Is Tesla anywhere close to delivering that ridiculous-looking truck thing they demoed at least a year ago? (or maybe 5 months ago time has lost all bearing)
I thought they were also perceived as a competitor on self driving car technology. If they corner the market on self driving car technology they could simply partner with a traditional car manufacturer.
This is a ludicrous theory as well. Waymo actually exists.
1 Like
Article about the young robinhood options trader who committed suicide.
The e-brokers have statements stressing that options trading entails significant risk and is not appropriate for all investors, directing people who want to learn more to a 26-year-old paper — last updated in 2012 — from the Options Clearing Corporation about the potential pitfalls.
This is misleading at best. Anybody who applies to get approved for even the lowest level of options trading is required to sign a declaration that they have read and understood this document (“Characteristics and Risks of Standardized Options”).
Retail brokers are required to set different levels of options trading available to customers, who apply for permission to move from one tier to another based on factors such as how long they have traded, net worth, liquid assets and age. The e-brokers typically have three or four different levels…
I don’t know exactly what strategy this guy was using, but it probably wasn’t Level 0 or even 1, which means he applied multiple times for approval, declaring each time that he understood the risks and knew what he was doing. There’s only so much a brokerage can do to try and save people from themselves.
Everything I’ve read puts the guy in Level 3 or Level 4, but I wouldn’t be surprised if Robinhood’s compliance was absolutely garbage.
Sure, and the fact that he said in his suicide note he had “no clue about what I was doing” means something went terribly wrong at some point in the process.
I just remember going through the process a long time ago and being pretty impressed by the system of hoops I had to jump through.
The fact that all some random bozo off the street has to do is sign a few forms to get $700k in debt is a sign something is really rotten. It’s hard to imagine a legitimate business model that would actually allow that.
It makes me wonder if he could have actually cashed out his winnings. But I guess RobinHood has been around a while and has a good reputation?
Did you have to put up any collateral?
You can’t disrupt the investments industry with a strong compliance department.
This is from earlier in the thread, but I’m confident that he was never in $700k of debt (in anything other than purely technical terms). The far more likely scenario is that he misunderstood his positions.
It would be like someone buying a house and believing that $500k of their wealth was vaporized because they’ve now got a huge mortgage balance. The only difference is that, in this case, rather than having an illiquid house offsetting that mortgage, the kid had a very liquid investment balance offsetting the liability.
Right, well that’s what I was wondering. So this article never even confirmed if he was actually that far in debt or not?
#JOURNALISM
I maintain that if he was literally that far in debt somehow than RobinHood is running some kind of ponzi scheme or something. Why wouldn’t people just make a bunch of crazy bets, then cash out if they win and go bankrupt if they lose? How could that be a business model?
But if he wasn’t really that much in debt then it makes sense.
Credit cards never let you get more in debt than what they think it will be worth it for you to bankrupt. About $15kish. And if you rack up $15k on one credit card the others immediately yank your credit line and jack up your rates. This story would be like American Express letting some kid put a $700k Lambo on their card.
But maybe there’s something I don’t understand. Which is why I was wondering about collateral.
If American Express had possession of the Lambo.
If they’re really going to expose themselves to the kid’s bets winning and him cashing out for $700k, then it’s effectively like letting him take possession of the lambo.
I think the article I posted makes it pretty clear:
Horrifically, it appears Kearns mistook the potential loss on one leg of an options trade for the outcome of the overall bet — wrongly believing that he had racked up a loss of $730,165. In fact, his account had a balance of $16,000.
One could also argue that it’s a failure of the design of the platform that it would even be possible to misinterpret what you’re seeing in this way.
As far as collateral, I think net worth is one of the factors for the options approval process. But even just opening a margin account (which is required for shorting stocks) means you are effectively applying for a loan from the brokerage. If your position goes negative and you don’t have the funds to settle it, you’re now borrowing from the brokerage and racking up interest on your loan. IANACFA
$16k sounds about right for max unsecured debt.
I used to routinely rack up multiple credit cards. $15k outstanding on your credit report is about the point where they all shut it down.
They will never let you get $30k in hock, at least not as a random office drone with an ok job that they’ve never verified. But I have always wondered if you maxed them all out on the same day, to the tune of say $75k, if they have some system to alarm them of what’s going on.
Robinhood’s KYC is pathetic. There are no hoops to jump through and afaik they basically auto approve anyone who isn’t a financial advisor.
Just look atWallstreet Bets on reddit because it’s literally the 4chan of “investing”. Most of them trade on RH. These guys routinely go all in on lotto options that are 95%+ to fail and brag equally about huge gains and huge losses.
I’ve been over the 50k mark more than once and never had a problem getting a 10k CL for my next card with a sub-100k income and no real assets.
and of course, capital one double-reimbursed me putting my account at -$1100 and of course, there’s no email for them, just phone numbers. 
The saddest part of the story to me is that this kid killed himself before calling them or going into a live chat to make sure there hadn’t been a mistake. That’s unfathomable to me. You can connect through the app.
Seriously, you don’t need to let Capital One know they double reimbursed you. It’s not a cashier, nobody is going to lose a job or get punished. Just plan for it to be removed at some point. You’re playing with house money.