Look for the opportunity in every crisis. Ask yourself where the best risk to reward rations lie in selling short, buying the deep dip, and trading reversals and gaps. Get in the habit of developing your own reactive technical trading signals and trade them with discipline. I'd recommend the SQB-AMAc strategy for anyone who still lacks an edge in the market. Yuril Zubong and this strategy will change your life.
What I heard is that there was an initial uptick which allowed him to withdraw $10000 from his account. Also they way his account was closed and the way the trades were allowed to go through were somewhat illegal, thereby shielding him from Robinhood going after him for the lost monies. So really he made $5000 by losing 200k.
I don't think he ever had to pay it back though, it was robinhoods fuck up. He withdrew 10k in premiums before they froze his account and then he deleted the app. 🤣🤣
A box, long or short, is just opposing call/put verticals, same strikes, so if he got assigned on some shorts why couldn't he just use the longs to offset? Not seeing exactly the mechanism of the blow-up. If he held the long options, he had the means to make delivery on the assignment.
and this i think is exactly why he walked with the 10k and RH could not recover, if they had liquidated his entire account as is without considering to exercise those long options, they were screwing up that badly themselves being his broker and should rightly take the hit. if they had sold my options off before giving me the opportunity to make delivery by exercising them you damned well can bet that's what i would argue, if they had the balls to bring a lawsuit...in this case it doesn't appear they did, and i like the point of the other commenter that it is squarely the job of the broker to respond to the advantage of the client and the brokerage ie not be daft and do this...but, i would bet they automate a lot of that process to cut costs and despite the relative ease of automating that they would rather blame client ineptness than fix shitty trading software in house. having used it...it is pretty terrible if you want things to reliably do what you want when you want them to, and one thing that really pisses me off is they gyp you out of a significant portion of after hours trading, the same securities i can trade at fidelity til say 830 pm robinhood is shutting it all down at 6pm...given the volatility in after hours trading and fact i've been enjoying that lately i was pretty pissed off to open the account and find out they were not trading my stuff til open at ~6pm, its not even a very precise clock....i would not be surprised this really was just braindead software to liquidate things to cover
Interestingly, his trade might have been good if he were using European style options instead of American style (maybe this is 1ronic?). He should have made this trade in Germany instead of America. Awesome video- liked and subbed. Keep it up!
I think actually finding a European style arbitrage box spread is very difficult. Well, I would say his “arbitrage” was more likely the risk premium on early exercise. Furthermore, a truly hedged investment should pay implied repo or otherwise known as “return on hedged investment” which is close to yield on Bunds or Treasuries (risk free yield). So even if we assume that he was hedged we would have to subtract yield on treasuries for that given timeframe before considering something an arbitrage opportunity. Example: If you hedge $100 payable in 10 years, while 10y Treasuries yield 2%, you want to get at least $102 in 10y as well, otherwise you could have just bought treasuries. Since implied repo is negative for euro investments you’d have to make ~0.5% arbitrage p.a. for a 10y hedged investment just to brake even.
The risk of early exercise is manageable by using the shares. Provided you use a real broker who is willing to work with you and understands the risk of the position after you get early assignment. Just trade out of it and sell the same contract again. The outsized leveraged risk only exists during that time while you are liquidating the stock position in order to re-enter the same initial short leg of the assigned option. The risk exists but only temporarily, depending on how good your broker is at getting u a fill (assuming liquidity is there, especially for the ITM options). And how volatile the intraday price of the underlying is ;) just keep your fingers crossed ha ha! But tbh 95%+ of brokers dont understand how to work a box position.
UVXY is some kind of a volitility ETF which always goes down in value except when the market starts crashing then it shoots up in value which would lead to the options being exercised.
the real mistake 1RONYMAN made was doing this on Robinhood with American style options. He should have just realized that there's no free lunch and done his box spreads on a real broker that charges comissions on an index like SPX.
@@simulatethat6099 The short call he held was covered by a deep in-the-money (ITM) call option. Given this, why didn’t he simply exercise his ITM call to cover the short call? Doing so could have allowed him to make a profit.
