Their decision came with a tradeoff: A spike in volatility could be very, very bad 2/X
Robinhood is not the only brokerage that limited buys on GameStop this week, so why is it catching all the heat?
Maybe because @stoolpresidente & others were quick to spread a theory that hedge funds must have forced the move? Or, Robinhood acted alone
A thread on facts 1/X

Their decision came with a tradeoff: A spike in volatility could be very, very bad 2/X
They carry some liability in the days it takes for your trade to settle. That usually isn't a problem, but can become one if a stock swings fast 3/X
But Robinhood in 2018 decided to cut ties with Apex to build their own clearing house called Clearing By Robinhood 4/X
In Robinhood's own blog they trumpeted their achievement as the "only clearing system built from scratch, and on modern technology, in the last decade." 5/X

So what took Robinhood so long? 7/X
Building their own clearing house came with added risks - it just seems no one saw GameStop rising 500% in a week 8/X

Letting customers continue to buy GameStop stock was like selling lottery tickets while knowing there could be problems with the drawing 9/X
Messaging to customers that this wasn't about "protection" could have come sooner
The SEC could've done something (anything) and *market wide* to protect the lopsided impact to protect the market's poorest investors 10/X
But running with a theory that hedge funds pressured them into anything before those facts exist is dangerous and endangers any real change 11/X
I'm just as angry about it as everyone else (even Mama Guz couldn't trade on Robinhood!) I'll keep chasing the truth.
https://t.co/CGhDIqjRk1
More from Trading
Thread on Short straddle with adjustments:
Short straddle is non-directional strategy
Selling same strike price CALL/PUT option same underlying with same expiry.
Nifty Spot at 14353, So you can sell 14350 CE as well 14350 PE of 14 Jan. Expiry.
(1/n)
*RETWEET for max response
Bullish short straddle: Selling 14400 CE and 14400 PE of same expiry.
Bearish short straddle: Selling 14250 CE and 14250 PE of same expiry.
You can sell straddle as per your market view.
If you are natural view sell CE and PE at ATM strike.
(2/n)
Short straddle has limited profit potential (only premium) and unlimited risk without adjustment.
In Example, Short straddle of 14350, Breakeven is (14131.0-14569.0), need 1.7Lac Margin to sell straddle.
Maximum profit: 16k and Loss: Unlimited, Winning probability: 50%
(3/n)
If market staying near at 14350 then win. Probability increase slowly. Rewards also increase slowly.
Volatility(IV) is also play important role in selling straddle, Like If IV increase so straddle premium increase and IV cool off so premium casually comes down.
(4/n)
Short straddle adjustment:
https://t.co/59Lr64kEtK way to limit the overnight risk.
Convert short straddle in Ironfly, its nothing we have to add long strangle in short straddle it become Ironfly. It gives the good Risk Rewards.
(5/n)
Short straddle is non-directional strategy
Selling same strike price CALL/PUT option same underlying with same expiry.
Nifty Spot at 14353, So you can sell 14350 CE as well 14350 PE of 14 Jan. Expiry.
(1/n)
*RETWEET for max response
Bullish short straddle: Selling 14400 CE and 14400 PE of same expiry.
Bearish short straddle: Selling 14250 CE and 14250 PE of same expiry.
You can sell straddle as per your market view.
If you are natural view sell CE and PE at ATM strike.
(2/n)
Short straddle has limited profit potential (only premium) and unlimited risk without adjustment.
In Example, Short straddle of 14350, Breakeven is (14131.0-14569.0), need 1.7Lac Margin to sell straddle.
Maximum profit: 16k and Loss: Unlimited, Winning probability: 50%
(3/n)

If market staying near at 14350 then win. Probability increase slowly. Rewards also increase slowly.
Volatility(IV) is also play important role in selling straddle, Like If IV increase so straddle premium increase and IV cool off so premium casually comes down.
(4/n)
Short straddle adjustment:
https://t.co/59Lr64kEtK way to limit the overnight risk.
Convert short straddle in Ironfly, its nothing we have to add long strangle in short straddle it become Ironfly. It gives the good Risk Rewards.
(5/n)
