In my opinion, tastyworks is the best broker for options traders. One of the main reasons for this is that they have a great trading platform with a ton of useful features. But as with all new platforms with many features, this comes with a learning curve. The goal of this tastyworks tutorial is to walk you through every single aspect of the tastyworks trading platform so that you can truly reap its benefits.
After going through this tastyworks platform tutorial, you should fully understand how the platform works and how to take advantage of its immense potential. Furthermore, you can always come back to this page to look up a certain feature.
This is a very detailed and thus very long tutorial. If you are looking for something specific, you can try searching this tastyworks tutorial for certain key phrases. Most browsers allow you to do this by pressing ctrl-f. Doing this displays all the occurrences of the entered word or phrase.
Alternatively, you can navigate this tastyworks guide with the following table of contents:
- 1 No Account Yet?
- 2 Download
- 3 The Tastyworks Desktop Platform
- 4 The Main Section
- 5 Other Platforms
- 6 A Bonus Offer
- 7 Any Questions Left?
Don’t have an account yet?
If you don’t have a tastyworks account yet and aren’t sure whether tastyworks is the right broker for you, make sure to check out my tastyworks review.
Without an account, you won’t be able to use the tastyworks platform. Therefore, I highly recommend opening an account before continuing this tutorial. You don’t even have to fund the account to access the platform. If you are unsure about which account type to open, let me walk you through the account opening process:
Click the following button to open a free account now:
If you open an account and enter my referral code, you can receive a free copy of my premium trading journal template. You can learn more about this bonus offer here.
When opening an account, you will first be prompted to enter basic account information such as your name, email, password, etc.
Next up, you will have to choose which account type to open. If you are an individual and you want to open an account for yourself, you should choose the Individual account type. Alternatively, you can open a Joint account with someone else, or an Entity account if you are a trading organization with multiple traders. The vast majority of people will want to open an Individual account for themselves.
The next step is to choose between three account types:
- Margin: A margin account is by far the most versatile account type with the least restrictions. It allows you to borrow money from your broker to trade anything in any direction (as long as you have enough funds in your account). Certain trading strategies such as short selling require you to have a margin account. You will not be able to short sell stocks or options outside a margin account (even if the total risk is defined). In my opinion, this is the best account type for an active trader. You need a minimum balance of $2000 to use margin privileges.
- Cash: A cash account is the most basic account type. If you want to trade something inside a cash account, your funds have to fully cover the entire position. This makes short selling and trading options spreads impossible inside of a cash account. In my opinion, this is the best account for a basic passive buy and hold investor that doesn’t want to overcomplicate anything.
- Retirement: Retirement accounts can offer different tax benefits. This can be a great way to save for retirement. A standard retirement account works just like a cash account with added tax benefits. But a tastyworks retirement account actually allows you to trade defined risk option strategies (even if the strategy involves selling options). There are multiple different retirement accounts. Depending on your income, age, and specific situation, some might offer advantageous tax benefits over others.
Note that when opening a margin account, you will be prompted to answer a short questionnaire to assess your trading experience. This assessment is used to decide which trading privileges your account has access to. For instance, if you are assessed to be too inexperienced, you might not be allowed to use certain (‘too risky’) trading strategies in your account. Your answers to these questions can be changed at any time under My Profile | Investor on the tastyworks website. The following image shows the 3 different categories of a margin account and their trading rights:
Download & Installation
Tastyworks currently offers three different trading platforms:
- Downloadable Desktop Platform
- Web Platform
- Mobile App (IOS/Android)
The downloadable desktop platform is available for Windows, Mac, and Linux. Its recommended disk space is about 250 MB. You can download it directly from the tastyworks Technology Page. Do not download it from third party websites!
The focus of this tastyworks tutorial will be on the desktop platform since it offers the most functionality and best trading interface out of the three options. If you haven’t already, I highly recommend downloading the desktop platform. This would allow you to try out everything yourself while going through this tutorial.
The Tastyworks Desktop Platform
Before we get into the main section of the tastyworks desktop platform, let us first go over its general layout. Tastyworks’ platform is divided into 4 different sections as can be seen on the following image:
To begin with, we will look at the left sidebar, header, and right sidebar.
At the top of the left sidebar, you can see which securities you viewed last. Right below that, there is a section that allows you to display one of your watchlists. By default, the Bid price, Ask price, and net change of these symbols are displayed. It is possible to set up a buy order for that security by clicking the Ask price. To set up a sell order, you just have to click the Bid price.
