tastyworks is a platform built specifically for frequent options traders. It is the brokerage companion to tastytrade, a sassy financial news and education platform. All of the tools are designed to get you focused on liquidity, probability, and volatility. You won't be nudged to contact a financial advisor or check out some passive investing choices here. It's all about making decisions and taking action. We'll look at how tastyworks stacks up against its more established rivals to help you decide whether it is the right fit for your trading needs.
- Rated our best broker for options trading and best for low costs.
- Strong set of tools for frequent derivatives traders and a design that keeps all the key features accessible during your session.
- Trade ticket has key analytics built in, so you can see the probability of profit as you adjust the strike, size, or expiry date.
- A derivatives-focused platform, though you can also trade stocks, ETFs, and mutual funds (the latter by calling a live broker).
- Products from The Small Exchange were integrated into tastyworks in June 2020.
Who Tastyworks Is For
Tastyworks is aimed squarely at active traders and is very upfront about it. The company says that more than 90% of the trades placed by its customers are derivatives, so there are a lot of tools for options and futures traders. When asked to describe its target customer, CEO Tom Sosnoff says, "An unregenerate market junkie who can tell you the price of an AAPL 260 put faster than her Mom's birthday, but whose Mom would follow her into the depths of the Wall St. jungle and emerge victorious. Learn fast, trade hard, and leave a good looking account when you're gone."
Customizable trading platform with streaming real-time quotes
Options-focused charting that helps you understand the probability of making a profit
A video player for keeping an eye on the tastytrade personalities is built in
If you're new to trading options, the platform looks bewildering at first
No bonds or CDs available
Portfolio analysis requires using a separate website
- All of the tools you'll need for analyzing and trading derivatives are built into the platform. You won't have to skip over to the website for some analytical tasks if you're using the downloadable system. Features you don't use can just be closed, but they're available if you want to use them in the future.
- The charting capabilities are uniquely tuned for the options trader. If you have multiple positions on a particular underlying, such as an iron condor and a butterfly on the same underlying, you can analyze the risk profiles of the combined position. You can put together a modification to an existing position using the chart and quickly enter the order.
- There are hours of original video from tastytrade every weekday, offering up-to-the-minute trading ideas, plus a huge library of pre-recorded videos and shows.
- Newcomers to trading and investing may be overwhelmed by tastyworks at first. All trading platforms have a learning curve, but tastyworks' is steeper because it is designed for active traders. Other platforms start with basic functions for their retail crowd and hide the more advanced tool set in the expanded trade tickets.
- Tastyworks offers no fixed income trading (outside of ETFs that contain bonds) for those who want to allocate some of their assets to a more conservative asset class.
- Any additional portfolio analysis beyond profit and loss requires setting up a login on a separate site, The Quiet Foundation, which is also part of the tastytrade family.
Tastyworks expects you to know a little bit about what you are doing before you get started trading. Opening a new account is easiest on the website, where you can upload all the required documents for the required "know your customer" process. Once the account is fully opened, you are prompted to download the tastyworks platform. You can download and play with the tastyworks platform prior to funding an account, but you need the login created during the account opening process.
Once your account is open, you can rearrange the locations of the various widgets and change the layout of columns. You can also change the color, chart settings, and font sizes. You can set up a tab for any feature on any of the platforms for easier accessibility. Overall, tastyworks benefits from being targeted at traders. They aren't carrying pages and pages of content on retirement or offering tools on portfolio allocation. When you log in to your account, you are choosing between a few basic actions: you can check your portfolio, you can check up on traders you follow, you can check in on tastytrade news, and you can get down to trading.
Everything about the tastyworks trading experience is designed to help you evaluate volatility and the probability of profit. There are two nearly-identical desktop platforms available. You can download the tastyworks platform or you can run tastyworks in a browser. If speed is critical to your style of trading, the downloadable tastyworks platform streams data faster.
