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Robinhood users have taken to Twitter to express their displeasure as they are unable to revel in the SVB and Signature Bank failure.
Users of the Menlo-Park-headquartered financial services company Robinhood Markets Inc (NASDAQ: HOOD) app have been unable to cash in on the recent crumble of Signature Bank and Silicon Valley Bank (SVB) despite their put options. Investors gamble on the possible decline of stock via put options. If they are lucky and the said stock price indeed declines, the trader could sell the shares at a higher price than the market value. Alternatively, investors may sell the contract to another trader taking risks that the stock would further decrease. People make profits either way.
Robinhood User Complain of Not Able Realize Bet Gains Against SVB and Signature
Robinhood users sensed a possible stock plunge for SVB and Signature Bank before the US banks indeed collapsed. Hence, some purchased put options on the stocks. As hoped by Robinhood users, SVB and Signature Bank collapsed, and the unfortunate event is meant to be an advantage for them. However, users of the trading app said the financial services provider is not letting them sell their contracts or get paid. To worsen the matter, many of the contracts would expire on Friday. This has additionally triggered many traders who are not ready to take advantage of the opportunity.
Forbes explained that the fact that SVB and Signature Bank shares are no longer trading makes it difficult for Robinhood to allow users to cash in. With the shares no longer in the market, many are unwilling to buy the contracts. SVB Financial Group is currently closed down 60.41% to $106.04.
Similar to Robinhood, there are comments against Fidelity Investments for not paying up retail options traders. But the attack is big on Robinhood due to its history. While the mobile trading app is designed to give people access to the market and democratize finance, the great meme stock rally in 2021 got Robinhood stuck. The alarming increasing demand for GameStop shares threatened the platform’s infrastructure. The financial services company could not sufficiently meet the demand, resulting in the company almost crumbling. Robinhood also had to face Congress and probing by the House Financial Services Committee.
Robinhood users have taken to Twitter to express their displeasure as they are unable to revel in the SVB and Signature Bank failure. Popular short-seller Marc Chodes also weighed on the matter, advising the trading app users to engage a lawyer.