There were some people claiming that RH erroneously exercised their options on r/wallstreetbets. Could be a hoax, but if it isn't, then that seems like grounds for compensation.

Of course, no one complains when RH makes a mistake in the client's favor.

Those people don’t know what is pin risk. Basically their long puts got exercised because automatic execution is determine at 4pm and they didn’t object (creating a short position in equity), their short puts didn’t get exercised because the stock rallied by 5pm and their counterparty was diligent and prevented auto execution (thus no long equities position to compensate the short equities position). Robinhood couldn’t rebuy the short equity position because the actual price rose above the put price leading to a net loss.

> Those people don’t know what is pin risk.

Is it just me, or does it feel like the only people using Robinhood are college students gambling with their parent's money?

Given that many extremely smart people who have devoted their lives to the stock market cannot beat average returns, the lack of Robinhood user's knowledge of "pin risk" seems to miss the greater point.

There are two things:

1) Somewhat pedantic: A big reason why performance is-what-it-is is that at any real $$$ liquidity/volume becomes an issue. Lots of option markets are just not that liquid. If you play with only a few $k and robinhood pays for much of market friction then you can potentially outperform market at risk parity.

2) More real: For most people active trading is not about investing, it is about easy and legal gambling. There is a thrill of throwing you money into high risk options or skyrocketing meme-stocks. Because markets are (relatively) efficient the prices of these assets usually reflect their risk profile, so on average you should gain money (flip side of it being hard to beat market is that it is hard to severely underperform, on average, as long as you don't all-in; normally friction cost makes these kind of strategies not work but RH reduces that significantly). It ends up like going to a casino where on average you make a bit of money (but with high volatility means some people lose a lot, some people gain a lot).

You couldn't execute or cancel orders.

That means there are no orders mishandled either. If no one has an SLA then just switching the servers off without thinking about whether customers were planning on trading seems fully in their right. This is terrible for their reputation, but that does't mean they are going to start handing out money because people argue they could have avoided losses if the servers had been up. It's going to be extremely difficult for any customers to back that up legally.

I doubt that you need an SLA to enforce a penalty for keeping other people's money.

They can probably be fined by some authority, but that penalty isn’t the same as being liable for losses people claim they made because the site was inaccessible. The fine wouldn’t be paid to customers.

People lost the opportunity to place orders. Determining the actual cost is of course impossible since you don't know what orders people would have placed.

Absent a contract on availability that doesn’t sound like something you would have a case for.

I agree with that, was just answering the question.

Yesterday was the largest upswing in market history and the entirety of RH missed out.

"Missed out" doesn't seem like the right phrase here. If you already owned the stock, you still held it, no?

So people who were going to continue to sell off got lucky that they couldn't make that trade, and people who were going to buy got unlucky?

Does anyone seriously expect compensation, or think that it's deserved, or is it group wishful thinking? How would it even work? Would they just take people's word for their supposed intent? Or are people wanting some sort of "here's a gift card" type deal?

This is not to defend RobinHood - I've personally kept my money with well-established companies cause conservative, old, proven systems seem like a good thing for a product in this space - but shit happens, no? There will be more good days, and more bad days, in the market, it's a long-run game anyway, and it's pretty easy to vote with your wallet in this space.

There could be folks holding leveraged Bear ETFs or similar after last week's downturn, who were waiting to see how the market moved Monday morning to decide whether to sell or hold. I could see those folks losing quite a bit of money due to the inability to sell off those types of positions after the market reversed course on Monday.

I suspect you're right though, that it's mostly sour grapes concerning the opposite case - inability to buy as the market rallied.

This is just like the late '90s, up to 9/11 when day trading was the rage. Now it's back in fashion, low-key.

I had never heard of /r/wallstreetbets or Robin Hood (well, barely) until a couple weeks ago.

> Now it's back in fashion, low-key

There is an entire generation that has never traded through a crisis.

> There is an entire generation that has never traded through a crisis.

Given that most crises seem to occur roughly every 7-15 years, there will always be such a generation.

A hypothesis: the reason why crises occur roughly 7-15 years is because that is approximately the length of society's collective memory concerning monetary issues.

Only possible claims would be limit orders set before the outage that didn't execute but were in the price range.

And even then, limit orders are placed on a best effort basis. I'm sure their terms of service say as much. I have had limit orders not get placed before on otherwise functioning platforms.

The close of today is effectively the open yesterday, so everyone is back where they were.

Of course the problem with the "compensate me" arguments is that a lot of people were going to make decisions that would have turned out poorly yesterday (indeed, the market is balanced and every transaction has a counterparty), though of course with the amazing clarity of hindsight few would recognize or admit that. So if they need to compensate for illusory lost trades, do some people have to pay them for losses they would have incurred?

[I get that there are some complex options that can legitimately be all downside when trading isn't available, but that's a less common option]

Lots of RH are gamblers with short term options. Today's implied volatility and time-value for those options is way lower.