Yes, but I think it's important to note that every other broker I've used presents the information in the same way and the way they are displaying the info is an accurate representation of the state of the account at that moment.

Blaming bad UI is the easy way out here. Robinhood should take the blame for this, but not because of bad UI. Robinhood should be at fault because the knowingly allow tons of "investors" to have options trading access with little or no screening and verification.

Blaming the UI here would be like blaming a single specific gun maker for a mass shooting, when the real question you should be asking is how did this person get a gun at all?

There is a rather large difference between how you do interfaces for people with training who are experts and the amateurs that Robinhood is targeting. It is the difference between a full cockpit and the interface you put on something like Garmin's autolanding system[1].

So, yeah, I'm blaming the interface people at Robinhood because they are targeting a non-broker segment of the population and need to find a way to put that information a broker would give you into the interface. This information includes things like "you do not own this much money" at a minimum. Facts are amazing things, but eventual truth might of save this person.

If you target a group of people, its your responsibility as a UI designer to make sure your interface is actually safe for that group of people.

1) https://www.garmin.com/en-US/autonomi/

But regulation requires that you do self-certify as (to a certain extent) an expert who understands the more sophisticated product in order to trade it.

I suppose I don't disagree that they're targeting people who in many cases probably shouldn't be passing that screen, but I suppose I think that's the problem, rather than it not being dumbed down enough.

Like I said elsewhere, its horrible this kid killed himself over something as transient as this, and RH's interface is pretty dumb, but if you're selling uncovered put spreads, and covering them with call spreads and you're doing all of this in RH....well you're either much better at RH than I am, or much worse.

Could the UI be better? Probably. My point isn't to absolve them here, it's just to point out that this same issue exists across most of the platforms. That leads me to believe that, while the UI may have contributed, it's not the root cause of the issue.

These instruments are very high risk and not really meant for average investors. Their primary goal is for hedging and leverage.

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One of the reasons for the "Black Friday" (kicking off the Great Depression) was the proliferation of leverage among people who didn't really understand it. That's why most other companies make you sign forms and ask for verbal agreements before allowing you to have access to things this dangerous.

Black Thursday. Black Friday is the name of the crash in the federal gold market half a century earlier - or more commonly, the yearly American mega-sale event that follows Thanksgiving.

Robinhood already asks for information about your net-worth, income, etc. The problem is that they verify nothing (at least in my experience). I read /r/wallstreetbets all the time, and plenty of 18 year olds say they are making 100k+ and RH just approves them. They need to improve that process.

I marked that my liquid assets are under 25k, net worth is under 25k, and yearly income is under 25k (all the lowest you can select) and they approved me for option trading instantly.

Looking at GOOG the UI shows me put where the max loss is $8.5k. Seems reckless if they really use the information I gave them to determine what level of risk is appropriate.

Better verification of a person's financials and trading knowledge before allowing this access would be helpful.

It is like giving a loaded assault rifle to a trained member of the military compared to an average civilian. You can't just assume each will have the same level of knowledge. You need to provide that civilian more detailed instructions in order to make sure they don't cause accidental and unnecessary damage with it.

You also sign a lot of paperwork stating that you understand the mechanics and risks of trading. There are several levels between buying stock and selling options that you need to ask approval for.

The truth is that Robinhood targets a less educated segment of the market. They have a moral responsibility to either educate those users or put protections in place so it is harder for those users to harm themselves due to the lack of an education that can be assumed standard in other investment contexts.

I already stated elsewhere that there should be more verification and testing of credentials and knowledge but at some point, the adult making the decision still has the final responsibility.

>I already stated elsewhere that there should be more verification and testing of credentials and knowledge but at some point, the adult making the decision still has the final responsibility.

And in the absence of this verification and confirmation of credentials, Robinhood should be expected to communicate these details in a way that even someone without those credentials can easily understand.

Saying you didn’t know what you were signing isn’t an excuse and doesn’t relieve you of your contract. While more verification is necessary, lying about your credentials is still your fault, if not outright criminal.

People already sign disclaimers stating they understand how to trade and potential risks. Perhaps a more intensive testing process can help to enforce that, but they're still adults making their own decisions and I don't want to add even more regulations for market access.

With a put spread, if I sell $50P and buy $45P, the holder of the $50P I sold can exercise at any point, and I have to buy his 100 shares at $50/ea. Let's say I got a $2.50 premium ($250 total) on that spread. At that point, my account is -$4750, +1 $45P. Perhaps the premium on the $45P is $0.50, so my account's nominal value is -$4700, +100 shares at this point.

However, my $45P expires in 3 days, so maybe I want to hold on and see if the shares I had to buy at $50 will increase to $55, my $45P expires worthless, and I can then sell them for $5500 total, leaving my account +$800. Or, worst case in the other direction, the price drops below $45, and I exercise my $45P to sell them for $4500, leaving my account -$250. But until expiry or assignment, my account's nominal value is in the red.

Since it's a defined risk trade, you can easily sell a large number of contracts which can result in very large stock positions when exercised. It's not an issue, the math works out, but it's something you need to understand before making the trade.

Can someone correct me?

1. You sell a call credit spread. This is where you sell a call at say $100 and collect premium (let's use $2 for this example), then buy a call at $105 to cap your possible losses.

2. The options expire and the price of the stock is $110. I have lost the maximum amount. I sold a call and collected premium of $2, and bought a call at $105, so my total maximum loss was the difference ($3).

3. Robinhood will settle these assignment after hours, and will for whatever reason show the balance as if you hadn't bought the $105 call protection. So my balance may show a massive loss until the reconcile both the short and the long end of the calls.

I have seen my balance go to -200k before when it was way in the positive before the day ended. This happened to be a Friday and it wasn't resolved until the markets opened the following Monday.

Luckily, I realized what was going on, but many novice investors may not.

Many traders will close their positions before market close, leaving a relatively tiny amount on the table to avoid the risk.

Robinhood's UI is not particularly informative in this process either.

If I held through expiration and the short leg (AMZN $2640) was assigned, I would be contractually obligated to buy 300 shares of Amazon at $2640 a piece. This would briefly reduce my buying power by -$792,000. But as I also hold a contract to sell 300 shares of Amazon at $2635 ($790,500), it would have a net cost of only $1,500. And since I already received $600 up front, it would be just $900 additional out of pocket. But for a period of time, my account balance would have displayed -$792k.

If anything, it highlights the fact that these people should not be trading in the first place if they don't understand their own positions, and brokers need a much stricter gate before allowing them access.

That being said, yes customer support could help him understand what’s happening.

Their interface is an abomination. Even the tiny amount of information they do present is hard to parse. I use it for fun time investing, but would never trust real money with a company that can't plainly and clearly show me the status of said money.