Question: If he had a box spread with american options, doesnt this mean that he is hedged against someone excersising their options early? Lets say someone excersises their itm option(otm at the point of purchase) didnt ironyman also have an itm option (atm/less otm at purchase) he could excersise?
This is back when WSB was still awesome. He withdrew some of the money and 2x'ed himself monetarily and robinhood couldn't really do anything about it due to their terms of service, which is why they changed them after this incident. Robinhood had to eat the losses. Hilarious and 1ronyman is a legend.
Rough explanation The simplest option is the long call: you pay some money now, so that on the deathday, you have the right to buy the asset at the fixed price. If on the deathday, the asset's price is higher, you would obviously use the right and sell it off to make money. If not, you would obviously let it go. The long put is similar. Now, there's something very interesting about "the long call": it's got "unlimited upside", meaning that theoretically you could make unlimited amount of money on it. The question is -- where did that come from? Well the one selling the long call option is taking on the risk of "unlimited downside". Of course, nobody can literally take on unlimited downside (not even the broker who sold you the long call option), so what usually happens is that if the price goes high enough during the process, the option kind of "goes default", killed off early, and instead of enjoying the unlimited upside, you only get a high but not unlimited upside. This would make the weird box spread problem a lot easier to get. The "apparent" unlimited upside is only apparent. Each box-spread is composed of two options, one with unlimited downside for Robinhood, another with unlimited downside for ironyman. Now he got the unfortunate case where the unlimited downside for him got defaulted first....
Robin hood charge spreads.. example it cost you $2.22 per stock/shares, robin hood will charge you spreads,, $2.22 per stock become - $2.24 per stocks . When you buy and sell they take an cut of the spread... if you buy 2000 stock/shares at $2.22 plus robin hood charging spreads it becomes $2.24... you get it now
The short call he held was covered by a deep in-the-money (ITM) call option. Given this, why didn’t he simply exercise his ITM call to cover the short call? Doing so could have allowed him to make a profit.
If traded and exercised correctly early assignment shouldn't matter. If you buy a vertical spread your max risk / gain is difference between the strike prices net of the premium paid / received. So if you sell a $50 put and buy a $60 put for $9 your max profit is $100. If your short put gets early assigned then your broker should simply exercise your long put. You buy 100 shares @ $40 and sell them @ $50 and net $1000 - $900 = $100. A box is simultaneously a vertical put & vertical at same strike prices but reversed. If the box was bought correctly the only way he was in the whole was if RH screwed up and didn't exercise his option.
Wait i dont get it.. i thought whe your doing option the ammount of risk you put in is only the same ammount you can possibly loose.. so why did he loose more than 5k if he only put 5k in? I dont get it.. even if he did a call and stock went down.. and went -10k he would only loose -5k? Can someone explain?
Fuzzy on the details, but one of his options got exercised . That means he was required to buy the actual shares. He didn’t have the cash to actually purchase shares so his account went negative. He shouldn’t have been allowed to enter such a contract.
Just came across this. I routinely trade short boxes. Robinhood is a bad brokerage. Box can never lose so much. The mistake was that the trader did not have portfolio margin and the long stock was not used as a collateral.
The short call he held was covered by a deep in-the-money (ITM) call option. Given this, why didn’t he simply exercise his ITM call to cover the short call? Doing so could have allowed him to make a profit.
Selling your order flow, Robinhood Gold, Cash Management. They prob still lose money but like all startups their not really worried, just looking for growth
@@MHFIN theyre probably getting subsidised by bigger players in the market. All these morons throwing money into the market adds liquidity and pumps up prices.
selling your order flow is a very nice way to put it. their hft partners are actually front runners. it's not illegal because trhey can use the poor optimization of their platform as an excuse. it takes a long time to show you prices (in trading this means "not literally instant to your human eye, like all other legitimate platform in existence") is not a mistake. it's deliberate.
there is NO WAY THATS HIS NAME BRUHHHH and also i watched the video but am still a little confused can someone put it in simple man terms for me? Haha sorry
Ivan a video going into the details of box spreads would make you yawn in 30 seconds. This video is a simplified version of what happened, if you want to know the details look up assignment risk in option box spreads and you'll get a good idea.