Watchlists are a key component and they are the same on mobile, web, and the downloadable platform. Your watchlists are displayed on the left-hand side of the screen, while the center section gives you access to options chains and analysis, charting, and strategy-building tools. The right-hand section displays position details, activity, and alerts. It can all be customized to display whichever features you want to see. There is a persistent trade ticket open at the bottom of the middle portion of the screen. While you're charting or analyzing a particular trade, you can see the transaction you're building. Using the trade ticket, you can adjust it or analyze it in-depth before clicking on Review and Send.
You can display open positions in the charts and adjust them or build another spread. You cannot send multiple orders or stage orders for later entry, however. Trading defaults such as order size can be set. At the end of May 2020, the ability to set default Profit % and Stop Loss % for stocks/ETFs, single-leg options, and outright futures was added.
Mobile Trade Experience
The tastyworks mobile app is positioned as a stopgap for maintaining your trading positions while you are away from your computer. The mobile workflow is quick and intuitive, and it provides a better trading experience than many other broker apps that are built primarily for retail investing. Order entry on mobile uses drag and drop for choosing the legs of an option spread rather than trying to enter numbers on a tiny keypad, which (in theory) should minimize errors. For heavy trading, of course, the web or downloadable platform is preferred due to the extra visual space.
Range of Offerings
Tastyworks clients are expected to mostly be focused on options, futures, and other derivatives. There are no international offerings and limited fixed income. You'll have to call a broker to trade mutual funds or treasuries, and Tastyworks doesn't support OTCBB (penny stock) trades—except to close a position that has been transferred in from another brokerage.
In June 2020, tastyworks added the ability to trade futures listed on The Small Exchange in any of your futures-enabled accounts with reduced (subscriber) exchange fees. "The smalls" are designed to pair the efficiency of futures with the clarity of stocks.
Overall, you can trade the following:
- Stocks long and short (more than 4,500 on easy-to-borrow list for short sales).
- OTCBB (penny stocks) via live broker (no transaction fee) closing positions only. You cannot open a penny stock position on tastyworks.
- Mutual funds via live broker (approximately 10,000 no transaction fee).
- U.S. Treasuries via live broker. Corporate bond positions can be closed via live broker, but there are no opening trades.
- Futures/commodities (including those listed on The Small Exchange)
- Futures options
- Simple and multi-leg options
Tastyworks' order system is also geared towards derivatives trading. The stock order entry ticket is easy to use but you will find that the order entry setup is focused on trading options. You can place a market order, but you'll get a warning message when you hit the Place Order button asking if you're sure. Options strategies are pre-defined in the trade ticket; you can change the expiry date and update the probability of profit chart. Pairs trading is built into the platform for a variety of asset classes. This is a unique feature.
Closing positions and rolling strategies for options and futures options is simple, as is adjusting a current position. You cannot choose a tax lot when closing a position; the default is first-in, first-out.
Tastyworks has a proprietary smart router focused on order fill quality and price improvement. Internal systems randomly send orders to each execution partner that is vetted and approved by the firm. By monitoring trade quality statistics, tastyworks adjusts the percentage of orders routed to each execution partner as needed. Price improvement for stock orders is, on average, a little under $0.006 per share and for options is $2.95 per contract. The latter is higher than average.
Tastyworks added a pairs trading feature and a futures options roll feature in April 2020.
You cannot automate or backtest a trading strategy or designate where an order is routed.
Tastyworks customers pay no commission to trade U.S. equities online, and there is no per-leg fee for options trades. Tastyworks has a unique fee structure for options trades, charging $1 per contract to open a position, while closing trades are free. There is a maximum of $10 per leg for options trades, so traders who place large spread orders are happy. Stock and ETF commissions are $0. Exchange and regulatory fees are added to the commissions.
- Stock and ETF trades incur no commission, regardless of size.
- All OTCBB (penny stock) transactions must be placed with a live broker. $0 commission for closing trades. You cannot open an OTCBB position with tastyworks.
