A quick search online will turn up many commission-free brokers, so Tastyworks’ commission-free or maxed commission status may not entice you as much as it should.
But if you’re ready to trade options and futures or already do, Tastyworks is a platform you’ll want to know quite well.
Check out my review on Tastyworks, what it does, its pros and cons, and how it compares to others below.
About Tastyworks
Tastyworks is a low-cost investment platform meant for active traders. They are a DIY investment platform that offers stocks, ETFs, futures, and crypto trades.
Tastyworks is a 100% online brokerage based in Chicago, Illinois. They’re somewhat new to the scene, as they opened in 2017, and in their words, they provide professional-grade tools for retail investors.
Despite being new, the owners of Tastyworks are anything but new to the scene. Scott Sheridan and Tom Sosnoff founded Thinkorswim, the TD Ameritrade trading platform for active traders.
Pros and Cons of Tastyworks
It’s always a good idea to compare the pros and cons of any trading platform. Here’s what I find best about Tastyworks.
Pros
- Commission: Tastyworks is a low-commission broker that offers many trades for free. For example, stocks and ETFs trade for free, while other investments, such as futures, micro-futures, and cryptocurrency, have low, capped commissions. Take options, for example; you’ll pay $1 per contract to buy options on stocks and ETFs but no commission when you sell them. They also cap the commissions. Say, for example, the cap is $10. This means if your trades max out the commissions, any commission on top of it trade for free.
- Cryptocurrency Accesses: It’s difficult to find online brokerages offering crypto access, but Tastyworks is one of the brave ones. Like most other trades at Tastyworks, you’ll pay lower commissions and, in the case of crypto, have a $10 max commission on buying and selling crypto. Tastyworks offers access to 22 cryptocurrencies with the most prevalent names, including Dogecoin and Bitcoin.
Cons
- Slow-Moving Setup Process: The setup process is anything but fast. Most brokerage accounts take 10 to 15 minutes to set up, but Tastyworks takes days. When you sign up, you’ll receive a message stating you’ll receive an email in 3 to 5 days telling you when the account is ready for funding. That can damper the excitement of opening a brokerage account if you’re ready to invest. You may also have to wait a few more days for the account to be approved for trading.
- No Fractional Shares: Fractional shares make investing easier no matter how much money you have. Many brokers, like Robinhood, offer them, but Tastyworks doesn’t. Fractional shares make it easy to make all money work for you, even small dividend payments. With Tastyworks, you must wait until you have enough money to buy a full share to invest.
- Lack of Research Resources: Tastyworks doesn’t have extensive research resources. This is often the case with platforms for active traders, but it’s definitely a downside. If you’re looking for in-depth research and an active trading platform, you won’t find it at Tastyworks.
Products
All trading platforms have certain investments they offer, and Tastyworks is no exception. You can primarily trade stocks, ETFs, cryptocurrency, options, and futures.
Account Types
Account types should matter, too, when choosing an online broker. Never assume a broker offers taxable and tax-advantaged accounts; fortunately, Tastyworks does.
Here are the account types they offer:
- Individual accounts – Individuals can open a cash or marginal account, but you must have at least a $2,000 cash balance to have a marginal account.
- Joint accounts – You can open an account with your spouse or another family member as tenants in common or with rights of survivorship account.
- Retirement accounts – Tax-advantaged accounts, like IRAs, are available on Tastyworks. Not only do they offer traditional IRAs, but Roth and SEP IRAs too.
- Entity accounts – You can open a business investment account on Tastyworks for your S-corp, LLC, or partnership.
Top Features
Tastyworks has many features that are great for active traders. I’ve reviewed the top features below to help you determine if it’s right for you.
Usability
Tastyworks is pretty user-friendly. Once approved for an account, you can customize your dashboard to suit your needs. You can use the platform on your computer or mobile phone and get the same usability, laying out your columns, chart settings, and widgets how you want.
At the top of every dashboard are the net earnings in real-time. The lefthand menu takes you to your portfolio, watchlists, trading history, and the option to follow feed or copy trades of other professional traders on the platform.