That's correct but realistically the rules surrounding this incident are quite grey. Not sure if anyone besides a securities lawyer would be able to tell us if he was actually liable for that amount had Robinhood actually pursuit it.
@Davon Gallimore Yes that's right, but we're talking about Robinhood coming after 1R0NYMAN. In this instance it's not well understood whether or not he liable for the 53k loss he incurred but never paid. That is because Robinhood takes some blame in this situation due to poor risk analysis.
There's a new legend now, "GUH".
Don't count out Analfarmer2. His story is incredible also.
And guh is just hilarious 😂😂
I don’t see how you can overleverage random apple stock short options and expect to make money
G U H
That was the ugliest GUH ive ever heard, it truly disgusts me
Look for the opportunity in every crisis. Ask yourself where the best risk to reward rations lie in selling short, buying the deep dip, and trading reversals and gaps. Get in the habit of developing your own reactive technical trading signals and trade them with discipline. I'd recommend the SQB-AMAc strategy for anyone who still lacks an edge in the market. Yuril Zubong and this strategy will change your life.
-2000% isnt entirely accurate because ironyman withdrew 10k before his account was deleted, so really he had 100% profit
What a legend lmfao
the real reason why box spreads were bannned
What I heard is that there was an initial uptick which allowed him to withdraw $10000 from his account. Also they way his account was closed and the way the trades were allowed to go through were somewhat illegal, thereby shielding him from Robinhood going after him for the lost monies. So really he made $5000 by losing 200k.
I've heard a story similar in nature from someone on Reddit. Wish he would do a big follow up post with the full details
So who's paying the 200k losses?
@@fitrianhidayat robinhood has to eat the loss
I don't think he ever had to pay it back though, it was robinhoods fuck up. He withdrew 10k in premiums before they froze his account and then he deleted the app. 🤣🤣
Lost a little over 1k over the last months these videos are soothing
Just so you know before shit went tits up he withdrew 10000 dollars from his account and escaped leaving robinhood to pay for the rest
1RONYMAN 4 PRESIDENT
Slogan: It literally can not go tits up
Can't believe how small of an amount RH settled for with him. But I guess he did expose a huge flaw for them too
I got a Robinhood ad when watching this
I got no ads 🙂
"Can we interest you in some YOLO box spreads?" - RH
Pretty sure he didn’t pay back the debt and got to keep $10000
From what I've read and understand, robinhood was on the hook for that 52k
It seems that actually it was Robinhood fault. The risk for box spreads is the commission or the cost of the box > spread strikes
A box, long or short, is just opposing call/put verticals, same strikes, so if he got assigned on some shorts why couldn't he just use the longs to offset? Not seeing exactly the mechanism of the blow-up. If he held the long options, he had the means to make delivery on the assignment.
and this i think is exactly why he walked with the 10k and RH could not recover, if they had liquidated his entire account as is without considering to exercise those long options, they were screwing up that badly themselves being his broker and should rightly take the hit. if they had sold my options off before giving me the opportunity to make delivery by exercising them you damned well can bet that's what i would argue, if they had the balls to bring a lawsuit...in this case it doesn't appear they did, and i like the point of the other commenter that it is squarely the job of the broker to respond to the advantage of the client and the brokerage ie not be daft and do this...but, i would bet they automate a lot of that process to cut costs and despite the relative ease of automating that they would rather blame client ineptness than fix shitty trading software in house. having used it...it is pretty terrible if you want things to reliably do what you want when you want them to, and one thing that really pisses me off is they gyp you out of a significant portion of after hours trading, the same securities i can trade at fidelity til say 830 pm robinhood is shutting it all down at 6pm...given the volatility in after hours trading and fact i've been enjoying that lately i was pretty pissed off to open the account and find out they were not trading my stuff til open at ~6pm, its not even a very precise clock....i would not be surprised this really was just braindead software to liquidate things to cover
Still better than most hedge fund managers
Palpatine is impressed with this dark side trading. You will get Sith degeneracy but your hatred of virgin fund investors will make you strong.
