Tastytrade Review
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Stock Commissions
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Options Commissions
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Trading Platforms
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Education and Research
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Customer Service
Summary
If you have been looking for a brokerage firm, then you may have heard of Tastytrade. Tastytrade is a broker that ranks well for options traders. Read here to find out if this broker fits your trading style.
About Tastytrade
Founded in 2011, Tastytrade (formerly Tastyworks) is a brokerage designed specifically for active options traders. Tom Sosnoff, the creator of popular trading platform thinkorswim, is one of the company’s cofounders.
Tastytrade offers very competitive pricing for options trading as well as a trading platform with some great options-specific features. It also supports cryptocurrency trading, futures trading, and commission-free stock trading.
Is Tastytrade the right broker for you? Keep reading our Tastytrade review to find out.
Tastytrade Pricing
Options
Cheap options trading is one of the main reasons to trade with Tastytrade. All equity options trades cost $1 per contract to open, with a maximum commission of $10 per leg. Options trades cost $0 to close. There is also a 10¢ clearing fee per contract.
You can still find cheaper per-option pricing at brokers like SpeedTrader, but the differences are slim. It’s nice knowing that Tastytrade’s options fees are capped and that you won’t pay anything to close trades.
Options on futures cost $2.50 per contract to open and options on micro futures cost $1.50 per contract to open. Commissions aren’t capped, but you won’t pay anything to close.
Futures
The commission for futures trading is $1.25 per contract. Again, there’s no commission to close. There is a clearing fee of 30¢ per contract and exchange fees are passed onto traders.
Stocks & ETFs
Tastytrade doesn’t charge commissions for stock and ETF trades. There is a clearing fee of 0.08¢ per share.
Tastytrade does not offer trading on mutual funds.
Cryptocurrencies
Tastytrade charges 1% of your trade value to open and close crypto trades. The commission is capped at $10 on each side of your trade.
Software and Other Fees
Tastytrade does not charge anything for data or its trading tools.
Account Requirements
There is no account minimum at Tastytrade for cash accounts. Margin accounts have the standard $2,000 minimum per industry regulations. There are no ongoing fees, so you can open an account and leave it at $0 if you wish.
Tastytrade Trading Platforms
Website
The Tastytrade website is used for account management. It doesn’t have any trading capability. That said, it’s user-friendly and you won’t have any trouble finding your way around the site. In the top menu, there’s a link to the browser-based trading platform.
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Browser Platform
The Tastytrade web-based trading platform has a nice-looking interface with a lot of great features.
You can start just by entering a ticker symbol. You’ll immediately see tons of data, including a neat liquidity rating. This rates a stock’s liquidity on a scale from one to five.
In the left-hand column, there are several icons to access different functions. The Trade button produces a window for trading stocks, options, futures, and crypto.
The curve window is a feature options traders will appreciate. You can quickly evaluate the profit/loss for any strike price along with the probability of profit for different trading strategies.
Another nice feature of this platform is that you can roll over your contracts with a single click.
On the right-hand side, a vertical column of helpful data makes trading quick and easy. The information is laid out in an intuitive format, and clicking on a security’s price produces a pop-out trade window.
Overall, Tastytrade’s web platform packs a lot of features, especially for trading options. It’s not the easiest platform to use for new options traders, but Tastytrade offers a really thorough help center to help you learn your way around the software.
Desktop Platform
Now we come to Tastytrade’s desktop trading platform. It has a lot of similarities to the web platform and is equally appealing to the eye. On the left-hand side sits a watchlist, which can be changed from notable stocks to liquidity or to some other pre-defined list.
In the center is where most of the action takes place. Here, there is a graph, and I was impressed with the tools it offers. There are more than 100 technical studies as well as dozens of chart styles and drawing tools. You can explore price data stretching back 20 years.
There’s a really handy profit & loss calculator that shows estimates of maximum gain and loss for either stock or option strategies. Below this is the order entry module. Tastytrade supports market, limit, stop-loss, good-til-cancelled, good-til-date, one-cancels-the-other, and one-triggers-the-other orders. You can also trade during extended hours.
Like the web platform, the browser platform offers an options curve and a table of options chains. You can easily add legs to an order by clicking on a bid or ask price. There are a few pre-defined strategies like butterflies, iron condors, and straddles. The selection of ready-to-run strategies is somewhat limited compared to a platform like OptionStrat.
Mobile Trading
Tastytrade offers a mobile app for iOS and Android devices. Everything in the app is laid out nicely and trading stocks and options is a breeze.
The mobile app has far fewer features than either the web or desktop platforms, which can be a good thing for beginner options traders. The app has a much gentler learning curve.
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Our team has reviewed over 300 services. These are our favorites:|
📈 Best Day Trading Service Investors Underground 🎯 Best Stock Scanner Trade Ideas 📉 Best Stock Charts TradingView |
💰 Best Stock Picking Service Motley Fool 📱 Best Mobile Broker Webull 📊 Best for Stock Research Seeking Alpha |
Research Tools
Tastytrade offers its web-based, desktop, and mobile trading platforms for free with every trading account.
Additional research tools include live and on-demand market commentary videos. You can also follow other Tastytrade users to see what stocks or options contracts they’re trading.
However, Tastytrade is missing out on a variety of other research tools that brokers like Etrade and Interactive Brokers offer. You won’t find a market news feed or professional stock research from analysts. There are also no screeners or strategy backtesting tools. In addition, Tastytrade doesn’t support paper trading.
Customer Service
Tastytrade representatives are available from 7am to 5pm Central by phone, live chat, and email. During a test chat, it took several minutes to reach an agent and several more to get a response.
