How To Trade Options On Tastytrade (Step-by-Step)

Hey everybody, Darren here and in today’s video we are talking about how to trade options on Tastytrade.

So go ahead grab your phone or open up your computer and let’s get started.

In this post we are going to cover: 

• How To Open An Account With Tastytrade And Receive The Benefits 
• The Most Important Features On The Tastytrade Platform 
• How To Place A Trade On the Tastytrade Platform

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Thanks for joining. We talk about using options to increase profits and reduce risk in your trading portfolios.

I promise that we will dig into many different detailed option trading tips and tricks, and dive much deeper into options in future videos. So please subscribe if you haven’t already. 

It’s super important to have a great broker and platform when trading options. Why is that? So that we can easily have all of the information that we need to find and execute the best trades.

And most importantly, so we can make money. 

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Before we get started, be sure to download the FREE options Workshop in the link below. 

It talks about the two main benefits of trading options over buying stocks. 

DISCLAIMER, I am not a financial planner and I am not recommending trades. Please do your own research and if you are new or learning options, I recommend you start small.

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Please tap that like button and let’s begin.

Open An Account

If you don’t yet have a Tastytrade account, I’ll put a link below so that you can open one and receive the benefits.

Right now you can receive up to $3000 in cash bonus when opening an account. The more you deposit the more you receive in bonus. There is no minimum, however, I do recommend you at least deposit a couple thousand dollars so you can put on several different trades.

Tom Sosnoff and Scott Sheridan were co-founders and developed the TOS Think or Swim platform and then sold it to TD Ameritrade in 2009 fro $606M. If you use either TD or Schwab as your current broker, you know that Schwab acquired TD in 2020 and today both TD and Schwab use the Think or Swim platform.

Tom is the guy in the picture with the silly hat.

Now different from all the other brokers, Tastytrade has a show every day the market is open. You can find it at Tastylive.com. They do a lot of good research and training on options and I’ll be honest I learned a lot about options trading from their channel and from these guys and their team. I agree with a lot of the way or most of the way that they trade, but not absolutely everything. So I use what I like and then just adapt it to my own style.

I obviously do agree with Tom’s hat.

I didn’t even have to do my hair today.

The pricing is excellent at $1 per contract and $0 to close trades. With a max of $10 per leg no matter how many contracts. No other broker currently has that cap. Plus no fees to call the trade desk.

I looked at Schwab to compare and I saw $0. So I thought, wow Tasty isn’t the best costs. 

Now get this, I’m not kidding. I emailed Tom Sosnoff. Yes, the founder of TOS who sold it to TD for $600M, the founder of Tastytrade. I emailed him directly asking about the cost per option trade versus Schwab.

Now he has said on his tastylive channel that he responds to all emails, but c’mon. He replied back to me within 15 minutes and here is what he said. I actually copy and pasted this from the email he sent. 

“It’s just a little confusing the way Schwab explains their commissions. Both Tasty and Schwab are completely free for all stock trading (ETF’s included). The difference is for options. Tasty is $1 to open and zero to close ($1 round-turn) and Schwab is $.65 each way or $1.30 round-turn. Also, tasty has a $10 cap which no other firm has. Lastly, we have none of the fees Schwab has like $25 each time you call their trade desk.”

So how is that? I have always found in business that with both good and bad companies it comes from the top. The person in charge and then it trickles down. When the CEO and founder is humble and responsible enough to answer emails from the general public, then he does not take his clients and business for granted. 

That leadership trickles down and you know that he will expect nothing different from all the people that work under him at tastytrade. That is why I love tastytrade.

Here is a comparison versus some of the other popular brokers and as you can see it’s much less costly. Especially when you get to the larger number of lots.

I think that it is really important that we are always learning as much as we can about options trading from different sources. And that we share with each other what is working and what may not be working. 

So please always let us know in the comments below! 

Now having developed TOS, the Tastytrade platform is even better as they learned from developing TOS and continue to add things to the platform and make it more intuitive and useful.

