Rookie trader racks up $700K in debt trading options on Robinhood, takes own life

Isn't there like a $5k margin cap on robinhood?

Could have easily said didn't know what I was doing Robinhood would have been sol

How would a 20 yr old have enough margin to owe that much.

Very sad... it a warning to all of those who said...... “I made X% on these stocks”... and yes I am a boomer who will be retiring in three years... but I made plenty of mistakes along the way

I have five more years before retirement eligible. I only put my play money in stocks. I invest in mutual funds for all four of my retirement accounts.

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Please tell me no one believes this ridiculous story, there’s no way that could happen to a 20 year old with minimum collateral.

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Someone posted this on FB and I was about to call BS but decided not to get involved.

The only way I can figure it is if he had $350,000 in cash. Opened up a margin account and got $350,000 in margin. Lost big on options and had to buy.

I have no idea what scenario a 20 yr old kid would be unwittingly get enough margin, place orders against that margin and not know about it.

He’d have to have some serious collateral to even get that level of margin.

last i heard the margin exploiters on Robinhood basically walked away without Robinhood trying to go after them. The same could have been his case perhaps.

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Yeah this doesn’t pass the smell test for me. Totally random guy gets over half a mill in margin?

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Apparently the RH controls (when it comes to options) aren’t very advanced. Several months ago, some RH customers found a glitch that allowed them to essentially have unlimited margin with covered calls. Somehow they were able to buy stock, sell covered calls, buy more of the same stock, sell more covered calls, etc., etc. I have no idea if this episode is related to that glitch or something else.

It’s been long said that the worst thing that can happen to a trader who doesn’t really know what he’s doing is that he makes some early profits. That usually leads to taking on too much size and too much risk - cause “this is easy, man!” Then the sequence of returns goes against him and it’s all downhill from there. Just like I’ve seen on this board, you start hearing things like “I gotta get even”, “dollar cost average”, “you haven’t lost anything til you sell”, etc. I used to listen to the Chat With Traders podcast a lot, and these were the common things that seasoned traders would relate in their stories about things they saw in others (and themselves) and how they evolved into CONSISTENTLY profitable traders.

A lot of people who desire to be (real) traders will blow up at least one account along the way. As long as you can learn from the experience (and not bankrupt yourself), it’s not the end of the world. But the second you start thinking that your short term, blind luck success means that you’re special or different... you really should get ready for a swift kick in the nads. Believe me, it’s coming. But as long as you’re open to learning from ALL your experiences, you can be successful along the way.

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Not to get on a soapbox but people shouldn't have any business investing if they have no idea what they are doing.

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It’s bad enough if you try to invest when you don’t have a clue. But if you try to trade when you don’t have a clue (which is what this kid was apparently doing), that’s how you get your head handed to you.

I turned into a broken record on this board about a year ago, asking people if they were trading or investing when they’d ask for tips in open ended thread starters. Not talking about you, but since most didn’t know or care about the difference, I finally decided to shut up and not ask anymore.

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I don’t understand options at all, I stick to straight stocks.

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