This one is kinda funny because it's so absurd, and also anyone with 32k to invest in the first place can't be doing that badly. However, it's fucked up how gambling on your phone, sports and crypto as well as stocks, has just been completely normalized over the last couple of years.
This also might be a glitch (the number looks suspiciously close to the 32 bit max). But in that case it's fucked up how people's live are so controlled by completely unaccountable tech companies who don't provide support unless you're a corporate customer with millions of dollars in monthly spending.
They aren't investing, they are trying to win the lottery by buying very risky tickets.
The only reason it's that high is that they need to sell their long shares. They'll still lose money but not $4M. Right now they're on the hook because an options contract is for 100 shares. They bought SPY options (S&P 500 index fund) which is around $400. Sounds like they bought around 100 contracts. The rest is the $10k they added to cover their loss and the odd dollar amount of the stock price.
When your options expire or become worth very little, the broker will exercise the contract on your behalf. If you buy 100 puts (short/sell/bet that it'll go down) and the stock goes up too much, they'll make you buy 100 shares per contract. That's what a margin call is. The person bought a bunch of options on margin, RH doesn't want to be on the hook for it (no broker would) and so they made the person buy the actual shares. If they sell at opening, that'll set them right. Well, as right as they can be. They'll still lose thousands.
Nobody starting out should touch options. They are dangerous. RH is predatory about them. They are very lax in their requirements for trading and will give you margin when they shouldn't. This is because RH makes money when you blow up your account. I wouldn't be surprised if we find out a lot of the meme stock craze was guerilla marketing by these shady fintech companies to drive users.
If you invest thirty flobits in to a package deal of a hand chosen market basket of charmions and then invert the dynamic Merovingian portfolio you can redress a number of turbo-regressive sublingual distension properties and double or even triple your hydrodynamic flow!
It's also why naked shorts is freaking dangerous compared to just buying a straight put from someone to sell (yes you increase your profit possibility with a naked put but also you have high loss risk as well).
The amount of times I've seen something containing all of the below
-"I need help, need 6 or 7 figure amount now"
-"iron condor" and the classic
-"on margin"
is remarkable. So many idiots that are just like 'I'm built different' and then proceed to lose their life savings and then some on glorified gambling by fucking around with insanely high variance positions using borrowed money
The stock market is made entirely of fairy dust and cobwebs. Completely imaginary.
Doesn’t mean it can’t hurt you.
Investing in companies you think will succeed makes sense.
If you have the recources to do it: don't. Invest it in index funds. It's less sexy, but it won't drag you down.
You'll be beheaded after the revolution in both instances, offcourse, but your life beforehand will be better.
Just put it in a money market account with your credit union. The one I go to returns 3% per year plus dividends. And it's accessible at any time with no fees.
even investing in companies you think will succeed is still gambling. All the careful research in the world can't account for a sudden disaster.
I'd argue that if anything short selling is the safer bet in the long run because of the tendency of the rate of profit to fall.. Why bet on the success of startups when you can bet on the inevitable failure of overhyped bubbles? I don't do either, just my 2 cents.
true, the losses do be potentially infinite lol, and it can be hard to properly identify the peak of a bubble
You're not supposed to use options like wsb uses options. Anyone who strictly trades one asset class isn't investing properly. You're supposed to use options as a way to unload risk and reduce exposure on stocks you own. It's one tool in a portfolio that you don't use all the time. You don't even buy/sell stocks all the time. Sometimes you get out of stocks completely. Sometimes you do forex. Sometimes you don't invest anything at all. Sometimes you do bonds.
You should be constantly rotating positions/assets based on your needs and your appetite for risk. For most people that means only selling options when you need to.
counterpoint: shorts make elon mad and I posit that shorts on TSLA are probably cool and good
These people produce absolutely nothing, contribute no services to anyone, and just jack up the prices for ordinary rubes like us. They are such parasites. Their only motivation is their own greed. People look at me like I am the arsehole whenever I express this opinion in meat-space.
i don't think he's in the hole at all. i think it's robinhood being stupid af per usual.
he was selling puts, the market was dropping. he's in the money. the negative is just a temporary balance until stocks / assigned options are actually settled. frankly i think robinhood shows the negative as leverage instead of actual value with his puts. because the temporary balance says negative from leverage of options and ignoring his puts they're forcing him to sell even though once settled he's up.
edit: in other words: robinhood is only looking at his options and ignoring his puts. he may actually be down, but it's maybe 10k max based on the limited i read
edit: fuck robinhood. delete robinhood
Yes, this exact scenario has happened many times and plenty of times the person even ends up with a bit of a profit. Robinhood is dumb tho
OP posted another screenshot with the loss upped to 5.2m, I laughed for a good three minutes at that
The puts you sold are deep ITM and being exercised, which means you are now 100 shares long per contract. Robinhood being the sleazy incompetent fucks that they are will freeze your account instead of simply letting you close the position by selling your long put along with the long shares assigned thus closing your position for a max loss of your spread differential.
It really shouldn’t be an issue with most brokers, but again, you being a highly regarded individual of course you went for an idiotic play with the worst broker available.
So he buys one share on credit and owes 100 shares if it loses money? Lmao.
Online gambling can be fun if you:
Only gamble on things you're interested in and know something about
Consider the money you gamble gone from the second you put it in
Crypto/WSB is miserable because you have the risk of high stakes gambling in a market thats controlled by the super rich like the stock market. Added to that you aren't even investing in something tangible, it's just bazingabucks that on average transfer wealth from suckers to rich people.
Small "for fun" gambling is still risky if you haven't done it before; there's a chance that you find out the hard way that you're the kind of person who gets addicted to it.
the pinned mod reply is surely the only good reddit post
https://www.reddit.com/r/wallstreetbets/comments/zqevn0/i_need_help_robinhood_says_i_need_to_deposit/j0y1cc5/
(the number looks suspiciously close to the 32 bit max
2.147 billion? Versus 4.17 million?
Remember this is currency so it will be 420 millions cents. Still seems way off though.
Well an unsigned max is 4 million something, so if that was used to track a loss it might come out to around this. Probably not the actual reason, just a wild guess.
unsigned max 32 bit is 2^32 minus 1 or 4,294,967,295. Still billions, not millions. And certainly not 4.17 million. I seriously doubt this is a software error. Also I think banking software would not store a number of dollars as an unsigned integer since negative account balance is possible, and certainly not a 32 bit integer since there are plenty of billionaires who have more money than 2^32. And certainly they wouldn't even use an integer in the first place since you need a floating point for the number of cents, or whatever other fractional unit of currency.
