[SeanAppleby]

Eh, if I did this and I came up in the black off on a play with $1M in free leverage I would just close the position, pay off the margin and dip without posting about it. If like five people posted about it and lost money, there are probably a couple winners who are lying low, even just completely randomly assuming the traders have absolutely no signal whatsoever in their choice of play.

[zelly]

Most people would keep doing it until they lose it all. The original guy who lost $50k was at one point up net +$20k but still didn't close out.

[vkou]

But in that case, since the margin was returned, RobinHood, or its investors didn't lose anything. So, the analogy still doesn't hold. :)

[Zarel]

You're not understanding the math here.

RobinHood is essentially lending unlimited money to the teenagers in question. Assume, as an oversimplification, half of them will win big, and half of them will lose it all.

For the wins, the teenagers will keep it all, and for the losses, RobinHood will have to pay for it, because the teenagers don't have the money and will declare bankruptcy if RobinHood tries to recover it. This is a net wealth transfer from RobinHood to the teenagers.

The net wealth transfer looks like this:

teenagers: +lots of money

traders on the other side of the transactions: approximately +0 (wins and losses cancel out)

RobinHood: -lots of money

You can play games with which money comes from where, but you can't deny the way the money is flowing on net.