Trade Platform and Experience
Users can access Tastyworks on a computer or mobile device. On the computer, you can use the platform online or via the desktop program. All forms of the program are customizable, and you can view streaming quotes and charts in real-time to make fast trading decisions.
If you want to execute more complicated orders, such as one-triggers-the-other, you must use the desktop program. Likewise, the desktop version provides more options if you want charting and graphing tools.
Screeners
Tastworks offers stock, ETF, and options screeners, but the focus is on pricing trends, as Tastyworks focuses on technical analysis.
Tastyworks has preset watch lists, but you can sort them by what’s most important to you, such as liquidity, volume, biggest move, or bid/ask prices.
Where Tastyworks stands out is its options screeners. You can set up complicated options trades and create the scenarios you want by creating customized lists.
Research Amenities
Research is an area Tastyworks disappoints. There’s little to no research from third parties or their own content. This is mainly because it is a platform for active traders who don’t spend a lot of time doing in-depth research but instead do technical analysis.
Education
Whereas Tastyworks disappoints in the research department, they make up for it in the educational department. They carry a large library of educational content, including daily live videos about options, investment strategies, and other stock market-related content.
Customizable Portfolio Analysis
If you want help analyzing your portfolio, you can sign up for Quiet Foundation, a registered investment advisor, for free. Sign up under Tastyworks, and you can customize your portfolio analysis to meet your needs. You can also bring in outside accounts to further your analyses.
Analytics
All investors can see their real-time portfolio statistics on the dashboard. This includes key factors such as:
- Profit
- Theta
- Liquidity
- Buying power
Calculators and Tools
Sticking with its technical analysis theme, Tastywork’s calculators and tools work mostly with options, helping investors understand their profitability and/or volatility.
Generators
The trading idea generator helps investors come up with new trades. Each weekday, Tastyworks posts trades the show hosts make throughout the day. The trades are posted live so investors can mimic them in real time. They are also posted to the educational page for future views for more investing ideas.
DRIP Program
If you invested in dividend-paying stocks, you can sign up for the DRIP (dividend reinvestment program) and have your dividends reinvested in whole or fractional shares.
Range of Offers
Tastywork’s main offerings are options and futures, but investors can also choose stocks, ETFs, and cryptocurrency. Their range of products is smaller than most online brokers, but that’s because they focus on active traders, not buy-and-hold traders.
Types of Orders
Investors using the desktop version can enter conditional and complicated orders. If you’re using any other version, though, you’re limited to the following types of orders:
- Limit
- Market
- Stop Limit
- Stop Market
- Bracket Orders
Safety and Security
Safety and security are always a big issue with online brokers. You’re providing some of your most private information, so knowing the platform is secure is important. Tastyworks hasn’t had any security breaches, and they haven’t had any recent outages.
Because Tastyworks takes security seriously, they use many measures to ensure their platform is safe, including using two-factor authentication, facial recognition, and bank-level security. Tastyworks also has excess SIPC coverage for up to $600 million.
Transparency
Tastyworks doesn’t hide their fees or spring unexpected fees on you. Instead, I like their transparency with all fees and commissions, even before you sign up for an account. The fees are broken down into easy-to-understand categories so you can tell how much you’ll pay on cash balances, margins, trading commissions, and other miscellaneous fees.
Customer Support Services
Tastyworks offers a couple of options for customer service.
You can chat online with a bot or live chat with customer support. These features are available on every device, whether desktop, online or mobile.
Tastyworks also offers phone support Monday through Friday, 7 AM to 5 PM CST. If you need advice, you’ll talk to a customer service representative or a live broker. In my experience, there is very little, if any, hold time.
Pricing and Fees
Tastyworks has a unique pricing model called ‘better than free.’ They offer the typical commission-free trades on ETFs like many brokers, but they have other advantages in their pricing that are favorable for active traders, especially options traders.