- $0 per leg for options trades. $1 per contract to open a position with a maximum of $10 per leg. $0 to close.
- A trade of 50 contracts would cost $10 per leg maximum.
- Covered call trade of 500 shares plus five contracts is $5 to open, $0 to close.
- Mutual fund orders via live broker are commission-free.
- Futures trades are $1.25 per contract to open or close.
- Micro futures are $0.85 per contract to open or close.
- Options on futures are $2.50 per contract to open, $0 to close.
- Margin interest at $10,000 balance is 8%, $100,000 balance is 6.5%. Margin interest rates are lower than average.
- No fee for inactivity or account closure.
- Account transfer fee is $75.
- Exercise and assignment fee is $5. Voluntary reorganization is $50.
- Sending a wire is $25.
- Check fee is $5.
- Paper trade confirmations are $2 each. Paper statements are $5 each.
- Trades can be placed with a live broker at no additional charge.
How This Broker Makes Money From You and for You
The pressure of zero fees has changed the business model for most online brokers. Tastyworks' fee structure since its launch has been on the lower side of average; the pricing was set up to encourage customers to get out of losing trades by charging zero commissions to close options strategies. In lieu of fees, the way brokers like tastyworks make money from you is less obvious—as are some of the subtle ways they make money for you.
- Interest on cash balances: Tastyworks clients are not automatically enrolled in cash sweep programs that pay a higher interest rate than the 0.01% that is the default on cash. Clients have to take action on their own to put idle cash into a money market fund and then transfer it out when placing a trade. Tastyworks makes money from the difference between what you are paid on your idle cash and what they can earn on customer cash balances.
- Stock loan program: Tastyworks can also earn revenue loaning stocks in your account for short sales by other traders. This revenue is likely very small since trading equities is an infrequent practice by clients of tastyworks. However, the firm does not share the revenue it generates with its customers.
- Price improvement: tastyworks' order router generates, on average, an estimated $0.0057 per share in price improvement and approximately $2.95 per contract on options orders. The latter is higher than average.
- Payment for order flow: Tastyworks accepts some payment for order flow on equity and options orders. For equities, their average PFOF is below average at $0.0015 per share, and for options, it's about average at $0.50 per contract.
- Portfolio margining: Over the last year, tastyworks enabled portfolio margining, which can lower the amount of margin needed based on the overall risk calculated. Typically, portfolio margining works best for customers who trade derivatives that offset the risk inherent in their equity positions.
- Qualifying tastyworks clients can apply for portfolio margining
- There is no stock loan program
- Interest rate paid on cash balances is low (0.01%)
- Clients can manually sweep idle cash into a money market account
- There is no dividend reinvestment program
Most of the research features on the tastyworks platforms are designed to help you find and place trades for options, futures, or futures options. There is no research for mutual funds or fixed income, but derivatives traders will be happy with all the streaming data and analytics. The platform was built in-house and includes very little third-party tools or analysis.
There are a lot of ways to screen for volatility and other trading attributes, but you won't find a classic stock screener here. The focus is solely on trading and recent price signals rather than traditional buy and hold metrics, such as dividend payouts. You can screen for specific assets or take a market-wide approach and sort by implied volatility, net change, earnings date, and so on.
Equity analysis is not a focus for this company. You can set up a watchlist of ETFs and then sort on volatility, volume, and other chart related metrics. However, there is no option to sort by fundamental criteria.
Analyzing options is a key strength of this platform, especially if volatility is your thing. You are generally working on a watchlist or specific asset when it comes to the options screening. Most of your screening will be done with displayed columns where you can add or remove the Greeks, days to expiration, costs, and so on for sorting purposes.
Tools and Calculators
There are derivatives-focused tools and calculators, with an emphasis on calculating the probability of profit of a particular options strategy. All of the built-in sorters and live scanners include probability of success.
