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Comment by kllrnohj | Hacker News Reader

> And I mean if you want, ask RH and they'll downgrade to to a cash account... just be ready for T+2 and no options trading

You can do options trading on a cash account. You can only do covered options, but honestly that's probably a good restriction for most.

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Edit: Actually can you show me where RH even says you can trade covered options without Instant? I've only found evidence to the contrary, I think you're lying.

https://robinhood.com/us/en/support/articles/options-investi...

> NOTE: If you start options trading in your Cash account, we’ll automatically upgrade you to an Instant account.

Maybe if you've downgraded they won't upgrade you, but it's neither here nor there, covered options aren't what have allowed this to happen

If Robinhood only had covered options you'd be right back where I said it'd be: not supporting the way people are using it to enable all this.

I'm not talking about Robinhood specifically but general rules & regulations (see eg https://www.fool.com/the-ascent/buying-stocks/margin-account... ). RH specifically may have their own constraints beyond what's necessary, though. In which case get yourself a better brokerage.

Multiple brokerages have similar restrictions.

And the discussion is about Robinhood. Any reasonable person reading your comment would rightfully assume you're talking about Robinhood.

> NOTE: If you start options trading in your Cash account, we’ll automatically upgrade you to an Instant account.

HAHA oh my god this is terrifyingly predatory. It says "automatically", but I hope that there is a notice at least. Even if someone went to the effort to make sure that they understood their account type, it would just... change out from under them.

This is sort of like accidently using a premium feature in some SaaS platform, and being automatically upgraded into a free trial without knowing.

I mean I do think that's just legacy wording

You start with Robinhood Instant if your account was made any time in the last 5? or so years?

And things people know RH for won't work without it (like instant deposits and not waiting for settlement)

So options trading was actually added after most accounts had already if not all accounts were Instant

Really the only reason people ever go to Robinhood Cash these days is trying to get around PDT restrictions... but they inevitably realize the entire experience they've been introduced to ran on margin

I read it more as "If you have manually downgraded to a cash account, and then go into the "Trade Options" page and buy something, we'll automatically change your account type so that it works"

But you're right that it could just be legacy wording.

I think the way it works now is great, being able to go short on naked options with a proper margin maintenance is way smarter than restricting everyone to go long on options or only allow people to sell calls on covered options (which kind of defeats the purpose of a bearish position when you are required to hold the deliverables).

For a mass-market low-education target demographic? The defaults matter here.

Retail investors shouldn't be restricted from having such capabilities, but that doesn't mean it should be the default

Maybe I'm missing something, but what's the problem with this being the default?

A bearish position is to be long on puts. You don't need to write options, especially naked options which are usually the highest tier of access on every broker and require extra agreements.

If you only go long on options, theta is eventually going to catch up with you.

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