- Stock and ETF commissions: $0 to buy or sell
- Options on stocks and ETFs: $1 to open the trade and $10 max per leg; no commission to close the leg
- Options on futures: $2.50 per contract to open and no commission to close
- Options on micro futures: $1.50 per contract to open and no commission to close
- Futures: $1.50 per contract to open and close
- Micro futures: $0.85 per contract to open and close
- Small futures: $0.25 per contract to open and close
- Smalls futures options: $0.50 per contract to open and no commission to close
- Cryptocurrency: 1% of the amount traded to open or close, but with a $10 max
Margin rates vary from 8% to 11%, and other fees include:
- Outgoing domestic wire – $25
- Outgoing foreign wire – $45
- IRA closing fee – $60
- Transfer on Death account transfer fee – $50
- Dividend check – $5
- Check copies – $15
- Prepayment fee – 0.2% or $20, whichever is greater
You can see the full list of Tastyworks pricing here.
How Tastyworks Makes Money for You and From You
You might wonder how Tastyworks makes money if many of its trades are free or have capped commissions. There are several ways they make money.
Price Improvement
Tastyworks charges a minimal price improvement fee through its smart order router. They charge $0.01 per share and $0.05 per contract. While that may not seem like much, it adds up quickly with the large volume of trades they process.
Order Flow Payment
Like most brokers, Tastyworks charges for order flow on most trades. While it can differ for each trade, the average cost is $0.00141 per equity share and $0.50 per option contract.
Cash Balance Interest
Tastyworks pays investors 0.01% on cash balances if you request it; it’s not automatic. If you don’t request it, they won’t sweep the funds into a money market fund, which will sit idle. Even if you have your money swept, Tastyworks makes the difference between the interest they earn on your uninvested cash and what they pay you in interest.
Portfolio Margining
Tastyworks’ base margin rate is 10%, but the rates vary from 8 to 11% depending on the balance invested.
Signing Up and Getting Started
Opening a Tastyworks account is free, and you don’t have to meet a minimum opening deposit amount. However, if you plan to invest on margin, you’ll need at least a $2,000 cash balance.
It takes only a few minutes on your part to open an account, but as I said earlier, the entire process takes a handful of days because of the approval process they use.
To start, you’ll enter your email address and choose a username. You’ll then answer questions about your country and the type of account you want to open, such as individual, joint, retirement, etc.
To complete the process, you must provide your personally identifying information to prove you are the person you say you are. This includes your name, address, birth date, Social Security number, phone number, and employment information.
Tastyworks also does a soft credit pull. This doesn’t affect your credit score but allows them to see how you handle your financial responsibilities.
The entire process may take up to a week, depending on how long it takes to get you the Welcome email and final approval of your account.
Alternatives to Tastyworks
Tastyworks has plenty of competition, including platforms meant for active traders. You have many choices for investment options on Tastyworks, including stocks and ETFs, but the competing brokers offer similar options.
TD Ameritrade and InterativeBrokers are Tastyworks largest competitors. They offer commission-free stock and ETF trades like Tastyworks, and they both cap their per-contract options fees at $0.65 per contract. However, they don’t have the commission cap per leg like Tastyworks offers.
Another area TD Ameritrade and InteractiveBrokers beat Tastyworks is that they both offer fractional shares. Some investors prefer fractional shares or at least having the option. However, a downside of TD Ameritrade is that they don’t offer crypto investments.
Frequently Asked Questions
Tastyworks is a good option for active investors or options traders. They are low-cost and have many valuable features. But no two investors have the same needs, so always compare your options.
Is Tastyworks a good beginner-level broker?
Most beginning traders don’t start with options or futures, which is where Tastyworks excels. While you can trade stocks and ETFs, there are much more beginner-friendly platforms to consider before using Tastyworks.
What can you trade on Tastyworks?
Tastyworks offers various trading options, including stocks, ETFs, crypto, options, futures, and commodities. In addition, you can make complicated trades and multi-leg options, each with a maximum on their commissions.
How does Tastyworks compare to others?
Tastyworks is a strong competitor in the options and futures market. They are user-friendly but lack in the research department, which is common for active trading platforms. However, as long as you aren’t looking to trade fractional shares, Tastyworks offers many options and minimizes your commissions with its caps.
The Bottom Line
If you’re an active trader, trading options and futures and are mindful of the fees, Tastyworks can be a great option. I wouldn’t recommend it for new investors or anyone trading strictly stocks and ETFs. However, if options are your preferred investment, it packs quite a punch giving investors many choices, including complicated trades with maximized commissions.