So you basically follow the link below and fill out the information. The easiest way is to link your bank account to your Tastytrade account. And there are no fees whatsoever to transfer a couple thousand dollars or more into your new Tastytrade account. 

Alright, once set up we want to 

Pick The Stock We Want To Trade

I’m going to go ahead and choose AAPL for today’s example.

Now everything is nicely organized on the Tastytrade platform. And we are going to go through everything step by step.

Everyone is familiar with APPLE and we punch in AAPL in the upper left and make sure that we are on the Trade Page.

We first note under Volume that there are 654,000 shares traded so we know this is a liquid stock. It’s usually several Million during trading hours but I caught this one early in the morning before the market opened. We want to trade liquid stocks (at least 100,000 shares preferably 1M or more) so we don’t give up free money and we are able to get out of the trade without losing an arm or a leg.

The IV Rank is 16. We are currently in a low IV environment so that is not horrible. The higher the better because then we will collect more premium when selling the options. Which is what we want to do to consistently make profits over time.

The stock price is currently 171 and if we click on the far right we can open up some more information about the stock.

We see a quick 1 Day, 1 Month and 1 yr chart. We also see  there is no date for earnings since we just recently had earnings. If earnings was upcoming, the date would be shown right there. And that is good to know because IV is elevated and the stock can likely move more.

You can also click on this trade chain tab and see your trades over the last 30 , 60, 90 or 180 days.

This is one of my favorite features on the platform. You can see in this particular account $260 was made over the last 180 with these trades listed. It really allows you to see what you have done in a particular underlying stock.

You can click in the Research Tab and get the Financials and look at the quarterly and annual income statements and balance sheets.

I like to take everything into account when trading options so I look at the fundamentals, technical charts, conference call transcripts and even the news. 

Everything technically (pun intended) should be built into the stock price. But sometimes we may think it is not and that is what may be our advantage and why we place a certain trade.

The Ratios tab gives you additional Fundamental information like Total Revenue and Price to Earnings and other key fundamentals.

You can even see all of the recent news about the stock so you know what is going on with the company and get a feel for what the market in general thinks about the stock.

Click on the small chart symbol and open up a larger chart. There are all of the indicators like RSI and the moving averages so that is right at your fingertips as well. If you like to use indicators. 

Now let’s go back to the option chain. 

We will open up the July option chain since it is closest to 45 DTE which is the sweet spot for collecting the most amount of premium while having time to be right and still getting in a large number of cycles throughout the year. 

Let’s click on the Bid on the 160 Strike Put option. The bid ask spread is only 4 pennies wide. $2.27 – 2.23 = .04 x 100 shares => $4. The mid price is $2.25 and what is nice about the platform is that it automatically populates the mid price. 

We can flip from Table mode to Curve mode and get a more visual picture which some people (including myself) like better. We see that our breakeven is the $160 strike price – the $2.25 in premium collected = $157.75. Remember the stock is trading at $171.84 so it would take an 8% move down before we ever start to lose a penny. 

As long as the price remains above the 160 short strike at the expiration date in 57 days, we keep the entire $225. 

We hit review and send and place the trade. 

Alright guys, the question of the day. What option trading platform are you using? Please let me know and share in the comments below what you like about it. This is how we all learn and succeed together.

If you don’t have a broker or a platform that you really love, or maybe you do and you want to just have some of your money with another broker so that you get the additional FDIC insurance coverage, please use the link below and try out Tastytrade. 

It’s absolutely free for you to open an account. If you use the link below and fund with at least $2000 (you really need about that amount to place a few trades) then I get a small referral fee which I appreciate and it really helps out the channel. 

You can get cash back too!

I guarantee you will love it!

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Hope you enjoyed the video! I’ve put a link down below for the FREE Options Workshop. Be sure to grab that. 

Remember to hit like and subscribe.

Thanks for watching, please share this video with a friend and see you in the next one!