Trading Idea Generator
There is a tastytrade viewer built-in, allowing you to watch the personalities toss out trading ideas all day long and follow their trades by clicking "Duplicate this Trade." In addition, there are watchlists of tastytrade recommendations. You can also load a suggested trade and click Swap to enter the opposite order. There are dynamic watchlists like the top 10 most frequently traded in the last hour by tastyworks customers. The weekly Cherry Picks and Futures Insights letters provide clients with context around certain products and markets and help uncover potential trade opportunities.
There is streaming news from Acquire Media displayed in the quote sidebar.
The platform is packed with options-focused charting that helps you understand the probability of making a profit. Floating bars show trading data for the date or time over which you hover your mouse. An analysis page displays charting on open positions. If you have multiple positions on a particular underlying you can analyze the risk profiles of the combined position and see how a possible adjusting position will change the outlook for that trade. It's a remarkable toolset that has been crafted with attention to detail that many traders will greatly appreciate.
At the top of the tastyworks desktop platform, you'll see streaming real-time portfolio statistics, including probability of profit, delta, theta, liquidity, and buying power. For an in-depth analysis of your portfolio risk, you can create an account on the Quiet Foundation, which is a registered investment advisory run by tastyworks and tastytrade. There are no fees for the investment assessment, and you can connect other brokerage accounts for a look at all your assets together.
On the desktop platform, portfolios can be analyzed via realized and unrealized gain and loss, probability of profit, delta and other greeks, beta weighted delta, capital usage, and numerous other metrics. There's no internal rate of return calculation or the ability to estimate the tax impact of a future trade. Customers can attach notes to trades on the web platform and organize them by order type to see which have performed best.
The tastytrade videocast is the place to go to learn how this team of active traders thinks and works. You can watch live video for most of the trading day and then look through the video archive for more. Their live events are lively and entertaining, held all over the U.S., and free to attend. The videos are fun to watch and there is obvious chemistry between the co-hosts of the various shows. Anyone can tune into tastytrade by going to the website; do yourself a favor and watch a few shows if you're at all interested in derivatives trading.
In early March 2019, the tastyworks team announced their new digital publication, called luckbox. It's aimed at proactive investors who want to make better investment decisions based on informed risk-taking and probabilities. The articles are very well-written and also entertaining.
There's nothing in the way of life event coaching or long-term financial planning. The site's FAQs are helpful for figuring out not only how the various platforms work but also to learn more about the strategies that you can trade.
- The tastyworks phone support line is open Monday through Friday from 7 a.m.–5 p.m. Central time. The phone is answered promptly.
- There's a chat widget available on the website and the mobile app that connects to a live representative.
- You can talk to a live broker during regular telephone hours.
- Two-factor authentication is not yet available but is in the works.
- The mobile apps have fingerprint and face recognition.
- Excess Securities Investor Protection Corporation (SIPC) coverage is provided by Lloyd's of London at $37.5 million per account, with a cap of $150 million.
- Through Nov. 2019, there were no significant data breaches at any tastyworks location reported by the Identity Theft Research Center.
Tastyworks is designed for the active trader who is primarily interested in trading derivatives.
With extremely fast and stable data feeds, you can trade stocks, options, futures, and futures options. Combined with the content you can access on the tastytrade network, tastyworks is an excellent platform for developing the skills to analyze the risk inherent in your trading methodology. If you are a derivatives trader, then it is definitely worth your time to take a look at tastyworks and compare it to your current broker.
Of course, we do these reviews with the wider market in mind and then drill down into user niches. This approach hurts tastyworks in some categories that likely don't matter to its target audience. If you are new to investing or are more of a passive or traditional investor by nature, then tastyworks is not going to be a fit. If you are curious about options and futures and want to learn on a dedicated platform, then tastyworks may be the best place to start. A large part of the content is about taking you from an aspiring options trader to an actual one. Once you are there, tastyworks has put a lot of development into the platform and thought into its pricing in order to keep you there.
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