20-Year-Old Robinhood Customer Commits Suicide After Seeing A $730,000 Negative Balance

bone said:
I really lay all of this at Robinhood’s doorstep. If you’re going to sell options order flow to the highest bidder - at least embrace the responsibility to have an accurate real time P&L for those clients whom you are exploiting, which clearly was not the case.
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Looking at the screenshots linked in the article I don't think the app misrepresent his position. If he get assigned on the short leg and the long leg is out of money he indeed have a huge negative cash balance.
 
Alexpung said:
Looking at the screenshots linked in the article I don't think the app misrepresent his position. If he get assigned on the short leg and the long leg is out of money he indeed have a huge negative cash balance.
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The nuance is whether RH had notification/auto-exercise procedures as per or above and beyond official exchange & OCC protocol. Comments on YT vids & other soc-media posts tend to favor scenario of the long leg having had expired OTM and RH didn't notify him about his desire to exercise or auto-exercised but didn't display correctly until settlement processed or both.. I'm not a RHer so don't know their UX idiosyncrasies. My TOS "Available Equity" on Monitor Tab sometimes erroneously displays 6-7 fig margin calls/BP effects, clears up either automatically or contacfing tech support to fix back end.
 
faust said:
The nuance is whether RH had notification/auto-exercise procedures as per or above and beyond official exchange & OCC protocol. Comments on YT vids & other soc-media posts tend to favor scenario of the long leg having had expired OTM and RH didn't notify him about his desire to exercise or auto-exercised but didn't display correctly until settlement processed or both.. I'm not a RHer so don't know their UX idiosyncrasies. My TOS "Available Equity" on Monitor Tab sometimes erroneously displays 6-7 fig margin calls/BP effects, clears up either automatically or contacfing tech support to fix back end.
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I don't think the short leg was auto-exercised - it was exercised early by the buyer on Thursday June 11, the day before expiry. This is what I think happened:

Wednesday June 10
  • He sells 3 AMZN OTM June12 credit put spreads.
Thursday June 11
  • AMZN drops $100.
  • The credit put spread is now ITM.
  • The short leg is exercised early.
  • His account is put 300 shares of AMZN and showing the debit.
  • But his account isn't showing the value of the shares or his long puts.
  • He then killed himself Thursday evening.

I think he was using an app for a smart phone and the app didn't show the P/L correctly.
 
This is so sad and devastating. He could have tried to sort it out with the broker and figure out some solution. Suicide is not the solution to any problem. One should always take only that much risk that he/she can afford to bear.
 
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