Interestingly, his trade might have been good if he were using European style options instead of American style (maybe this is 1ronic?). He should have made this trade in Germany instead of America. Awesome video- liked and subbed. Keep it up!
Hey, thank you! Love the feedback
I think actually finding a European style arbitrage box spread is very difficult. Well, I would say his “arbitrage” was more likely the risk premium on early exercise. Furthermore, a truly hedged investment should pay implied repo or otherwise known as “return on hedged investment” which is close to yield on Bunds or Treasuries (risk free yield). So even if we assume that he was hedged we would have to subtract yield on treasuries for that given timeframe before considering something an arbitrage opportunity. Example:
If you hedge $100 payable in 10 years, while 10y Treasuries yield 2%, you want to get at least $102 in 10y as well, otherwise you could have just bought treasuries.
Since implied repo is negative for euro investments you’d have to make ~0.5% arbitrage p.a. for a 10y hedged investment just to brake even.
Don't u have ur own channel to worry about?
Ps your channel is dank
Ironyman 2 is happening on WSB right now. What a time to be alive.
Just saw it. Might make a video
As complicated as this is you explained it well. Its a lot of info
So what if you initiated this trade in SPX? There is no risk of assignment because it is cash settled?
In your title it says -2000%
But im sure it should be -4000%
The potential loss was 4000% but he lost almost 1200%
Not sure that is the right Euro symbol at 6:00
because it isn't...
The risk of early exercise is manageable by using the shares. Provided you use a real broker who is willing to work with you and understands the risk of the position after you get early assignment. Just trade out of it and sell the same contract again. The outsized leveraged risk only exists during that time while you are liquidating the stock position in order to re-enter the same initial short leg of the assigned option. The risk exists but only temporarily, depending on how good your broker is at getting u a fill (assuming liquidity is there, especially for the ITM options). And how volatile the intraday price of the underlying is ;) just keep your fingers crossed ha ha! But tbh 95%+ of brokers dont understand how to work a box position.
Here from the GME stonks. Specifically, someone was reminiscing about this story and I had to look at the youtube video.
UVXY is some kind of a volitility ETF which always goes down in value except when the market starts crashing then it shoots up in value which would lead to the options being exercised.
the real mistake 1RONYMAN made was doing this on Robinhood with American style options. He should have just realized that there's no free lunch and done his box spreads on a real broker that charges comissions on an index like SPX.
@@simulatethat6099 The short call he held was covered by a deep in-the-money (ITM) call option. Given this, why didn’t he simply exercise his ITM call to cover the short call? Doing so could have allowed him to make a profit.
Question: If he had a box spread with american options, doesnt this mean that he is hedged against someone excersising their options early? Lets say someone excersises their itm option(otm at the point of purchase) didnt ironyman also have an itm option (atm/less otm at purchase) he could excersise?
This is back when WSB was still awesome. He withdrew some of the money and 2x'ed himself monetarily and robinhood couldn't really do anything about it due to their terms of service, which is why they changed them after this incident. Robinhood had to eat the losses. Hilarious and 1ronyman is a legend.
Lol. Great explanation. 1ronyman still cracks me up. From WSB
Obviously RH hadn't actually learned because somebody just leveraged 25x on 2k.
Crazy. I think I exploited a somewhat clever loophole. Video incoming
@@MHFIN ruclips.net/video/A-tNkuYV4_Q/видео.html
MHFIN lololol
Rough explanation
The simplest option is the long call: you pay some money now, so that on the deathday, you have the right to buy the asset at the fixed price. If on the deathday, the asset's price is higher, you would obviously use the right and sell it off to make money. If not, you would obviously let it go. The long put is similar.
Now, there's something very interesting about "the long call": it's got "unlimited upside", meaning that theoretically you could make unlimited amount of money on it.
The question is -- where did that come from?
Well the one selling the long call option is taking on the risk of "unlimited downside".
