Discussion ***Official*** 2020 Stock Market Thread

[dasherHampton]

Yeah, a lot of people talking about this have said the same thing. Bankruptcy was the obvious option IF these numbers were right.

But his account was worth $16000 and RH apparently doesn't allow naked options. He would have been limited to $16000 worth of stocks or $16000 worth of covered puts.

There's no path to -$750,000 there that I can see. Was it possibly a mistake made by RH? I haven't heard anything.

 

[ponyo]

I've seen that article all over today and it still makes no sense. I don't know how that number would even be possible on that kid's account.

Does Robinhood automatically qualify every new customer for non-cash secured puts no matter what? That would be fucking insane.

He had spreads. He wasn't down $700k. It's just retarded Robinhood system that don't credit both legs at the same time even if both are closed out. The second leg credit can take extra day to update on Robinhood system. So the kid thought he lost $700k when he didn't. He probably had low 5 figure losses and didn't know it and freaked at the $700k number.

He wasn't doing simple single leg options. Lot of people use Robinhood to do spreads since they make it easy and don't charge commissions.

 

[brianmanahan]

I've seen that article all over today and it still makes no sense. I don't know how that number would even be possible on that kid's account.

Does Robinhood automatically qualify every new customer for non-cash secured puts no matter what? That would be fucking insane.

they have had a number of bugs that allow users to leverage way up, 1r0nyman on wallstreetbets got RH to treat his 5$k like 200$k

but yeah this was probably not one of them, it's just an RH timing issue that he freaked out over

 

[ponyo]

Yeah, a lot of people talking about this have said the same thing. Bankruptcy was the obvious option IF these numbers were right.

But his account was worth $16000 and RH apparently doesn't allow naked options. He would have been limited to $16000 worth of stocks or $16000 worth of covered puts.

There's no path to -$750,000 there that I can see. Was it possibly a mistake made by RH? I haven't heard anything.

There's lot more to options than simple single leg calls and puts. You can make some exotic plays with very little money if you do complex spreads.

 

[dasherHampton]

Well, I've never done that and I'm glad I've never done that.

Anything system that can show a $750,000 loss on a $16000 account, even if it's temporary, is not for me.

 

[dasherHampton]

If all goes as planned tomorrow it looks like I'll go over 40 grand for the year.

Quite astonishing, really, considering how shitily the year started.

 

[Svnla]

Gotta spend money (stimulus check) to make money (Hertz) -

https://finance.yahoo.com/news/main-streets-boldest-wall-street-101048500.html

 

[dasherHampton]

It is what it is. A game of Chicken.

Or maybe, more accurately, a game of Liar's Dice.

 

[Ken g6]

Well, I've never done that and I'm glad I've never done that.

Anything system that can show a $750,000 loss on a $16000 account, even if it's temporary, is not for me.

I knew Robinhood was bad news when they got caught trying to set up a "high-yield savings account" even though they're not a bank. I use Betterment, which did something similar, but always made clear it was bond investments. (Until they partnered with 5 banks to make a real savings account.)

Betterment has none of this leveraged stock-picking options-trading monkey-business. Just a nice, robo-balanced mutual fund of stocks and bonds. (Plus partner bank accounts.)

 

[woodman1999]

So is now the time to sell my GRUB, or do I hold onto it and take my Just Eat Takeaway shares?

 

[dasherHampton]

Are you sitting on a nice profit?

I don't know much about GRUB. Are they one of those companies that is in danger of having to reclassify their employees?

 

[dasherHampton]

So the SRNE adventure officially comes to an end. I feel a little nostalgic.

It was fun to watch.

Once everything becomes official (usually somewhere between 12 and 2 tonight) I'll post a summary and totals.

 

[woodman1999]

Bought GRUB at 37 and change, so up roughly 72%, so not to shabby.

 

[dasherHampton]

If I were you I'd take the profit.

GRUB is already sitting above its price target and has a bunch of recent downgrades.

If you have enough shares and aren't ready to dump it you could sell some covered calls.

