Tastytrade Review

Tastytrade Ratings at a Glance

Open & fund a new tastytrade account to get a cash bonus up to $3,000* from now until 1/31/2023. The offer is valid for new accounts as well as existing TT customers that have not yet funded (IRA & Trust Accounts not eligible, must be 18+) and there are four different tiers for this offer:

• Deposit $5K - $24,999 for a $100 cash bonus
• Deposit $25K - $99,999 for a $500 cash bonus
• Deposit $100K-$249,999 for a $2,000 cash bonus
• Deposit $250,000+ for a $3,000 cash bonus

Tastytrade is a US-based brokerage firm that targets options traders, specifically those who trade the short-volatility style espoused by the firm’s founder Tom Sosnoff on his financial network tastylive. The tastytrade trading platform and fee model are optimized for trading the high probability-of-profit, short-volatility options spreads that the tastylive audience are such a fan of.

Why tastytrade Over Others?  

Tastytrade is geared toward advanced traders who have experience with complex multi-leg trades like iron condors and iron butterflies. Its 3 platforms offer a variety of charting and analysis tools and offer several advantages over competitors, such as:

• Easy onboarding. tastytrade might be a platform for advanced traders, but signing up and getting an account funded certainly isn’t an advanced process. It takes less than 5 minutes and all necessary documents and forms can be easily found on the tastytrade website. Accounts can be funded via ACH from any bank account with U.S. currency. 

• Strong leadership. tastytrade was created by the brains behind 1 of the world’s most powerful trading platforms — thinkorswim. The 4 main executives are thinkorswim co-creators Scott Sheridan, Tom Sosnoff and CTO Linwood Ma. 

• Affordable derivatives. Most brokers have gone commission-free for stock, ETF and mutual fund trades but finding cheap derivatives remains an obstacle. Webull and Robinhood offer free options trading but with limited choices and high spreads. The standard options fee is $0.65 per contract, but that means a commission is paid both opening and closing a trade. You wind up paying $1.30 for a round-trip options trade.

tastytrade is different. When trading options and micro futures, you only pay a commission to open the trade. That’s just $1 per contract for a round-trip trade.

Futures trades do have an open and close commission, but at a mere $1.25 per contract, they’re still far cheaper than most competitors. Stocks and ETF trades are completely free at tastytrade.

tastyworks Quick Summary 

tastytrade is part of tastylive, a financial news network with 8 hours of live programming each day. tastytrade doesn’t have much for investor education, but tastylive is loaded with helpful tips, videos and guides on a broad range of trading topics.

tastytrade Users

To put it shortly, tastytrade is suited best to the tastyliver. That is, someone who agrees with the core tenants of the tastylive philosophy of being a mechanical seller of volatility (when it’s historically expensive) in highly liquid underlyings. See the “tastylive Strategy” section of this article for a more in-depth explanation. The platform is created with this trading style in mind, as is the commission structure.

Still, if you’re an active options trader applying a different strategy, the commission structure will still be hugely beneficial to you if you frequently trade spreads.

If you frequently trade multi-legged options spreads like Butterflies or Iron Condors, you know how much commissions can eat into your P&L, especially in the lower-priced underlyings. Even at today’s low industry average rates of about $0.65/contract, just five lots of an at-the-money Iron Condor in SPY would cost you $26 in commission for a round trip (opening and closing the position).

Under the tastytrade commission structure, you pay $1 per contract to open a trade, but closing the trade is free. So those same five lots of the Iron Condor would cost you $20 for a round trip.

Before we get more into the finer details of the tastytrade platform and such, let’s cover the basics like fees and account types.

Tastytrade uses a different commission model for options than most other brokers, but it’s easy to understand, and the majority of the time, it reduces your commission costs.

Tastytrade charges $1.00 per contract to open, and $0.00 per contract to close trades. So the round-trip for one contract is $1.00. This is in contrast to the rest of the industry, which charges $0.65 per contract, but charges you on both opening and closing transactions, making a round trip cost $1.30 per contract.

Tastytrade also gives significant discounts to large orders, capping the commissions at $10 per leg. This is where you will see really significant savings. Do keep in mind that if you’re consistently doing high volume at a different broker, they’re very likely to offer you significant commissions savings if you call them up and negotiate a different rate. But this comparison is meant to show you how much the commission savings at tastytrade compound when you trade in larger size.

Let’s look at a few example trades to illustrate this:

tastytrade has a learning curve, especially if you’re new to derivatives. Buying and selling stocks is still as simple as clicking the bid or ask price and entering your order, but inexperienced traders are going to have no idea what uncovered puts or iron condors are. 

There’s no demo or paper trading account, so you’ll need a strong knowledge base going in. If options and futures bewilder you, tastylive.com offers educational materials about types of options orders and futures strategies.

With tastytrade, you can expect to find:

• Easy-to-execute trades with multiple order types. Complex options trades are simplified thanks to tastytrade’s interface. You’ll be able to enter multi-leg trades with a handful of clicks, set up limit or stop-loss orders and rollover option positions with ease. Orders are easily replaced or canceled and several different order fill methods are available.

• Follow feed and in-platform video. Tastytrade offers some social media features on the platform like the Follow Feed. Much like Twitter, users can follow their favorite traders and copy their moves and strategies. You’ll be able to see market pros act in real-time. Then there’s the in-platform video, where you’ll hear the market pros acting and discussing strategies in real-time right on your screen.

