How to Trade Options Using Tastyworks

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Contributor, Benzinga
April 21, 2021

Options provide an alternative way to invest, with contracts to buy or sell stocks, bonds, and other assets at a given price. The variety of ways you can pair and trade options in strategies make them extremely useful. Some investors focus exclusively on options trading with great results.

No broker focuses on options quite like Tastyworks.

Best For
  • Options Education
securely through Tastytrade's website

A Brief Introduction to Tastyworks

Don’t let the backward newsboy hat and ZZ Top hair fool you. Tom Sosnoff, the founder of Tastytrade, knows quite a bit about options trading. In the 1980s, Sosnoff was a lead market maker on the Chicago Board Options Exchange. He co-founded thinkorswim in 1999, believing options trading would move online. In 2009, TD Ameritrade bought thinkorswim and Sosnoff took $20 million in venture capital to found Tastytrade.

Tastyworks continues working toward Tom’s ideas by focusing on options trading. The software platform provides users with an easy to navigate interface. Users can identify opportunities and place trades through their brokerage.

How to Trade Options Using Tastyworks: Step-by-Step

While beginners can use Tastyworks, the platform appeals more to experienced traders. Low fees make the platform ideal for active options traders. If you only trade a few contracts a month, then you probably won’t see Tastyworks’ value. The platform and brokerage aren’t geared towards people who actively trade stocks or others assets, nor does Tastyworks provide much research for public companies.

Things to look out for

If you want to start trading with Tastyworks watch out of some of the following:

  • Incorrectly calculating how much risk exists in a trade
  • Forgetting to close out trades prior to the expiration
  • Overleveraging your account
  • Signs of bugs or glitches in the system
  • Difficulty withdrawing money

How to trade options with Tastyworks

Even though Tastyworks doesn’t offer free demo accounts you can follow these steps to place your options trades:

  1. Sign up for an account. Pick the account that best suits your needs. There are options for IRAs and retirement as well as basic brokerage accounts.
  2. Fund the account. ACH deposits are the only free option for putting money into Tastytrade. Otherwise, several options to fund the account contain fees. You can see a full list on the website.
  3. Research your trade. Options trading doesn’t mean just buying and selling single option legs. You can trade everything from verticals to calendar spreads with Tastyworks. Benzinga’s article on Option Trading Strategies provides a good overview of some choices.
  4. Obtain the correct approvals and margin. Different trades require different option level approvals and margins. For example, you won’t be able to sell naked options in an IRA account. Review your trade idea and account approvals and margin to make sure you won’t run into any issues with margin calls.
  5. Execute your trade. Initiate your trade through their platform when you’ve picked out your strategy. The trade may not execute immediately depending on the spread, liquidity and the type of order you placed.
  6. Manage your portfolio. After you’ve entered the trade, keep an eye on its performance. Options normally require more vigilance than owning stocks due to their time component. Know where your exits are and ensure you have a plan to follow up at regular intervals.

If you’re ready to open an account with Tastyworks you can register online.

Final Thoughts

One of the neat things about Tastyworks is the integration of the platform and financial show. Its regular program offers traders insights and education into options trading with a dose of humor. The team also hosts a variety of events in Las Vegas, including speaking engagements at the TradersEXPO. You can check out some videos and broadcasts at the Tastytrade website.

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