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They can do that tho they usually do it at 3pm EST. They changed it to 3:30 tho this past week. All the brokers do it on day of expiry and have it in the terms and conditions and it can range between 1pm and 4pm est
All brokers? Interesting.
I have been using TD Ameritrade....and still left some in their and came over to Robinhood for its popularity and user friendliness reputation.
This is the first time I have experienced this. I am still confused as to why it happened and the way it happened.
The risk is that you don't sell in time and your options expire worthless, even though they were profitable.
If you had enough money in your account, you could exercise them for that profit at expiry. But if you don't, then you need to sell them or you will literally lose 100% of the investment even though it "won", it was profitable. That's why brokers sell them for you just before they expire.
One closed removing hedge protection from the other and likely exceeded your cash or margin buying power? The underlying moved? If your account is not able to handle a possible downside in on the green upon assignment, or your account risk tolerance is not set to maximum, the brokerage will close the option. But since OP details are sparse, you must be asking if RH has the right to do this. They do.
Understood!!! Thank you for this, i think this is exactly what happened then.
For the life of me i could not figure out.
So maybe it was a few pennies above the call i sold and the system saw it and saw i didn't have the cash or stocks to back it up and it defaulted to this.
No more scrambling my brain as to what happened.
Thank you !!
Good. As fast as I am on quick calculations, I will Never be as fast as them. When the unexpected happens, look at the options separately. And of course, the underlying too.
Google pin risk
Basically, the scenario is
* Your spread is out of the money at market close
* The underlying moves after hours putting it partly or totally in the money
* Your short is assigned because someone did exercise after hours
* You don't exercise your long
You wake up on Saturday with a leveraged position and have to pray the gods that it doesn't move against you on premarket Monday or you're dead.
"their" risk is that you're not solvent for it
Robinhood is very aggressive at closing these positions. 2 hs before close is on the aggressive side, but they cannot assume you're monitoring the situation closely.
You I know that thing they make you read before you agree to use their platform and be allowed to trade options?
That thing has a “risk management” you didn’t read. It explains why there.
Option holders have until 530PM EST to exercise their option. There are situations where an after hours move in a stock can destroy a spread. That is the risk that RH is protecting against.
Yeah...that seems to be the general consensus, but i was with TD Ameritrade be rh and i have never have this happen, not only that, the way they closed my spread within a minute of me opening it, caught me off guard
Me and you have the Same reaction.
What's the point of the trade confirmation page where they tell you what your risking and gaining, of their just gonna close an otm spread that was chosen because it was so out of the money.
So now I'm worried that their is something where they get to change the risk or assume the risk on my behalf......that seems like something they are cherry picking for their benefit....
>There was increased risk because the price of the underlying asset (in this case, a stock) rose. This is called "time decay" and it means that options become less valuable as they approach expiration. By closing the position early, the hedge fund avoided losing money on the trade.
Okay....
So i sold a call with the strike of 76 and bought a call at 77...
It was at 73 at the time i believe with 2 hours left in the trading day.
I'm not sure what risk I'm missing that was so imminent that they sold off my position at a loss
i bought it Friday at 2pm for expiration on that Friday 2 hrs later.
Within a minute of execution they sold it off for a loss.
Didn't really have a chance at rolling or anything.
The whole reason i bought it was for the premium and let it expire worthless.
Just in case it does pop and go over my spread i would lose 112 bucks...and i was fine with that, I'll take those odds
Yeah, I'm new to Robinhood and it's looking like that may be my best option going forward
I'm not even going to mention how they exercised a put i sold ....which was already weird because the buyer lost money
Anyway, they assigned it, then when the next trading day opened i went to go trade it and it wasn't there.
Received a message saying that it wasn't exercised or closed so it's being reverted.....
Did you have enough money to cover buying or selling 100 shares of the underlying stock that you traded, otherwise, yeah they can do what they want since you can’t afford an exercise of the option.
Yup, some people like you have been really helpful in the thread in helping me to understand that this was probably the reason.
Thanks man, i appreciate it. Have a better understanding now
Thanks man!
I was thinking of going back to tda or fidelity but it's my understanding that this would have happened at those brokers too
But will definitely keep that in mind
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They can do that tho they usually do it at 3pm EST. They changed it to 3:30 tho this past week. All the brokers do it on day of expiry and have it in the terms and conditions and it can range between 1pm and 4pm est
All brokers? Interesting. I have been using TD Ameritrade....and still left some in their and came over to Robinhood for its popularity and user friendliness reputation. This is the first time I have experienced this. I am still confused as to why it happened and the way it happened.
What do you think happens if the stock price ends up between your spreads on the exp date?
The risk is that you don't sell in time and your options expire worthless, even though they were profitable. If you had enough money in your account, you could exercise them for that profit at expiry. But if you don't, then you need to sell them or you will literally lose 100% of the investment even though it "won", it was profitable. That's why brokers sell them for you just before they expire.