• Videos and articles explain how to use the platform. Research sources are limited to the tastylive sphere, but the platform instructional materials are terrific. If you’re unsure how to use the platform efficiently, tastytrade’s video library will demonstrate how to trade stocks, options and futures, as well as manage positions properly.
  
  Know how to roll over options trades? If not, there’s a YouTube video for you! Navigating the platform might be intimidating at first, but tastytrade’s library of educational materials cover every bell and whistle.

When you sign up for an account with tastytrade, it’s a good idea to already know what you’re doing in the options and futures markets. If you’re looking for a brokerage to hold your hand while learning to trade, you’ve downloaded the wrong platform. You won’t find advice on retirement or mutual funds in the tastytrade education library. 

But you will find is a wealth of how-to articles and videos discussing the nuances of the platform. The support section is broken down into 6 different pillars:

• Account opening and management
• Getting started
• Software, platform and tech support
• Deposits, withdrawals and transfers
• Trading, buying power and margin
• Tax center

The support section not only teaches users how to use the service’s many features but also how platform plumbing works. You’ll get answers to questions about transfers, margin calls, trading techniques, account types, account management, order entry and more. 

To get access to tastylive’s market research, you’ll need to sign up for an account at both tastytrade and tastylive’s newsletter, which is free to join.

Mobile App

Tastytrade mobile app is very similar to its online platform. It includes all of the major functions and is user-friendly.

Tastytrade mobile app is available for both iOS and Android.

tastytrade vs tastylive

This is a different review for us because it’s impossible to talk about Tastytrade without mentioning Tastylive, the engine that fueled it’s growth. Without the tastylive network, there is no tastytrade. And the content of TastyTrade dictated TastyWorks’ trajectory.

And because we see the tastytrade platform as one of the broker’s main value propositions, it’s important to understand the thinking behind the structure of this platform and if makes sense given your market approach.

There’s thousands of episodes of tastylive online and countless interviews with Sosnoff and the other hosts. There’s plenty of nuance to their strategies, but we can sum them up as this:

• Implied volatility is overstated: over the long run, implied volatility is higher than the volatility realized in the market. Sellers of volatility are essentially sellers of optionality, and they need to be compensated for taking on that risk. The Tastylive philosophy concludes that for this reason, shorting option premium (when it’s expensive) is a positive expected value trading strategy.
• Trade small, trade often: even if you have a coin weighted in your favor, betting a large portion of your wealth into any single flip could still ruin you. By making many small bets with a positive expected value, you reduce your variance and allow the law of large numbers to play in your favor.

If you want a deeper understanding of this strategy, the Tastylive YouTube channel has a video series called the “Trading Pillars,” where Tom Sosnoff explains his ten pillars of trading options.

Click the “Get Help” box at the bottom of each tastytrade webpage to get a standard support request form. You’ll get a canned answer from a chatbot that usually directs you to a help article. For better options, see the contact table below.

tastytrade is focused on options trading, but it still has a great selection of stocks, ETFs and other derivatives like futures and micro futures. Stocks and ETFs trade commission-free and options are only charged commission when the position is opened.

Standard futures contracts still carry commissions to open and close, but commissions are capped on complex options trades with multiple legs.

tastytrade Stocks and ETFs 

You can trade stocks and ETFs on tastytrade. Trading stocks and ETFs can be done simply by clicking on the bid or ask price.

Tastytrade now offers a full research tab for fundamental analysis and in platform news on specific symbols or general market news. Stocks and ETFs are always free to trade. Watchlists are easy to create and charts are smooth and interactive.

tastytrade Options 

tastytrade offers options not only on equities but on futures contracts as well. The platform is specialized for complex, multi-leg options trades like iron condors and vertical spreads.

Active traders will be happy to see the capped commissions on these multi-leg option trades, which are sometimes significantly lower than those offered by competitors. Options trades are only charged a single-way $1 fee per contract, which maxes out at $10. There’s no commission on closing trades!

tastytrade Futures 

tastytrade clients can trade both normal futures contracts and micro futures. Regular futures contracts have a $1.25 per contract fee on both open and close, but the micro contracts are only charged $0.85 on open.

Users can trade futures contracts on U.S. indices, interest rates, foreign currencies, energy, metals and grains. Overall, there are over 50 different futures products available, which pales in comparison to tastytrade’s strongest competitors.

The tastytrade mobile app is available for iOS and Android, and you won’t find any loss in on-the-go functionality. Features like curve roll and percent of profit orders are still available. Trade execution can be just as quick and flawless as the desktop platform. 

The social aspects carry over to the mobile platform as well, including the trader feed which allows users to copy trade their favorite follows. However, some reviews claim the app is clunky, freezes often and can make it difficult to execute trades. 

tastytrade makes options trading a breeze. Commissions are cheap, the platform is functional and intuitive and your choice of securities stretches into the territory of futures.

But stock and ETF traders will find simpler, more accessible platforms elsewhere and experienced futures traders may prefer a more varied list of securities. There’s no forex trading and fixed-income products like bonds or mortgage-backed securities are unavailable. If you want more than just efficient options trading, tastytrade might leave you disappointed.

Overall, tastytrade is a great offshoot of the tastylive brand. tastytrade offers the technology, management team and price points to remain a threat to legacy brokers for a long time.

tastyworks Tutorial

Frequently Asked Questions

Methodology

For brokerage reviews, Benzinga created a weighted scale based on the following criteria: usability, services offered, customer service, education, research, mobile app, account minimums and fees. We aim to provide the most up-to-date, impactful and trustworthy reviews. For an in-depth look at our process, read the full methodology process.