Robinhood suicide story -- My educated guess on the trade

Discussion in 'Options' started by OptionsOptionsOptions, Jun 28, 2020.

  1. Robinhood suicide story -- My educated guess on the trade

    • As far as I know the actual trade hasn't been revealed, but some details are out.
    • So based on those details I would like to take an educated guess on the trade.
    • I am guessing on the strikes, but I think they are close.

    Account: $16,000
    Trade: AMZN OTM credit put spread

    Wednesday June 10, 2020
    • AMZN at $2,650
    • Sell 3 contracts June12 2,590 puts
    • Buy 3 contracts June12 2,585 puts
    • Credit about $500
    • Maximum loss $1000, maximum profit $500

    Thursday June 11, 2020
    • AMZN drops $90 to $2,560
    • The credit put spread is now ITM
    • No big deal as the maximum loss is only $1000

    Now this is how the trade went downhill.
    • The short puts where exercised early on Thursday June 11, 2020 and 300 AMZN shares were put to his account at $2,590 each.
    • 300 x $2,590 = $777,000
    • $777,000 - margin available = $730,000
    • His account shows a buying power of -$730,000 but does not show the long 300 AMZN shares or the long 2585 puts.
    • He then killed himself later that day.

    Friday June 12, 2020
    • AMZN opens at $2,600
    • The 300 AMZN shares are liquidated at $2,600
    • $2,600 x 300 = $780,000
    • $780,000 - $777,000 = $3,000 profit.
    • Still long the AMZN June12 $2,585 puts. Daily range from $1.00 to $80.00. Expired at $40.00.

    His account most likely was at a huge profit on Friday.
    Matt_ORATS, zenlot, Onra and 6 others like this.
  2. Overnight


    We'll never know the truth of this, unless the family comes out with the details.
  3. southall


  4. maxinger


    Seems like he did not comprehend all these mathematics and what would happen during expiration.
  5. JSOP


    Good guess and analysis. Let's just hope that his spread was not too large in that his long puts were also ITM otherwise he might still be on the hook for that -ve cash balance. And it's a little strange that he didn't get assigned on his long puts at the same time if they were also ITM. Both of the legs of my vertical spreads that I ever do with TOS were always settled exactly at the same time and I always end up with just net figure never with just one leg settled and not the other. I read from Forbes that the -ve cash balance could've been the result of an early assignment (which usually never happens with puts) of options that weren't really expiring on June 12. If that's the case then to offset the -ve cash balance which would exceed how much he had in his account, he would have to exercise his long puts as well. And if the underlying was indeed AMZN, his estate executor would need to exercise soon before the long puts expire and when AMZN is going up right now. I hope his estate executor realizes this.

    Yes if the underlying was indeed AMZN and provided his puts haven't expired, his account is possibly sitting on huge profit right now, a small comfort to his parents who have just lost their son of 20 years. :(
  6. Golden Gate Bridge used to be a suicide magnet. a lot of people didn't survive the jump, but there was one guy who survived. his name is Kevin Hines. These were his thoughts after the jump: "There was a millisecond of free fall. In that instant, I thought, what have I just done? I don't want to die. God, please save me." ... (there was a documentary on PBS featured people who killed themselves by suicide and survived, they all expressed regret of the decision (one's life shouldn't be ended by a decision of moment).
    VPhantom likes this.
  7. Pekelo


    In other unrelated news on the same day hundreds died of COVID, car accidents etc. not due to their not understanding math.

    Let's move on...
  8. zdreg


    Both remarks are false
    .You made my day. I won the bet that you would post complete nonsense on this new thread.
    You are an expert on estate law and options par excellence.
    If the executor of his will reads this thread he will contact you and thank you for your advice.
    Last edited: Jun 29, 2020
  9. d0rian


    You don't "get assigned" on long positions. You exercise them, and you choose the timing of when to do so. You don't get a say in when you get assigned on a short position, and sometimes it happens before the expiration date, which was part of the theory/explanation in OP.
  10. JSOP


    Nope OCC rule. Unless with specific instructions, any long option that is at least 1 cent ITM is automatically exercised and thus assigned. With him, I don't think he gave a specific "no exercise" instruction.
    #10     Jul 1, 2020