A Guy on Reddit Turns $766 into $107,758 on Two Options Trades(bloomberg.com)
bloomberg.com
A Guy on Reddit Turns $766 into $107,758 on Two Options Trades
https://www.bloomberg.com/news/articles/2019-10-17/a-guy-on-reddit-turns-766-into-107-758-on-two-options-trades
13 comments
If you're after a more interesting trade on reddit thread then ir0nymans box spreads are legendary [1]. Invests $5k and proceeds to turn that into -$57k and ends up banning box spreads on Robin Hood.
1. https://www.marketwatch.com/story/trader-says-he-has-no-mone...
1. https://www.marketwatch.com/story/trader-says-he-has-no-mone...
I work in risk management in financial services (and also a /r/wsb lurker, because who doesn't like a little excitement in their life), and this is my absolute favorite story [1] to share about the tech industry running head long into a regulated industry where real dollars are at stake. Not only did Robinhood ban box spreads [2], there were additional risk management positions open the next day on their career site. It cost them at least $100k, which is lucky for them! They extended /u/1R0NYMAN almost $300k in credit (not traditional margin, but counterparty/assignment risk) inadvertently, and the user pulled their remaining $10k cash out while settlement was in flight for the $58k loss. Traditional brokers have no issue automatically managing the risk of this type of option trade, and if something goes sideways they will call you if you exceed trade risk limits.
It's not quite Knight Capital [3], but it's still a fun failure/risk management lesson.
[1] https://www.reddit.com/r/wallstreetbets/comments/aeqcvt/i_do... (Original wsb thread)
[2] https://en.wikipedia.org/wiki/Box_spread_(options)
[3] https://www.theregister.co.uk/2012/08/03/bad_algorithm_lost_...
It's not quite Knight Capital [3], but it's still a fun failure/risk management lesson.
[1] https://www.reddit.com/r/wallstreetbets/comments/aeqcvt/i_do... (Original wsb thread)
[2] https://en.wikipedia.org/wiki/Box_spread_(options)
[3] https://www.theregister.co.uk/2012/08/03/bad_algorithm_lost_...
What ended up happening to the guy? Did he have to pay that $53k?
Based on his post history they closed the account and never contacted him, but who knows what they might do in the future. Perhaps the debt can/will be sold to a collector at some point?
https://www.reddit.com/user/1R0NYMAN
https://www.reddit.com/user/1R0NYMAN
It's unlikely. They could file a FINRA and SEC complaint. It's cheaper to walk away from it on Robinhood's part. In my experience interacting with financial regulators, the conversation would not go well for RH as a broker-dealer.
[deleted]
Check his post history, he's still very active on reddit. He's rightfully pretty cagey about it from what I remember.
For all parties it's probably best if they just ignore it and pretend it never happened. Robin Hood is liable to some extent as they didn't highlight the risk in the trade.
For all parties it's probably best if they just ignore it and pretend it never happened. Robin Hood is liable to some extent as they didn't highlight the risk in the trade.
Reminds me of a banking customer I once worked with.
A very complex set of conditions occurred across numerous systems that was legitimately unpredictable. A system I supported looked like it was giving back false data in a seriously bad way that may have resulted in inaccurate data / data loss that may have been undetectable for a long time ... catastrophic if true.
All the evidence was from some testing they did, but it lined up with what was seeing as "bad data" in a way that seemed rock solid.
Despite all the evidence from their testing it just made no sense to me that what they claim was occurring was in fact occurring based on my experience, and what my own engineering folks I worked with said.
So I proposed a test that was pretty laborious but also would absolutely answer a lot of questions. The banking folks being good guys were all for it as they were inundated with executive pressure as there was a real possibility that there were regulatory implications, possibly enormous.
So anyway we run the test and everyone reports what they see along the chain of networking equipment and data and so forth. And it comes back completely unexpected nearly every step of the way. It also clearly points to what was a fundamentally bad design an some misunderstandings all along the way.
The conference call ended with the bank "We're going to a breakout session with the executive team, please stand by." A few hours later they told us we could go.
Thankfully no data damage was done, it was possible someone really fucked up as far as regulatory stuff but it really depended on your POV, and the events were highly unusual / unpredictable. No idea if the bank ever reported it to the feds.
Nobody talked about it after that, just as you noted, everyone pretended nothing happened.
A very complex set of conditions occurred across numerous systems that was legitimately unpredictable. A system I supported looked like it was giving back false data in a seriously bad way that may have resulted in inaccurate data / data loss that may have been undetectable for a long time ... catastrophic if true.