Of course, nobody can literally take on unlimited downside (not even the broker who sold you the long call option), so what usually happens is that if the price goes high enough during the process, the option kind of "goes default", killed off early, and instead of enjoying the unlimited upside, you only get a high but not unlimited upside.
This would make the weird box spread problem a lot easier to get. The "apparent" unlimited upside is only apparent. Each box-spread is composed of two options, one with unlimited downside for Robinhood, another with unlimited downside for ironyman.
Now he got the unfortunate case where the unlimited downside for him got defaulted first....
Robin hood charge spreads.. example it cost you $2.22 per stock/shares, robin hood will charge you spreads,, $2.22 per stock become - $2.24 per stocks . When you buy and sell they take an cut of the spread... if you buy 2000 stock/shares at $2.22 plus robin hood charging spreads it becomes $2.24... you get it now
The short call he held was covered by a deep in-the-money (ITM) call option. Given this, why didn’t he simply exercise his ITM call to cover the short call? Doing so could have allowed him to make a profit.
he ended up cashing out 10k so it's a win for him
RUclips search sucks where’s the video put to thunderstruck?? That’s the only recap on 1ronmoney anyone ever needs.
Theres another new legend now, 4.3 million tesla -GUHs.
Video about that upcoming today!
so what you're saying is I should replicate what 1ronyman did but box spreads on indices as they have Euro options?
If traded and exercised correctly early assignment shouldn't matter. If you buy a vertical spread your max risk / gain is difference between the strike prices net of the premium paid / received. So if you sell a $50 put and buy a $60 put for $9 your max profit is $100. If your short put gets early assigned then your broker should simply exercise your long put. You buy 100 shares @ $40 and sell them @ $50 and net $1000 - $900 = $100.
A box is simultaneously a vertical put & vertical at same strike prices but reversed. If the box was bought correctly the only way he was in the whole was if RH screwed up and didn't exercise his option.
@@matthewbarnes2167 Correct you're still winning.
So what youre saying is it would have worked with european options?
As far as I understand yes. But someone with more familiarity with Euro options can probably explain further.
Any update to what happened?
The part of the video where VOL crushed and you can see it in his face... priceless! GUH!
Wait i dont get it.. i thought whe your doing option the ammount of risk you put in is only the same ammount you can possibly loose.. so why did he loose more than 5k if he only put 5k in? I dont get it.. even if he did a call and stock went down.. and went -10k he would only loose -5k? Can someone explain?
Fuzzy on the details, but one of his options got exercised . That means he was required to buy the actual shares. He didn’t have the cash to actually purchase shares so his account went negative. He shouldn’t have been allowed to enter such a contract.
He was selling options
Just came across this. I routinely trade short boxes. Robinhood is a bad brokerage. Box can never lose so much. The mistake was that the trader did not have portfolio margin and the long stock was not used as a collateral.
this is literally the titanic
Finally a good tutorial
THanks.
Still do not understand. If he is assigned, just close the long options that have acted as protection
That's what i'm saying. He was protected
Or just wait for a glitch that shows you lost an absurd amount of money or gained a shitload today.
Man saw arbitrage but didn’t understand the contracts he was trading. Got assigned.
The short call he held was covered by a deep in-the-money (ITM) call option. Given this, why didn’t he simply exercise his ITM call to cover the short call? Doing so could have allowed him to make a profit.
7:30, Thougth i was watching a candlestick on LSD
It literally can't go tits up
What bothers me the most is the "€" sign at 6:10 :D aside from that great video!
Most of what u said made no sense to me
for those wondering the problem. he sold instead of buying.
I still don't get it
Wow now I know why robinhood doesn’t allow boxspreads
He did pay it back after he moved to euro options and is very successful there.
ControlTheNarrative: Hold my beer..... GUH
A wild /u/ControlTheNarrative appears
not to be that guy, but... If Ironyman sued Robinhood, for damages/not properly warning him, he might have had a legitimate case
Where tf are these people. I want to see how guj is doing
I'd love to know too
im an idiot with day trading and always panic my gains away but this makes me feel better
Can't make money if you limit you upside but expose yourself to unlimited downside
LMAO Ironyman used this on a VOL etf? LMAO. No wonder. I've heard this story before.
