WE FIXED THE GLITCH
*Up, up, down, down, left, right, left, right* Apparently, this cheat code will allow you to invest with unlimited leverage on the Robinhood app.
Umm ... what?
According to reports, there’s a glitch in the Robinhood Markets system that allows Robinhood Gold users to trade with more funds than are actually in a user’s account. After selling a covered call on margin, Robinhood incorrectly adds the value of the call to the user’s own capital. This, of course, means that Robinhood will lend them more in the future. Margin, baby.
The discovery came to light, where else, but Reddit’s WallStreetBets subreddit, home capitalism at its finest. One trader turned his $2k deposit into $50k of purchasing power, which he then used to buy Apple puts. Of course, in typical WSB fashion, he lost all the money (see video here). Another user allegedly turned his $4k deposit into a $1M position. Not a bad day at the office.
The bottom line ...
If it seems too good to be true then it probably is. Traders who are using this infinite leverage loophole to cheat the system could be held liable for the money and be found guilty of securities fraud. Robinhood has apparently already communicated directly with the customers.
Remember, prison sentences end … but r/WallStreetBets legends never die.
Robinhood Traders Discovered a Glitch That Gave Them ‘Infinite Leverage’ [Bloomberg]
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