 

[Svnla]

This is why you don't get nice thing. If you are a newbie and clueless, D-O-N-T do anything stupid and risky (only use the money that you can afford to lose). Tragic.

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

Amid the wave of newcomers to what has become a casino stock market, a novice options trader takes his own life.

www.forbes.com

Robinhood is putting more guardrails after the death -

Robinhood increases guardrails on options trading in the wake of a customer suicide

Robinhood is making it more difficult to get access to its options offering in the wake of a customer's suicide last week.

www.cnbc.com

 

[woodman1999]

Nah. It would either be a full sale or hold. I am leaning toward a sale, but with my luck it'll shoot right up afterwards.

 

[Red Squirrel]

Was he using credit to buy stocks? Why would he have thought he actually was that much in the negatives and not question it as a glitch? Though that specific buying thing he was doing does not sound like normal stocks and sounds a bit more complex. Do you end up owing money if things don't go your way when trading "puts"? I always figured stocks were risk free, in the sense that you can't lose more money than what you put in. In his case did he end up owing more money than he put in? I know there was a glitch with the software but if he thought he really did owe that, is that something that can actually happen?

Totally sucks that he killed himself over that though. Quite a tragic situation.

 

[FelixDeCat]

Yeah, a lot of people talking about this have said the same thing. Bankruptcy was the obvious option IF these numbers were right.

But his account was worth $16000 and RH apparently doesn't allow naked options. He would have been limited to $16000 worth of stocks or $16000 worth of covered puts.

There's no path to -$750,000 there that I can see. Was it possibly a mistake made by RH? I haven't heard anything.

I used to trade spreads all the time back in the day. A couple of years ago I sold a put spread and wound up getting a $100,000 margin call on an account worth only $5,000.

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What happened was I bought a lower priced put and shorted the next leg up when the QQQs were about $105. The contracts expired the same day.

The put expired worthless at the weekly Friday close but not by much, and certain securities trade options for 15 mins AFTER market hours. During that 15 min session one of the big tech names dropped a bomb and the QQQs fell, so I got assigned 1000 shares @ $105 (short). I had to "buy to cover" first thing Monday morning to unwind the position.

What did I learn? If the closing price on option expiration day is too close to your short strike, do not assume you will not be assigned. Also, the risk was too high for the premium received. I learned later that is called "eating like a bird and crapping like an elephant".

 

[FelixDeCat]

Typically TDA will not let anyone be short an option that would put an account upside down like that on the day it expires. You can ride it short until then however, most do not.


If the risk department sees you still in the trade 1 hour prior to close on expiration day w/o the funds to take delivery they will buy you back in. It used to be they would overlook your account if you called the risk department and asked permission, now I think you cannot do that. You have to close the position if you are within a certain percent of the strike on expiration or it has to be far out of the money to be allowed to expire worthless.

 

[dasherHampton]

SRNE totals:

4000 shares cost basis 3.22 - $12880

4000 share put exercised @ 4 - $16000

total options profit - $6120.25

-----------------------------------------

Profit $9240.25


Thanks guys. I wish you the best in the future. Its time to move on.

 

[JTsyo]

Nah. It would either be a full sale or hold. I am leaning toward a sale, but with my luck it'll shoot right up afterwards.

Sell enough to cover you initial investment and put a stop on rest for whatever profit you can live with.

 

[Roger Wilco]

Futures went from +100 to -400 to -88. Apparently the China trade deal is off.
This is a hell of a time to learn about the stock market...

 

[IEC]

Nothing to learn, Jpow teaches you all in 1 easy point:
1. Stonks only go up
2. See #1

 

[woodman1999]

Still clinging to GRUB... squeeze as many bps of performance as I can....

 

[s0me0nesmind1]

Our stock market right now:




Meanwhile....

US home-mortgage delinquencies surge to the highest level in 9 years

While the jump in delinquencies was less than the record spike in April, uncertainty looms for many homeowners because of the coronavirus pandemic.

markets.businessinsider.com