In the wake a young user’s suicide, popular trading platform Robinhood has decided to tighten up its options platform.
As we sadly detailed here, the devastating suicide of 20-year-old Alex Kearns, after discovering he faced a loss of over $700,000 on his massively-levered options account, exposed the very real downside of the speculative mania occurring in American stock and option markets currently; and facing the potential of some seriously bad PR, Vlad Tenev & Baiju Bhatt, Co-Founders and Co-CEOs of Robinhood wrote in a blog post how they have worked to improve the customer experience (presumably in the hope of avoiding sudden suicide-inducing collapses in net worth?).
On Saturday, we learned that Alex Kearns, a Robinhood customer, died by suicide and left a note citing confusion with our product. We quickly reached out to Alex’s family to share our condolences and offer to speak. We are personally devastated by this tragedy.
Over the past week, our team at Robinhood has been focused on identifying how we can improve Robinhood’s customer experience, specifically around our option flows involving multi-leg exercise and assignment. We want to share with you today what we are committing to as a company moving forward:
Eligibility: We are considering additional criteria and education for customers seeking level 3 options authorization to help ensure customers understand more sophisticated options trading.
Educational resources: We are expanding our educational content related to options trading. We have added information on early options assignments to our help center and we will be hiring an Options Education Specialist to further enhance education related to our options offering.
User Interface: In the near term, we are rolling out improvements to in-app messages and emails we send customers about their multi-leg options spreads. We are also adding detail to the in-app history page to help users understand the mechanics of early options assignments. We are also working on changes to our user interface, including the way buying power is displayed. These changes will take a bit of time to roll out, but our teams are hard at work.
While we recognize that nothing can ease the pain that Alex’s family is feeling now, in addition to the steps above, Robinhood is making a $250,000 donation to the American Foundation for Suicide Prevention. If you or anyone you know is in crisis, please reach out for help.
It is not lost upon us that our company and our service have become synonymous with retail investing in America, and that this has led to millions of new investors making their first investments through Robinhood. We recognize this profound responsibility, and we don’t take it lightly. Our aspiration is to innovate, lead, and go beyond the status quo.
We remain ever committed to providing the best investing experience as well as the resources customers need to get and stay informed.
So, is this an advertisement too?
As a family member said at the time, here’s the truth. AND PLEASE PAY ATTENTION TO THIS IF YOU’RE YOUNG.
The markets are bananas right now. It’s not the time for amateurs. Really really pay attention to position sizing. Stay away from exotic instruments like options and futures.
These are the times Buffett talks about being more careful because others aren’t.
Almost everything you see on this platform is coming from someone with a bias, myself included. Don’t pay attention to how many followers someone has, where they work, etc.
Judge investments on their own merits, as you understand them.
And, if you find yourself in a world of shit please talk to your family. Listen to @QTRResearch and @sanglucci pod about blowing up. Shit, hit me up. You are not alone. Finance isn’t worth losing your life over.
I do have one ask- if you know of Robinhood willingly extending way too much credit/margin please let me know. They are squarely on my radar and I have time for a research project.
Alex, R.I.P. You will forever be missed.
Once again we note that while it is all well and good to mock the likes of Dave Portnoy who has become the poster-child for the current round of speculative mania (picking stock tickers at random from a scrabble bag today for instance)…
Portnoy using scrabble letters at random to pick a stock right now..
— momotrader (@momotrader) June 19, 2020
the fact of the matter is that the dollars being levered into worthless stocks (and options) are real to many people and when this liquidity-fueled shitshow ends, there will be hell to pay… and this time everyone knows The Fed is responsible for enabling it.