10

It isn't the first initiative (see link below) and maybe this one will stick around. Time will be a good test. Here is an article on it.... http://www.investopedia.com/articles/active-trading/020515/how-robinhood-makes-money.asp They plan to make money off unused balances - so they hope to get the masses signed up using the 0$ fees. Also, no type of ...


9

All discount brokers offer a commission structure that is based on the average kind of order that their target audience will make. Different brokers advertise to different target audiences. They could all have a lot lower commissions than they do. The maximum commission price for the order ticket is set at $99 by the industry securities regulators. When ...


9

Your money is likely not insured as the SIPC said that the accounts they insure are not meant to hold cash strictly for savings. Cash balances sitting in accounts collecting interest for a long period of time also skirt the SIPC rules on what's covered in the event of a collapse, Harbeck said. It may fall under the category of a loan because the brokerage ...


9

Robinhood had a perceived an edge when they were one of the few brokers that didn’t charge commissions. I say perceived edge because they have many deficiencies. Until recently they didn't pay interest on cash balances, they charge more for margin borrowing than other brokers, and they route orders for Payment For Order Flow which can lead to poorer ...


7

The EPS of Amazon for the last quarter of 2018 was $6.05. However, the P/E ratio is calculated using an annual number for earnings. Amazon’s earnings for 2018 was $20.14. (Source) $1673 / $20.14 = 83.07


6

Robinhood is fine for the small investor who wants to minimize the effect of commissions (elsewhere) on a small portfolio and whose needs are minimal, if not absent (research, charting, fast execution and reporting, etc.). If you need more than a stripped down platform, you need to look elsewhere. Another issue to add to your list is that RH receives ...


6

If those are the respective real time quotes then yes, you could do a Discount Arbitrage (buy call, exercise call to acquire stock, and sell stock. To avoid slippage, you'd buy a Synthetic Put via a Combo Order (buy the call and short the stock) and then exercise the call to close the position. The reality of these 'free lunch' situations is that: you're ...


6

I don't think the commercial describes insider trading. For a large corporation, the amount of inventory on the shelves in the stockroom in one location isn't insider information. It tells you nothing about the overall health and plans of the company, but it might tell you something about that one location. Having an advanced copy of the monthly inventory ...


6

Never sell stocks then buy. You transfer shares Any competent trading platform should allow you to transfer stock shares to another platform directly. That way a sell and buy does not occur, you do not pay capital gains, and any question of "wash sales" never arises. You can tell eTrade to move your shares, say, to a Fidelity account. (I've done this). ...


5

If you receive a 1099 Form with all zeroes, treat it like you never got the Form and don’t need it. And if you are entering a form you have received into the tax software, it is okay to leave cells blank or enter 0 if that is what is shown on the form. In your case, you have a 1099-DIV showing your $0.26 of dividends, but the other forms are empty because ...


4

Regulation T requires that at least 50% of the money you are trading with be your money. If you fail to meet this requirement, stocks will be sold to both reduce what you're borrowing and increase what you're holding until the required 50% margin is met. This only applies to margin accounts. So, for example, if you hold stocks worth $4.00, your account must ...


4

The statement by Robinhood that "if the contract is about to expire and is out of the money, they will automatically sell it back in the market so I don't lose all of it" makes no sense at all. Only the owner of the long contract can make the decision to sell or exercise the long contract prior to expiration (ignoring an auto-liquidation event by your ...


4

When you write (sell) an option, you must be covered or you must put up margin. For margin purposes, covered means that you: Own the underlying stock Own a call with same or lower strike price with the same or longer expiration Long a security convertible into the underlying stock Long a warrant with a lower exercise ...


4

Personally, I have no idea why anyone would trust Robinhood for their brokerage account. I understand that people (probably young people) think an "investing app" is a thing and that may appeal to some people. With that said, I think most of those enumerated points aren't even the problem. For starters, if you don't have much money you shouldn't be ...


4

Obviously the news has fleshed out a little bit but it might be worth simply examining things from a high level. When you send $100 to your bank, it goes in your bank's balance sheet and the bank issues an IOU for $100. Your bank then lends part of your $100 or does whatever with that money up to the regulatory limits of what it's allowed to do with that ...


