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I'm using margin. Why do I have an account deficit?

Before you begin

If you are not using margin, check out I'm not using margin. Why do I have an account deficit?

Margin Requirements

If your portfolio value (minus any cryptocurrency positions) drops below margin requirements, you may have an account deficit. This doesn’t necessarily mean that you’re in a margin call. Resolve your account deficit by the end of trading day to avoid margin calls and to open new positions.

In the majority of cases, account deficits due to portfolio value (minus any cryptocurrency positions) being below maintenance requirements will result in a margin call.

ACH Reversals After Using Instant Deposits

When you make a transfer, we give you early access to some of the funds in the form of Instant Deposits. If you spend some or all of your Instant Deposits and your scheduled ACH transfer is canceled or reversed, the amount of Instant Deposits you’ve used will be deducted from your buying power, potentially causing you to have an account deficit. To learn more about how you can avoid reversals, check out How to Prevent Bank Transfer Reversals.

Fees

If you are charged a fee, and this fee brings your portfolio value (minus any cryptocurrency positions) to either

  1. below $2000 or
  2. below your maintenance requirement,

the account will be in deficit. Some of the most common fees that cause customers to have an account deficit are Robinhood Gold fees and fees associated with American Depositary Receipts (ADRs). You can find all of your past Robinhood Gold fees and interest payments in the History section of your app. Additionally, you can find information about your next Gold billing cycle in the Account Overview section of the app. Check out our fee schedule to learn more.

Early Assignment on an Options Spread

Note

For more information about assignments, check out Expiration, Exercise, and Assignment.

When you’re assigned early on a short leg in general, before you exercise the long leg of your spread, your buying power can decrease and you may have an account deficit. This is because the positions you hold are used to calculate your buying power, and at that time, the shares (from the put assignment) or cash collateral (from the call assignment) are needed to cover the deficit in your account.

If your long leg is in-the-money and you would like to exercise, you can either do so in your app or contact us so we can help do it for you.

Keep in mind

An account deficit due to early assignment might result in a margin call. In these cases, our brokers are likely to take action to cover your position for you.

How do I resolve an account deficit?

To resolve an account deficit, you can typically deposit more funds into your account or close positions. If you are not in a margin call, you can also wait for your portfolio value to rise.

Disclosures

Options trading entails significant risk and is not appropriate for all investors. Certain complex options strategies carry additional risk. To learn more about the risks associated with options trading, please review the options disclosure document entitled Characteristics and Risks of Standardized Options, available here or through https://www.theocc.com. Investors should consider their investment objectives and risks carefully before trading options. Supporting documentation for any claims, if applicable, will be furnished upon request.

For more information please see Robinhood Financial’s Margin Disclosure Statement, Margin Agreement and FINRA Investor Information.

Robinhood Financial LLC is a registered broker dealer (member SIPC). Robinhood Securities, LLC provides brokerage clearing services. Robinhood Crypto, LLC provides crypto currency trading. All are subsidiaries of Robinhood Markets, Inc. (‘Robinhood’).

© 2020 Robinhood Financial LLC. Robinhood®

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