All the evidence was from some testing they did, but it lined up with what was seeing as "bad data" in a way that seemed rock solid.
Despite all the evidence from their testing it just made no sense to me that what they claim was occurring was in fact occurring based on my experience, and what my own engineering folks I worked with said.
So I proposed a test that was pretty laborious but also would absolutely answer a lot of questions. The banking folks being good guys were all for it as they were inundated with executive pressure as there was a real possibility that there were regulatory implications, possibly enormous.
So anyway we run the test and everyone reports what they see along the chain of networking equipment and data and so forth. And it comes back completely unexpected nearly every step of the way. It also clearly points to what was a fundamentally bad design an some misunderstandings all along the way.
The conference call ended with the bank "We're going to a breakout session with the executive team, please stand by." A few hours later they told us we could go.
Thankfully no data damage was done, it was possible someone really fucked up as far as regulatory stuff but it really depended on your POV, and the events were highly unusual / unpredictable. No idea if the bank ever reported it to the feds.
Nobody talked about it after that, just as you noted, everyone pretended nothing happened.
wouldn't be surprised if they washed their hands of it and just ate the loss. It's a sticky situation and the client may have damages due to how KYC was conducted and the forced closure of the position. Also, the SEC would definitely be an interested party if this went any further.
Less popular is the other story: Several Guys on Reddit Turn $107,758 into $766 on Two Options Trades.
Not really. Loss porn is equally if not more popular on WSB than gain porn.
How many of those are on Bloomberg?
I mean in wallstreetbets. I think a story about a massive literal Wall Street bet is well within reason for Bloomberg news
Was it fool proof?
Previously on reddit - a guy on reddit loses $60'000 [1]
[1] https://www.reddit.com/r/wallstreetbets/comments/agovgl/only... SFW
Previously on reddit - a guy on reddit loses $60'000 [1]
[1] https://www.reddit.com/r/wallstreetbets/comments/agovgl/only... SFW
It appears this guy actually profited 5k, he started out with 5k and withdrew 10k before his account was closed.
As it appears that RH isn't going to go after him for the negative balance, that's free money.
So maybe it is foolproof? Even if you lose, you still win :)
As it appears that RH isn't going to go after him for the negative balance, that's free money.
So maybe it is foolproof? Even if you lose, you still win :)
A million monkies at a million typewriters...
Related Reddit thread: https://www.reddit.com/r/wallstreetbets/comments/dj5xru/u_di...
A WSB thread. What else could it have been?
"Choi credited luck". At least he knows it.
"Choi credited luck". At least he knows it.
is this much different than someone winning millions on a 2 euro accumulator bet at a horse race?
Yes. It’s more a story about wallstreetbets and Robinhood.
I intake WSB content like any other meme sub.
[deleted]
There are so many fun /r/wsb stories.
Just in the past few months there's been 1ronyman, analfarmer and my favorite - well I guess I shouldn't name him in case it violates rules - but some guy that yolo'd his student loans by accidentally buying puts and then tried to convince people he was a good trader.
I also just remembered that time someone tried to share his success with SquareSpace and it turned out he'd bought Square stocks instead by accident and didn't even realize it.
Just in the past few months there's been 1ronyman, analfarmer and my favorite - well I guess I shouldn't name him in case it violates rules - but some guy that yolo'd his student loans by accidentally buying puts and then tried to convince people he was a good trader.
I also just remembered that time someone tried to share his success with SquareSpace and it turned out he'd bought Square stocks instead by accident and didn't even realize it.
>analfarmer
His trades were just a sad eye on what must be gambling addiction. To go from nothing to $750k dollars in a couple of weeks and then watch him trade it all away over the next 2 weeks was just tragic.
His trades were just a sad eye on what must be gambling addiction. To go from nothing to $750k dollars in a couple of weeks and then watch him trade it all away over the next 2 weeks was just tragic.
>well I guess I shouldn't name him in case it violates rules
Can you provide links or terms to search for those of us who want to read the story?
Can you provide links or terms to search for those of us who want to read the story?
Amazing! Everyone should gamble with options more, because, winnings.
I can't see how Bloomberg could possibly benefit from that.
I can't see how Bloomberg could possibly benefit from that.
Why is this flagged?
If you want a funnier read at the expense of a company, read about /u/1R0NYMAN basically conning Robinhood by withdrawing $10k before they ate a $53k loss. Subsequently they stopped allowing box spreads. I believe there was also talk that he could sue Robinhood for being so irresponsible with him, but I'm assuming he cut his winnings and ran.
https://www.marketwatch.com/story/trader-says-he-has-no-mone...