Executions and Routes
None of Tastytrade’s platforms offer direct-access routing, which will be a disappointment for many experienced traders. There is no Level II data on Tastytrade.
Shorting Stocks
Tastytrade requires an initial margin of 50% or $10 per share (whichever is greater) to short equities. Maintenance margin is 30% or $10 per share (whichever is greater).
What Type of Trader Is Tastytrade Best For?
Tastytrade is designed for active traders who primarily trade options and futures. With a Tastytrade account, you can trade options on equities, futures, and micro futures with some of the lowest commissions around. Tastytrade can even end up being cheaper overall than lower-commission competitors like SpeedTrader since there’s no cost for software or data.
Tastytrade does require traders to bring their own, well-developed strategy to the platform. There’s no demo account, no support for backtesting, and no stock or option screener. Tastytrade also has a relatively steep learning curve.
With this in mind, beginners might be better off learning how to trade options successfully with a more general-purpose trading platform before switching over to Tastytrade. More experienced options and futures traders who follow strategies from Motley Fool Options, Sky View Trading, or Born to Sell will find a lot to like about Tastytrade.
Alternatives to Tastytrade
Tastytrade isn’t the only discount brokerage that caters to options traders. Here are a few other brokers traders might want to explore.
TD Ameritrade
TD Ameritrade offers access to Thinkorswim, the powerful trading platform that Tom Sosnoff built before founding Tastytrade. Thinkorswim offers more research tools than Tastytrade, including paper trading, strategy backtesting, and an options scanner. Options trades cost $0.65 per contract.
Interactive Brokers
Interactive Brokers is another discount brokerage with powerful trading software and tons of research tools. One of the key advantages over Tastytrade is that it offers direct access routing via multiple exchanges as well as Level II data. Interactive Brokers charges options commissions starting at $0.65 per contract.
Pros
- Very competitive pricing for stock, options, futures, and crypto trading
- Offers options on futures and micro futures
- Powerful trading platforms for web, desktop, and mobile
- Follow other traders using the platform
Cons
- No stock or option screener, strategy backtesting, or research reports
- Lacks 24/7 customer support
- Doesn’t support direct access routing or Level II data
Stay away, worst experience ever. Didn’t give me a chance to wire additional funds and didn’t call me before closing my short position in a matter of minutes. Don’t see them staying in business.
I have been using the platform for a little over a year and so far I’m very impressed and a happily satisfied customer. I give it 4.5 out of 5 stars.
For option premium sellers and some types of futures trading it doesn’t get much better, for other strategies it may disappoint. The reasons why TastyWorks is a great brokerage platform for certain niche traders are simple yet profound:
1) FEEs
TastyWorks offers fees that are unmatched in the industry and that really do give an edge in using a premium selling strategy to a smaller account size. At $1.00 to open per option contract and capped at $10 with no cost to the closing side of a position, you don’t just do better than other brokerages, you do significantly better. It makes defined risk strategies common to smaller accounts with limited buying power such as iron condors and credit spreads way more feasible than any other brokerage. Of course a larger account will also benefit greatly too with the ultra low cost fee structure.
2) DESKTOP PLATFORM
The platform is a little quirky at first, just like any “new to you” technology, but once you get used to it and apply it for what it is designed to do, mostly options selling strategies and/or futures trading, especially pairs style trades, it becomes an invaluable resource in structuring a profitable trade. The platform makes it easy to analyze the greeks and probabilities of a trade as well as forecasting the “what-will happen to my portfolio” if the “what-if’s” of a position play out. In other words the analyze features on the platform can be used as a powerful risk management tool. This summary pertains to their desktop platform only. Their mobile device platform needs some work and as far as I know they are updating it with much needed improvements.
3) HIGH SPEED FILLS
Trade fills definitely seem faster with better prices than my previous brokerage experiences.
4) CUSTOMER SERVICE
I have had nothing but great experiences dealing with the team at TW. More than once I needed to call them in order to execute trades as I was away from my computer and their mobile app (see cons below) is quite frustrating as of the time being. Every time I have had to call them for trade assistance I have been pleased including one time when I needed to get a lot of positions executed and was able to do so fast and at great prices. Also for some technical questions and the occasional general help needs I have found them to be a pleasure to deal with.
5) SIMPLICITY
They advertise as a low fee brokerage without the bloat and catering to the retail client who makes frequent trades. This they excel at and
this is a great place to play if you are using any premium selling strategies for your trading.
A few Cons…
1) Mobile Device App for Trading
The app is only really good for watching your p/l and the market prices. Trading on it is a nightmare and I avoid it at all costs now after a few bad order entries due to its cluttered and non-intuitive interface.
2) Limited functions and products
This to me is more of a pro but for some looking to trade penny stocks, otc fixed income, mutual funds, etc…TW doesn’t offer these products so if you do like to play in those sandboxes keep this in mind. They also don’t have any advanced features like ToS for backtesting and all the bells and whistles of TA and fundamental analysis.
BOTTOM LINE: TW is a great brokerage for some types of traders. I think of it a lot like a Southwest Airlines of the brokerage world….it is a no frills-“get me to the destination safely at the most competitive price”. If your destination is a profitable and cost effective option premium selling strategy or futures trading strategy than TW is the airline you want to be flying to get there. Nothing fancy but very worthwhile for the option premium selling and futures trading niche.
I missed, or failed to understand; what is the minimum fund requirement in my account for an options trader?
I don’t believe they have a minimum funding requirement for non-margin accounts