|I saw this story though I don't use twitter. I saw this recent post tonight from what appears to be a RH trader. and of course we all need to wait to find out the actual facts in this [still purported] tragic case but we can suspect this is what may have happened here since if a 20 year old with little income it would seem impossible to truly be exposed like this (unless he really had deposited say an inheritance of 800k no indication the case here) much more likely the below.|
Tragedy because this is a fault in RH's UI since the very beginning.
When you open a defined risk trade, notional exposure can be massive while net exposure is pretty minimal. RH shows notional exposure when options are being settled at expiry, easily scaring new traders.
P.s. me again. for basic examples see- investopedia.com
Thinking about this if you had very short dated options way out of money you could 'control' a very large notional position with a relatively modest amount of money if you are looking to hit either a homerun ball or strikeout. he may have figured worst case lose that entire investment but then sees that shocker negative cash number. argggg.