Robinhood backs down over Signature Bank bets - FT
Reuters
Published Mar 27, 2023 06:01AM ET
Updated Mar 27, 2023 06:42AM ET
(Reuters) - (This March 16 story has been corrected to say "to exercise their options position for Friday's expiry date," and not "to keep the position open beyond Friday's expiry date," after an official report's clarification, in paragraph 6)
Robinhood (NASDAQ:HOOD) Inc made an exception to its short position ban for clients who had winning 'puts' against failed lender Signature Bank (NASDAQ:SBNY), the Financial Times reported on Thursday.
Put options are contracts that give a buyer the right, but no obligation, to sell shares in future.
Shares of New York-based Signature have shed nearly 37% in four trading sessions since regulators took control of the bank on Sunday, making it the third largest failure in U.S. banking history.
Signature's collapse followed two days after California regulators shuttered Silicon Valley Bank on Friday that worsened concerns of a contagion and triggered a sell-off in financial stocks.
The investors had bought short-dated options on Robinhood and stood to make huge gains if the share price of Signature fell before the contracts expired.
On Thursday, Robinhood told clients holding profitable positions on Signature that it would make an exception to its rules and allow investors to exercise their options position for Friday's expiry date, the report added.
Robinhood did not immediately respond to a Reuters request for comment while Signature Bank declined to comment.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.