Trader’s Tip: I personally use this section to get a gauge for the overall market. Therefore, I typically display a watchlist with major market indexes, their mid-price, daily % change, and IV Rank. This allows me to always peak at the bottom left corner of my screen to find out what’s going on in different markets.
Alternatively, you could also use this section to display information about the underlying securities of your positions.
At the bottom of the left sidebar, you can also view the current date and time. Furthermore, there are three displays that tell you whether the market is open, whether your quotes are live, and whether you are connected correctly.
Next up, let’s take a look at the header of tastyworks’ platform. The header displays all the relevant information regarding the selected security and your portfolio’s performance.
The first row of the header displays relevant trade information about the selected security. Let’s now go through each of these displays, step by step:
- Selected Security: The ticker symbol of the selected security is displayed in the top left corner of the header. To change the security, simply hover over the current ticker symbol, click, and type in a new one. Alternatively, you can select a security by clicking on a symbol inside a watchlist. Note that futures are marked with a forward slash (/). For instance, crude oil futures can be found through /CL.
- IV Rank: Implied volatility is a measure of options prices and IV Rank is a measure of the implied volatility of a security relative to IV levels of the past year. IV Rank is normalized to between 0 and 100, and the higher it is, the higher the current IV is relative to the security’s IV history. (Note that if IV spikes to new highs, IV Rank can temporarily exceed 100. If IV makes new lows, IV Rank can also drop below 0.) IV Rank is a great gauge for how cheap or expensive options prices are on a given underlying.
- Last X Size: This displays the price and size of the last buy or sell order alongside the accompanying exchange code.
- Chg: This displays the net price change of the selected security since the prior day’s close.
- Bid X: This is the current highest price someone is willing to buy the security for as well as the exchange code for that order.
- Ask X: This is the current lowest price someone is willing to sell the security for as well as the exchange code for that order.
- Size: The format of the size display is AxB, where A is the size of the highest buy order, and B is the size of the lowest sell order.
- Volume: This is the total number of shares that were bought or sold throughout the current trading day.
- Description: This displays the full name of the selected security. Right above this, you can see on which exchange it is traded and whether it is hard to borrow (for short-sellers).
Next to the Bid, Ask, and Last price, there is a letter displayed. This letter stands for the exchange from which this order has been sent. Here is a table with some of the most common abbreviations:
|A: NYSE MKT||I: International Securities Exchange||P: NYSE Arca||U: OTCBB|
|C: National Stock Exchange||J: Direct Edge A||Q: NASDAQ OMX||W: CBOE|
|D: FINRA ADF||M: Chicago Stock Exchange||S: NASDAQ Small Cap||G: GLOBEX|
|E: Market Independent||N: NYSE||T: NASDAQ Int||Z: BATS|
Now, let’s move on to the second row that displays information relevant to your portfolio:
- Accounts: All the way to the left, you can see your account type and account number. If you have multiple accounts, you can see them here and easily switch between them by selecting the desired account.
- Balances: Right next to the account display, there is a button that shows your available account balance when clicked. The pop-up window divides your current balance into multiple sections.
- The first is cash. Note that your cash balance can be greater than your net liquidity since cash also includes the premium collected for sold options. If you have a margin account, the cash balance can go negative (displayed in parentheses). If this happens, you are trading on margin.
- Maintenance Excess tells you by how much your cash and equity exceeds the current minimum account requirements. In other words, it tells you how close you are to a margin call.
- The Starting Day Trade Buying Power displays your maintenance excess at the close of the previous day. So comparing this figure with your current maintenance excess can give you a great gauge by how much things changed today.
- Long Equity Derivatives tells you the total value of your long equity derivatives positions.
- Short Equity Derivatives tells you the total value of your short equity derivatives positions.
- Depending on what you are trading, there might be some other balance displays of the total value of those positions as well.
Other displays in the header include:
- Net Liquidity: This tells you the value of your account if all current positions were liquidated right now. Net Liquidity is calculated by adding the current value of each position to your current cash balance. This is the best gauge for your total account value.
- P/L Day: This displays the profit or loss of your entire portfolio for the current day.
- P/L YTD: This displays the profit or loss of your entire portfolio for the current year.
- Option BP: Option buying power tells you how much buying power your account has without accounting for margin. This is called option buying power since you can’t trade options on margin.
- Stock BP: This displays the available buying power for stock positions. If you have a margin account with at least $2000 deposited, this will standardly be twice the amount of your option buying power.
- Today’s Trades: This displays the number of trades executed during the current trading session. Note that these aren’t necessarily day trades per the definition of the PDT rule.