6:00 the Euro symbol with just one line is cursed...
€
It’s pronounced “I-Run-Knee”
Not “Iron-ee”
And the same community banded together to send GME to the moon and back and not a single one of them made a dollar.
Subscribed for this
It literally cannot go tits up
I feel for this guy if this is considered a "wash sale".
How does Robin Hood make money?
Selling your order flow, Robinhood Gold, Cash Management. They prob still lose money but like all startups their not really worried, just looking for growth
@@MHFIN theyre probably getting subsidised by bigger players in the market. All these morons throwing money into the market adds liquidity and pumps up prices.
selling your order flow is a very nice way to put it. their hft partners are actually front runners. it's not illegal because trhey can use the poor optimization of their platform as an excuse. it takes a long time to show you prices (in trading this means "not literally instant to your human eye, like all other legitimate platform in existence") is not a mistake. it's deliberate.
@@Schoolship. If they do frontload they are lying right to our faces. In their FAQ it explicitly states they do not engage in that practice.
He won a trip to Ramenistan!
Not the most famous RobinHood story anymore!
Robinhood no comission? Yea ask the irs if u have to pay them $10 per transaction. I ended up paying $710 . (Only the transactions) .
Every fucking time I hear this i fucking cry
Is this Seth Green?
Who?
Wow super interesting sometimes I forget that when I sell options they can exercise whenever they want
always a chance. Rare though
$59k isn’t that much
no he ended up getting 10g in cash n vanishing !
My question is why would someone ever exercise an option?
Guh
Up Work stock is a good buy and extremely oversold!!! please talk about it UPWK
Shit company no future.
You really sound like you know nothing about options, bunch of filler words, waste of time. He can't lose 59000 when the options are exercised
Robinhood charges 2 cents per option
Did not know this
they do not. it's commissions free trading. there are no fees.
@@redditonvhs9558 they do, go to your monthly account statement
@@redditonvhs9558 i found out about it when i was doing my taxes
This is robinhoods fault for not allowing the correct margin needed to trade this strategy, lol
dethroned by GUH
Uber loses more.
Not if it was a euro option :)
there is NO WAY THATS HIS NAME BRUHHHH
and also i watched the video but am still a little confused
can someone put it in simple man terms for me? Haha sorry
There wasn't anything wrong with his trade unless he did it wrong. RH was at fault for not taking the proper action as it executed.
do another video with the "GUH" leyend!!
I did. Check out my channel!
Lots of money!
The most!
supposably 🤔
Why the fuck didn’t he run this idea by someone smart
Not a lot of people knew what a box spread was. Pretty niche option stradegy for retail investors
You're making this video when you don't even understand the details and reasoning behind the assignment risks.
sure
haha why does this need such thought-out narration?
It's a great story. Almost biblical
Roll out
AMC 300% oooyaaa
Hey
1ronic
GUH
Lol
This doesn't explain anything lol
Ivan a video going into the details of box spreads would make you yawn in 30 seconds. This video is a simplified version of what happened, if you want to know the details look up assignment risk in option box spreads and you'll get a good idea.
Too funny
There's nothing heroic or interesting about not understanding how options work, and digging a 53k hole for yourself.
Quite fascinating in my opinion. Wouldn't call it heroic
Go get a -2000% return on a trade and then call it not interesting
That's correct but realistically the rules surrounding this incident are quite grey. Not sure if anyone besides a securities lawyer would be able to tell us if he was actually liable for that amount had Robinhood actually pursuit it.
@@MHFIN You can owe the IRS $0.01 and they will definitely come after it, i'm 100% sure they wouldn't let you get away with $53,000 lol.
@Davon Gallimore Yes that's right, but we're talking about Robinhood coming after 1R0NYMAN. In this instance it's not well understood whether or not he liable for the 53k loss he incurred but never paid. That is because Robinhood takes some blame in this situation due to poor risk analysis.
It literally cannot go tits up
Lol
Guh