[crazynick4]

Rh was probably losing money on widening spreads. If a client buys and holds and volatility increases and spreads widen, when the client closes out the trade, Rh will eat the difference in the spreads. If a client opens a short position and spreads widen, RH will make a net gain when the client closes out. I think this is why they halted people from buying and probably why they closed out the trades for clients, I would guess it was during periods of lower volatility.

I don't know how legal it is for them to do that but when volatility is high like this that's when a broker like RH can really go under.

[amluto]

I am pretty sure Rh doesn’t take positions the way you’re describing.

[crazynick4]

I am pretty sure they're a broker who hedges their positions with a counterparty. Otherwise, they would be taking on the risk themselves?

But I think my math was backwards on the closing transaction. If the spreads widen they would technically end up net positive.

[tedunangst]

They're a broker, not a market maker. They don't have positions.