- Day Trade Counter: This displays the number of day trades that you have made over the past 5 (business) days. This is especially relevant for traders in a margin account with less than $25000 since the PDT rule applies to them. The PDT rule prohibits traders with such accounts to make more than 3 day trades in a rolling 5 day business period. To learn more about this rule, check out my article on the PDT Rule.
- Delta: This is the net beta-weighted Delta of your entire portfolio. This is a measure of the directional exposure of your overall portfolio to the market. Standardly, this Delta is beta-weighted to SPY. If you don’t know what this means, make sure to check out my post on what beta-weighting is.
- Theta: This Theta value displays the exposure of your overall portfolio to time. If you aren’t trading any derivatives, this is irrelevant. But since derivatives have a fixed expiration date, their value changes with time. This change is represented by Theta. If you add up all the Theta values of your positions, you get a value for your entire portfolio. That’s exactly what this Theta value is. For instance, a Theta of 1 would mean that you lose $1 for every day that goes by.
- Ext: Ext. stands for extrinsic value. This is, once again, only relevant for derivatives. The extrinsic value of an option represents its time (and IV) value. For option sellers, extrinsic value is a measure of assignment risk. The less extrinsic value an option has left, the higher the assignment risk becomes. The extrinsic value displayed in the header is an aggregate of all your positions’ extrinsic values.
This is the default layout of the header menu. It is possible to change what is displayed in the header in the settings menu. Here are all the other possible displays:
- P/L Open: The total P/L of all your open positions.
- Net Vega: Vega measures the rate of change of a position for changes in implied volatility. So a position with a Vega of 2, would profit $2 for a 1% increase in IV. Conversely, it would lose $2 for a 1% drop in IV. The net Vega is the total Vega of all your positions combined and it tells you the exposure of your portfolio to changes in IV.
- Net Gamma: Gamma measures the rate of change of Delta. For instance, a position with a Gamma of 0.5 would mean that for a $1 increase in the underlying price, the Delta of that position would increase by 0.5. The net Gamma is the total Gamma of all your positions combined.
- Equity Prob of Profit: This is the net theoretical probability of profit for all your equity positions. This includes all positions except for futures and options on futures.
Trader’s Tip: Besides using the header to determine a security’s price and liquidity, the header is the best way to quickly gauge your portfolio’s performance and exposure. Furthermore, it is a great way to monitor your account balances.
If you have limited screen space, you can collapse the portfolio section of the header to save space.
Before we move on to the main section of the tastyworks platform, there is one last sidebar to look at. Like with all things inside of the tastyworks platform, the right-hand sidebar is also divided into multiple subsections. It consists of 6 different tabs.
The first Overview tab does exactly what it sounds like. It gives you a general overview of the selected security and your positions in that security. At the top of the sidebar, you can view a 1-day, 1-month, or 1-year chart of the security. Right below that, you can see more details on the selected security. Among others, these displays include the daily and yearly high/low prices, IV details, volume, and correlation to SPY. The values that are displayed can be changed inside the settings menu. But more on that later.
Below the Quote Details section, you can view current positions and orders in that underlying. By default, working, filled, and canceled orders from the past 7 days are displayed. But this can easily be changed. It is also possible to cancel, replace, or set up a similar order by right-clicking an order. Furthermore, you can cancel all active orders on a given security by pressing the cancel all button in this sidebar. To reserve the entire sidebar for orders, simply select the Activity tab inside of the right-hand sidebar.
The next tab is the Analysis tab. This is relevant for the trade analysis tab in the main section of the platform. Therefore, I will cover this tab later in this tastyworks tutorial.
Additionally, you can also use the right-hand sidebar to display another watchlist in the Watchlist tab. This works the exact same way as the left sidebar.
The Alerts tab allows you to set price alerts for the selected security. As of right now, it is possible to set alerts for a security’s Bid, Ask, Last price, and level of implied volatility.
Last but not least is the tastytrade tab. This allows you to watch tastytrade live right from the sidebar of the tastyworks platform. Below the video, you can simultaneously view your positions and orders on the selected security.
Trader’s Tip: The right-hand sidebar can be detached to form a seperate window. This is especially great for multi-screen setups. Alternatively, the sidebar can also be collapsed to save screen space.
I usually keep the Overview tab open most of the time. During earnings announcements and dividend payments, stocks often trade differently. Therefore, I highly recommend to always glance at the Quote Details to see if there are any upcoming earnings or dividends before you open a position. This allows you to avoid being in a bad trade due to a forgotten earnings announcement or dividend payment.