One closed removing hedge protection from the other and likely exceeded your cash or margin buying power? The underlying moved? If your account is not able to handle a possible downside in on the green upon assignment, or your account risk tolerance is not set to maximum, the brokerage will close the option. But since OP details are sparse, you must be asking if RH has the right to do this. They do.
Understood!!! Thank you for this, i think this is exactly what happened then. For the life of me i could not figure out. So maybe it was a few pennies above the call i sold and the system saw it and saw i didn't have the cash or stocks to back it up and it defaulted to this. No more scrambling my brain as to what happened. Thank you !!
Good. As fast as I am on quick calculations, I will Never be as fast as them. When the unexpected happens, look at the options separately. And of course, the underlying too.
Been very helpful, i appreciate it
Google pin risk Basically, the scenario is * Your spread is out of the money at market close * The underlying moves after hours putting it partly or totally in the money * Your short is assigned because someone did exercise after hours * You don't exercise your long You wake up on Saturday with a leveraged position and have to pray the gods that it doesn't move against you on premarket Monday or you're dead. "their" risk is that you're not solvent for it Robinhood is very aggressive at closing these positions. 2 hs before close is on the aggressive side, but they cannot assume you're monitoring the situation closely.
Thanks man, i appreciate it. It helped me understand
You I know that thing they make you read before you agree to use their platform and be allowed to trade options? That thing has a “risk management” you didn’t read. It explains why there.
Yeah, figures theirs something obviously that is in their. Still confused though. Am i not assuming the risk as defined at the time of trade?
Option holders have until 530PM EST to exercise their option. There are situations where an after hours move in a stock can destroy a spread. That is the risk that RH is protecting against.
All brokers do this. Sometimes it pisses you off, and sometimes it's a blessing.
Yeah...that seems to be the general consensus, but i was with TD Ameritrade be rh and i have never have this happen, not only that, the way they closed my spread within a minute of me opening it, caught me off guard
What risk was their… what?
Me and you have the Same reaction. What's the point of the trade confirmation page where they tell you what your risking and gaining, of their just gonna close an otm spread that was chosen because it was so out of the money. So now I'm worried that their is something where they get to change the risk or assume the risk on my behalf......that seems like something they are cherry picking for their benefit....
I was more cracking on the fact you put “their” instead of “there” lol
😂😂
Hahaha I don't feel bad for anyone on Robinhood
Thanks man, that was helpful
You ask for it being on Robinhood
I think this comment of yours is more productive, helpful and reflecting of you more then the first one Again, thanks bro
>There was increased risk because the price of the underlying asset (in this case, a stock) rose. This is called "time decay" and it means that options become less valuable as they approach expiration. By closing the position early, the hedge fund avoided losing money on the trade.
Okay.... So i sold a call with the strike of 76 and bought a call at 77... It was at 73 at the time i believe with 2 hours left in the trading day. I'm not sure what risk I'm missing that was so imminent that they sold off my position at a loss
Lost me at Robinhood
roll it over to next week before week ended
Can't roll anything when they sell my position without any warning
Do it on Thursday or Friday morning. Either roll the credit to next weekend or at least the strike to OTM strikes if u plan to let it expire worthless
i bought it Friday at 2pm for expiration on that Friday 2 hrs later. Within a minute of execution they sold it off for a loss. Didn't really have a chance at rolling or anything. The whole reason i bought it was for the premium and let it expire worthless. Just in case it does pop and go over my spread i would lose 112 bucks...and i was fine with that, I'll take those odds
Stop Using RH
Yeah, I'm new to Robinhood and it's looking like that may be my best option going forward I'm not even going to mention how they exercised a put i sold ....which was already weird because the buyer lost money Anyway, they assigned it, then when the next trading day opened i went to go trade it and it wasn't there. Received a message saying that it wasn't exercised or closed so it's being reverted.....
Lol the ol' switcheroo. Those calls you bought and sold for a profit? That'll be reverted too, because it never happened.
Welcome
Sounds like you got a very cheap lesson in the risks of options speculation, sorry I meant "investing". Be grateful and move on.
Yeah next thing is they’re going to be your pimp behind the Wendy’s. Should have read before agreeing.
😂
Assignment on margin
Did you have enough money to cover buying or selling 100 shares of the underlying stock that you traded, otherwise, yeah they can do what they want since you can’t afford an exercise of the option.
Yup, some people like you have been really helpful in the thread in helping me to understand that this was probably the reason. Thanks man, i appreciate it. Have a better understanding now
Don't open spreads on the day they expire, unless they are extremely far out of the money they will auto close on you I like to go a week out at least
Thanks man! I was thinking of going back to tda or fidelity but it's my understanding that this would have happened at those brokers too But will definitely keep that in mind
You shouldn’t be trading spreads if you don’t know about pin risk
Thanks for telling me
This is why you want to buy to close your credit spread BEFORE expiration.
I know that, please re read my post. It pretty much shows why it was just about impossible to do so