With margin investing disabled, why do I have an account deficit?
If you're using the margin investing feature, check out I have margin investing enabled. Why do I have an account deficit?
You have an account deficit because you’ve used more buying power than you had available. Several things can cause you to have an account deficit, including ACH reversals after using Instant Deposits, fees, and cases when you’re assigned early on an options spread or in certain option exercise scenarios.
With Instant Deposits, you may be able to instantly trade with a portion or full amount of your pending deposit.
If you spend some or all of your Instant Deposits and your scheduled ACH transfer is canceled (your transfer is reversed), the amount of the reversed deposits 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.
If you're charged a fee and you don’t have enough brokerage cash in your account to cover it, you may have an account deficit. You must resolve an account deficit immediately as described in this section.
Some of the most common fees that cause customers to have an account deficit are Robinhood Gold subscription charges and fees associated with American Depositary Receipts (ADRs).
You can find all of your past Robinhood Gold fees and interest payments in the app in History. Additionally, you can find information about your next Gold billing cycle in the Account Overview. Check out our fee schedule to learn more.
For more information about exercises and assignments, check out Expiration, exercise, and assignment.
If you’re trading an options spread, your long leg should cover your short leg. However, you may have an account deficit if the short leg of your options spread is assigned prior to the expiration date. When you’re assigned early on a short leg in general, before you exercise the long leg of your spread, your buying power will 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 (for call spreads) or buying power (for put spreads) 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. You can also experience an account deficit when your long leg is exercised in anticipation of your short leg being assigned. Generally, if the short leg assignment is processed in the account, the deficit will be covered.
An account deficit due to early assignment might result in a margin call. In these cases, Robinhood is likely to take action to cover your position for you.
You can resolve an account deficit by depositing funds or closing positions. Unresolved deficits may result in Robinhood liquidating some or all of your positions to cover the outstanding balance without prior notice to you.
For joint investing account deficits, both owners are equally responsible for resolving them.
Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.
Margin investing involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Before using margin, customers must determine whether this type of trading strategy is right for them given their specific investment objectives, experience, risk tolerance, and financial situation.
Robinhood Financial can change its maintenance requirements at any time without prior notice. If the equity in your account decreases to less than the total maintenance requirement, you’ll have to deposit additional cash or acceptable collateral. If you fail to meet your minimums, Robinhood Financial may be forced to sell some or all of your securities, with or without your prior approval.
Robinhood Financial charges a margin interest rate that varies depending on your settled margin balance and the upper bound of the Target Federal Funds Rate, which is set by the Federal Reserve and is subject to change without notice. The formulas used to calculate the margin interest rate are subject to change at Robinhood Financial’s discretion.
For more information, review FINRA’s Investor Alert and Robinhood Financial’s Customer Relationship Summary, Margin Disclosure Statement, and Margin Agreement. These disclosures contain important information on Robinhood Financial’s products and services, conflicts of interests, lending policies, interest charges, and the risks associated with margin investing enabled accounts.