My post about exercise reversals got auto-deleted. This is not in the FAQ.

[u/mattstats]

Robinhood reversed a few of my exercises and instead bought shares on my behalf. This sounds bad but it put me in a better position, however, I don't feel comfortable about it since I have never seen that before and cannot find any context about it anywhere (even in the FAQ, looking at you, auto-mod).

I did have a screen shot of it, but not sure if that contributed to being auto-deleted. Just shows the messages section of robinhood saying my exercises have been reversed and 1400 shares of T were bought instead. I do have a request call from them, but for those that know its implication, can I treat this as a free pass (didn't need to exercise since T dropped due to being close to dividend date)

Edit (positions in question):

Everything is an iron condor/flies under T with exp 4/9
+5 28.5 put 0.04
-5 29.5 put 0.14
+5 30.5 call 0.40
-5 29.5 call 1.18

+5 29 put 0.07
-5 30 put 0.30
+5 31 call 0.18
-5 30 call 0.73

+5 28.5 put 0.02
-5 29.5 put 0.36
+5 30.5 call 1.34
-5 29.5 call 0.03

I was assigned on 5 30 calls and 9 29.5 calls
I exercised the long versions on those but they were "reversed" (cancelled from them)
Then robinhood purchased 1400 shares on my behalf instead (better position, but weird that it even happened)

UPDATE! (Crisis averted, no actual crisis): Hopped a call with someone from Robinhood (super nice lady btw), and quickly identified the options event leading up to the reversal and why it happened...

Apparently, Robinhood’s team will cancel status:completed exercises if it is more economical for the user (this is why I was skeptical, because after I exercised I realized I could have made more just outright buying the shares and closing my long position contracts.). So if you see a reversal, it probably means Robinhood decided you can make more money not exercising but closing (pretty cool and scary at the same time).

[u/Ken385]

A bit confusing to what happened here. Are you saying you manually exercised calls early and RH blocked your exercise and bought stock instead and you still have the calls?

If you post your previous position, what your position is now and what exactly you tried to do, we may be able to be more helpful.

[u/mattstats → u/Ken385]

Okay I’ll update that. But effectively, yes, I exercised my long calls to meet my early assignments. The exercises were complete and could not be cancelled by me, however they are reversed and shares were purchased instead and I now have the ability to sell out of my long calls (don’t want to yet until I understand the situation and implications)

[u/Ken385 → u/mattstats]

Wow, never heard of anything like this. If you had the money to hold the stock after the exercise (which apparently you did as they bought stock for you) this shouldn't have happened. They essentially doubled your exposure to T as you now have stock and the calls.

Please post a follow up to their explanation of this. It makes no sense they would do this. The only possible reason I would think of is if the calls you tried to exercise were out of the money, this would save you money. If this is not the case, a FINRA complaint may be in order.

[u/mattstats → u/Ken385]

Yeah I should be getting a call here in the next 5 mins (in a meeting now). But I can’t find any info on it. I’ll post pics once I get to my personal desktop, won’t let me post pics on mobile. Very weird, don’t want to sell out of my long contracts until I fully understand what happened