Why wouldn't his account show the 3 $2,585 Puts he was long? It's plausible that the 300 AMZN shares may not have appeared immediately, if they were the product of the recent assignment and who knows how that was being handled on RH's end, but the 3 x Long Puts had been purchased in the normal course...why wouldn't they have appeared?
Robinhood suicide story -- My educated guess on the trade
- Thread starter OptionsOptionsOptions
- Start date
Why wouldn't his account show the 3 $2,585 Puts he was long? It's plausible that the 300 AMZN shares may not have appeared immediately, if they were the product of the recent assignment and who knows how that was being handled on RH's end, but the 3 x Long Puts had been purchased in the normal course...why wouldn't they have appeared?
Re-read the OP, you're missing something fundamental. OP's saying the short position was Assigned to the RH kid early (a day before its expiration date). The rule you're citing only applies to what happens at 4pm on expiration day.
Buying Power is separate from holdings and is update instantly. The value of an option position is not added to the buying power.
- My guess he had about $16,000 cash for buying power, plus the margin.
- $16,000 x 3 = $48,000
- He is assigned about $777,000 worth of AMZN stock.
- $777,000 - $48,000 = -$730,000
- When he checked his account on Thursday June 11 it showed a Buying Power of -$730,000
- Holdings are not updated until the next day - but Buying Power is updated instantly.
- He saw the -$730,000 - but not the long 300 AMZN shares.
I'm fairly sure that by Friday June 12 his account was all updated and showing a profit from his AMZN trade.
I know what the OP said. You need to re-read my previous post in this thread. I already covered this "early assignment" scenario. All I am saying is if he chose not to exercise, he could still get automatic exercising provided his options are still ITM at that time. The early assignment is just ONE day before the expiration date. By the next day which is the expiration date, he would've made whole and everything would've been fine.
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.