1/17: In honor of the @RobinhoodApp S-1 I thought I’d share a conversation I had a few weeks ago with a friend who used Robinhood as his on-ramp into the trading world.
Brace yourselves. It was a fun conversation but pretty eye opening in lots of ways.
Brace yourselves. It was a fun conversation but pretty eye opening in lots of ways.
2/17: It started with two texts:
“I bought 2 $9 CLOV call options on 6/7 for a total of $170. Expiration 6/18. The value is now at $2450. The share price is up again this morning almost $5. I want to lock in profits but don't want to miss out on future profit by selling now.”
“I bought 2 $9 CLOV call options on 6/7 for a total of $170. Expiration 6/18. The value is now at $2450. The share price is up again this morning almost $5. I want to lock in profits but don't want to miss out on future profit by selling now.”
3/17: “Any suggestions on doing this. I was thinking of selling 1 contract to get back my initial investment plus 1400% profit and let the other ride until the day before expiration. Is there any other strategy you may know?”
4/17: I gave him the generic answer to be happy with his profit and close out his positions, but when I saw him a few days later in person it kicked off a deeper conversation. He’s a super nice guy but I have to admit that the conversation was🤯!
A few abbreviated highlights:
A few abbreviated highlights:
5/17: I WANT ACTION
Me: What made you decide to buy options in CLOV?
Him: It was the next thing that everyone agreed to do. I read about it online and wanted to be in on the action. I think I was a bit late but I’m pumped I got in.
Me: What made you decide to buy options in CLOV?
Him: It was the next thing that everyone agreed to do. I read about it online and wanted to be in on the action. I think I was a bit late but I’m pumped I got in.
6/17: US VS THEM
Me: Do you know what CLOV does?
Him: Nope. This is about sticking it to the hedge funds. Those bastards are crooked and use games to make insane amounts of money. They deserve to go down and I like being part of the group that does it.
Me: Do you know what CLOV does?
Him: Nope. This is about sticking it to the hedge funds. Those bastards are crooked and use games to make insane amounts of money. They deserve to go down and I like being part of the group that does it.
7/17: HEDGE FUNDS (1)
Me: You obviously don't like hedge funds. Do you know what they do?
Him: They make money shorting stocks with shares that don’t exist. All they care about is making money. The little guy gets hurt and finally with Robinhood we can take them down.
Me: You obviously don't like hedge funds. Do you know what they do?
Him: They make money shorting stocks with shares that don’t exist. All they care about is making money. The little guy gets hurt and finally with Robinhood we can take them down.
8/17: HEDGE FUNDS (2)
Me: That’s not exactly what they do. But what’s so bad about investing in the market to make money?
Him: The rich guys in NY make money illegally by manipulating the system. We’re just manipulating them. We’re outplaying them and taking their money.
Me: That’s not exactly what they do. But what’s so bad about investing in the market to make money?
Him: The rich guys in NY make money illegally by manipulating the system. We’re just manipulating them. We’re outplaying them and taking their money.
9/17: SHORT SELLING (1)
Me: You seem really upset about short selling. Why?
Him: Why should you be allowed to make money betting against a company, especially with shares that don’t exist? That feels really shady.
Me: You seem really upset about short selling. Why?
Him: Why should you be allowed to make money betting against a company, especially with shares that don’t exist? That feels really shady.
10/17: SHORT SELLING (2)
Me: You love betting on sports. Aren’t you betting against a team?
Him: That’s different. I want my team to win but there’s a team on the other side that has to lose for my team to win. Why would anyone be allowed to profit when a company fails?
Me: You love betting on sports. Aren’t you betting against a team?
Him: That’s different. I want my team to win but there’s a team on the other side that has to lose for my team to win. Why would anyone be allowed to profit when a company fails?
11/17: PFOF (1)
Me: What do you like about Robinhood?
Him: It’s free and super easy. They don’t make any money on my trades so I can move my money around a lot. I like trying a little of this and a little of that and it works because its free.
Me: What do you like about Robinhood?
Him: It’s free and super easy. They don’t make any money on my trades so I can move my money around a lot. I like trying a little of this and a little of that and it works because its free.
12/17: PFOF (2)
Me: Do you realize they make money by selling your order flow to electronic trading firms? They make a little on stock trades, more on crypto and even more on options.
Him: First I’ve heard of it. They don’t charge me anything so to me its free.
Me: Do you realize they make money by selling your order flow to electronic trading firms? They make a little on stock trades, more on crypto and even more on options.
Him: First I’ve heard of it. They don’t charge me anything so to me its free.
13/17: CRYPTO (1)
Me: You’re really into Crypto these days. What’s so interesting about it?
Him: Once you find the right app, you can buy all sorts of coins that go up and down a lot. This is where Robinhood sucks. They need to let me buy whatever I want.
Me: You’re really into Crypto these days. What’s so interesting about it?
Him: Once you find the right app, you can buy all sorts of coins that go up and down a lot. This is where Robinhood sucks. They need to let me buy whatever I want.
14/17: CRYPTO (2)
Me: What coins do you like?
Him: I like the ones that are cheap. I can spread $100 across a few games on Draft Kings but it doesn't buy me squat of $BTC. I’d rather own 200 $DOGE or even better 10 million $SHIB. That way if it hits I make a ton of money.
Me: What coins do you like?
Him: I like the ones that are cheap. I can spread $100 across a few games on Draft Kings but it doesn't buy me squat of $BTC. I’d rather own 200 $DOGE or even better 10 million $SHIB. That way if it hits I make a ton of money.
15/17: CRYPTO (3)
Me: Why are there so many coins? Do you know what they do?
Him: I know that crypto is meant to make paper money unnecessary and stop governments from controlling what I can spend money on. But I haven’t researched the differences in the coins much.
Me: Why are there so many coins? Do you know what they do?
Him: I know that crypto is meant to make paper money unnecessary and stop governments from controlling what I can spend money on. But I haven’t researched the differences in the coins much.
16/17: To be completely transparent, the above Tweets barely scratch the surface of our conversation. It was much deeper, much longer and consisted of a lot of back-and-forth. But hopefully I’ve captured the essence in a 280-character format.
17/17: My personal takeaway is that I have to digest what’s going on in the trading space if my friend is the new prototypical retail trader. He LOVES trading. He LOVES being part of a movement. And he doesn’t care if he knows what he’s doing because he’s having fun.
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