4

The current price is $2.11 per share, the strike price on the call option is $0.50, and you're placing a bid for the option for $0.15 per share? You'll never get it at that price. The reason for this is that the option currently has an intrinsic value of $1.61 per share, which means that anyone who holds the option can get an instant profit of $1.61 per ...


4

The reason that it is recommended not to hold long options until expiration is that option premium decay is non linear. It speeds up every day, faster and faster as expiration approaches. The reason that it is not recommended to exercise ITM options is that if there is time premium remaining, you throw it away by exercising. So unless the time premium ...


4

It is two slightly different ways of specifying how much you want to buy when placing a market order (i.e. one that is satisfied at whatever the current price is). For simplicity, I'm assuming there's no commission or other costs associated with dealing. Suppose you were interested in a stock that is currently priced at $30 (offer price), and you've got &...


3

If all of your transactions are in the same tax year there is zero difference in outcome. Basic accounting with no wash sale yields a net $1 gain: Transaction 1 Transaction 2 Buy $10 Buy $4 Sell $5 Sell $10 Result -$5 Result +$6 Net +$1 Now consider wash sale, with a disallowed and appropriate cost basis ...


3

First, trading stocks is inherently risky. If you would be in trouble financially should you lose everything, you should reconsider why you are trading and how much you are investing. Alright, onto your question. This Reddit post says that the dotted line is the previous close price. Every day the line will change based on what the stock closed at the day ...


3

Take note, Robinhood also uses a fuzzy pricing model. The quote you see and purchase the stock at is not necessarily what the market has on its books at that exact moment. Robinhood can opt to buy/sell you the shares at a slight premium to actual market value. They also can freely fail to complete your transaction at the quoted price specifically if the ...


3

BP goes ex-dividend for tomorrow for 61 cents. The payment date is June 21st. Every broker I have used offers a look up feature to check the Declaration, Ex-div, Record and Payment dates for securities. See if you can find that feature at Robinhood. If not, there are many web sites that offer it. None (brokers) provided notification of a pending dividend.


3

That is an in house rule at Robinhood. CBOE Position Limits are typically in the 25,000 to 250,000 contracts depending on the capitalization of the underlying, the number of outstanding shares and the trading volume of the underlying during the past 6 months. That limit is the same for contracts exercised on the same side of the market during any 5 ...


3

You might pay taxes "twice" if you have gains after selling both times. You're already paid the income taxes for the vested shares, but if the stocks have gained value since you were vested then you'll pay capital gains tax on the gain. If they then rise again on another platform then you'll pay taxes on that gain. So you're not paying taxes on the same ...


3

I'd highly recommend reading JL Collin's Stock Series. This is a great resource to teach you about how investing works, and gives you a primer on index funds, stock and bonds. Aditionally (and most importantly) it teaches you how to think about your money so that you don't make the bad decisions that so many people do by panic selling every time the market ...


3

SIPC also protects cash, not just securities. Your cash is still insured. From https://www.sipc.org/for-investors/what-sipc-protects SIPC protects against the loss of cash and securities – such as stocks and bonds – held by a customer at a financially-troubled SIPC-member brokerage firm. The limit of SIPC protection is $500,000, which includes a $250,000 ...


2

That is correct, however, you should always keep the potential of slippage in mind, especially for market/unrestricted orders. Bonus : This may lead you to question how Robinhood stays profitable, which is a combination of Gold subscribers, and collecting interest off its users account balances.


2

In the old days, Fool Service Brokers charged a variable fee for equity and option trades. I think most have gotten away from that and lean more toward fixed fees and managed fee accounts. On the discount broker side, option commissions are charged as a fixed fee. Some brokers charge a base rate plus a fee per contract (for example, $4.95 + $0.50 per ...


2

Reg T sets margin borrowing at 50% so if you want to buy $10k worth of stock, you must put up $5k and the broker loans you $5k. There are various formulas involved: Buying Power = Cash Available/Margin Pct = $5k / 50% = $10k Market Value - Debit Balance = Equity so $10k = Market Value $ 5k = Debit $ 5k = Equity This satisfies the initial margin ...


2

I don't know about the legitimacy of Firstrade. But if you believe that selling order flow to high-frequency firms (Payment For Order Flow) is front running then Robinhood is guilty as charged. RH denies this in their FAQs list but it's clearly spelled out in their quarterly financial statement. It's about $2.50 per $10,000. PFOF can result in inferior ...


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