Some of you might have heard some rumblings from over in WSB-land. In fact, at 5 this morning, I sent the following email to Tom Sosnoff and Tony Batista, my colleagues at tastytrade:
I’m not sure if either of you ever don your hip waders and saunter into the madhouse which is /WSB, which the place has turned 100% into a mayhem-filled attic of people shrieking about how you can trick RobinHood into giving you obscene amounts of buying power (like $1 million on a $4,000 deposit). Seems their system is pretty broken, and figured you would want to know (although I suspect you probably know all too well by now) since their faulty code has really exposed them, at least to this group of degenerates on WSB.
One fellow in particular exploited this loophole to ill effect. Apparently he knew absolutely nothing about options trading – – I’m talking nada – – as of a month ago. But when he got wise to this loophole, he found his $2,000 deposit at RobinHood could be used to buy $50,000 in options. (Some users have parlayed their tiny deposits into a million dollars in buying power).
So this guy thought, cool, free money, I’m going to bet the house on short-dated AAPL puts. For some masochistic reason, he decided to film himself watching this financial train wreck when the market opened on Halloween, after AAPL had reported their earnings. It isn’t pretty. (And why he filmed this in a passenger seat of a car is beyond me).
Looking at this guy’s YouTube account, all of his other videos are of him playing video games. But this young fellow wandered into the wonderful world of options and, in a true degenerate fashion, promptly lost $50,000 that didn’t belong to him.
I suspect the folks at RobinHood might be reaching out to him soon. And the frat-boy mass at WSB isn’t particularly sympathetic to the losses that RobinHood is slated to suffer from the hodgepodge of individuals playing this dangerous game.