Robinhood notified customers who shorted Signature Bank’s stock it would let them keep their positions open after previously saying it would not honor their put options contracts due to the suspension of Signature’s shares. Following the closures of Silicon Valley Bank (SVB) and Silvergate Capital, Robinhood traders bet against Signature’s shares, which turned out to be a profitable move.

Robinhood Makes an Exception to Short Position Ban

Robinhood has backed down on its decision to let its customers’ profitable put options contracts against the collapsed Signature Bank expire without a payout. Put options refer to contracts that give a trader the right to sell a company’s shares in the future but do not oblige them to do so.

Investors purchased short-dated put options on the Robinhood platform that would yield them substantial gains if the stock price of the crypto-friendly bank declined before the contracts expired. But the crypto and stock broker attempted to avoid the payout, arguing that the recent suspension of Signature’s shares after its collapse meant many of these contracts could not be honored.

This was the case until Thursday morning when Robinhood informed customers it would let them keep their positions open. Before its U-turn, the broker said it would only honor the contracts if traders already held Signature shares in their account and had used the put option as a hedge against potential losses. The company does not usually let traders place short bets on its platform.

Signature Stock Lost Over 35% of Value Since Regulators’ Intervention

Signature’s shares fell more than 35% in four trading sessions since the regulators closed the bank on Sunday to contain systemic risk. The closure marked the third-biggest banking failure in the US, just two days after the second-biggest banking collapse as the Federal Reserve and the Treasury Department shuttered the SVB.

The SVB collapse, and the earlier voluntary liquidation of Silvergate Capital, triggered a banking crisis that encouraged retail traders to bet against Signature Bank’s shares. But regulators intervened on Sunday, taking over the bank and suspending its shares on stock exchanges.

Signature Bank and Silvergate Capital were two of the largest crypto-friendly banks, with their closures marking a huge blow to the crypto-banking ecosystem. The two banks pioneered blockchain systems that enabled instant commercial crypto transfers. The two payment systems, Silvergate Exchange Network (SEN) and Signature’s Signet facilitated over $2 trillion to and from digital asset markets.

This article originally appeared on The Tokenist

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