, and that this has led to millions of new investors making their first investments through Robinhood,” the CEOs said. “We recognize this profound responsibility, and we don’t take it lightly. Our aspiration is to innovate, lead, and go beyond the status quo.” The company is also making a $250,000 donation to the American Foundation for Suicide Prevention.
They can not afford the bad publicity and glad to see they have a profound responsibility. What they were doing was no different than vaping companies marketing their vaping products with clever candy colour names near the candy / junk food aisles. wrbtrader
Very sad, sad that this young man may not have known what the numbers were referring to! 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 into his account. Taken from: https://www.forbes.com/sites/sergei...eeing-a-730000-negative-balance/#1b0f111f5928
Perhaps they need to have a policy in place that flags young people, to have them take mandatory training / awareness of what it is people under a certain age i.e. 21, only upon completion, they are allowed to trade. Do younger people need to have parental approval to trade using this app? Very nice of the donation... ya think they can afford this? lol
Robinhood’s business model is to offer free trading and make it super accessible. The devil’s in the details. The trades are commission-free because they are selling order flow to Wall Street - who in turn are going to make said Robinhood customers pay to get into and out of the market. There is no free lunch. You can offer a free trading App if the design was an afterthought. I’m sure it’s a very clever feeling to be able to fast track a trading platform front end phone App without all of the design engineering and position management considerations that a Trading Technologies or CQG spent millions on developing. And all the tech blogs and techie websites rate it five stars because paid influencers are pushing it like any other Silicon Valley startup. Because it’s free and you can trade on it without commissions. As if any of them knew WTF they were talking about when it came to trading.
Yeah right. 3/4's of these f'r's here would have called him stupid and belittled him beyond belief. That's a fact.
Well, here's the big question... Does anyone know the details of his, what was it, a credit spread, and how it would have looked on his screen the next day? How much in the hole would he have been? From most comments here, it would have been peanuts compared to the screen-cap we've all seen, -$700K+