Instead of monitoring prices all day, take advantage of price alerts.
The Main Section
Now that we covered the general layout of the tastyworks desktop platform, let us move on to the most interesting main section. This inner section is divided into 8 tabs of which some have multiple subsections. Let us start all the way at the top with the positions tab.
The Positions Tab
Just like the name implies, this is where all of your positions are displayed. By default, your positions will be grouped by their underlying security. This means all positions on one security are summed up into one big position. To view each position individually, you can select the security to expand all your open positions and active orders on it. You can also deactivate the grouping of positions by deselecting ‘Group by Symbol’.
Furthermore, you will normally see all your open positions, active trade orders, and positions that were closed today. If you have many open positions and orders, this can clutter up your positions tab. To fix this, you can apply certain filters at the top of the positions tab to only view stock positions, futures positions, option positions, orders, or any combination of these.
If you have more than one account, standardly, the positions of all your accounts will be displayed in the positions tab. A colored dot all the way at the left shows in which account a given position is. This is a great way to assess your total risk and performance across multiple accounts. To view positions of only one account, you can select the desired account in the header. It is also possible to hide accounts entirely in the settings menu.
Now let’s start to break down each column inside of the positions tab. The big green ‘pill’, all the way at the left, displays information about the underlying security. If you are trading options, you can also view the number of options contracts, expiration date, days until expiration, strike price, and option type of each option by clicking on the green ‘pill’.
Otherwise, by default, the following things are displayed for each position:
- P/L Day: This is today’s profit or loss of that position. The previous day’s close is used as a reference for this calculation.
- Delta: The option Greek Delta represents the directional exposure of a position to its underlying asset.
- ∂ Bid: This is the current highest price someone is willing to buy this position for.
- ∂ Ask: This is the current lowest price someone is willing to sell this position for.
- IV Rank: Implied volatility is a measure of options prices and IV Rank is a measure of the implied volatility of a security relative to IV levels of the past year. IV Rank is normalized to between 0 and 100, and the higher it is, the higher the current IV is relative to the security’s IV history. This is a great gauge for how cheap or expensive options are on a given underlying.
- Trade Price: This is the price that the position was opened for. Positive (green) values mean that the position was opened for a net credit, whereas negative (red) values mean that it was established for a net debit.
- D’s Open: This is the number of days that the position has been open.
- β Delta: This is the beta-weighted Delta of your position. Instead of showing the directional exposure to the underlying security, the beta-weighted Delta shows you the directional exposure of a position to the market. By default, your positions will be beta-weighted to SPY. You can change this at the top of the positions tab.
- Cap Req: This shows you how much capital each position requires.
- DTE: DTE stands for Days-Til-Expiration.
- Underlying Indicators: This displays any upcoming events such as earnings or dividend payments. If a security has upcoming earnings, the number of days until earnings will be displayed in a purple box. This box is blue for upcoming dividends.
Like with most displays inside of the tastyworks platform, you can also remove and change these displays in the settings menu. Here is a list of all other possible displayable values:
- PoP: This is the theoretical probability of achieving at least $0.01 of profit at expiration. PoP is calculated from options prices.
- Ext: This is the extrinsic value of an option position. Extrinsic value can be thought of as the time value of an option. It can be calculated by subtracting the amount that an option is ITM from its price.
- Delta Per Qty: This is the Delta of a position broken down to a single contract. For example, a normal long stock position would have a Delta of 1 for each share that was bought. The Delta per Qty for a long stock position is 1 regardless of the number of shares.
- Net Theta: Theta measures the price sensitivity to time. The net Theta is the total Theta of a position. This is calculated by adding up all the Thetas of the options that went into the position. A stock position has a Theta of 0 since a stock price is not directly affected by time.
- Theta Per Qty: This is the Theta for a single contract of the selected position. You can calculate the Theta per Qty by dividing the net Theta of a position by the number of contracts of that position.
- Net Gamma: Gamma measures the rate of change of Delta. The net Gamma tells you the total Gamma of a position. It is calculated by summing up all the Gamma values of a position.
- Gamma Per Qty: This is the Gamma for a single contract of the selected position.
- Net Vega: Vega measures a position’s price sensitivity to changes in implied volatility. The net Vega is the total Vega of a position. It is calculated by adding up all the Vega values of a position.
- Vega Per Qty: This is the Vega for a single contract of the selected position.
- Cost: This is the money you paid (or received) when opening the position. If you opened the position for a net credit, the cost will be a positive (green) number and if you opened it for a net debit, it will be negative (red). Note that the cost does not account for any commissions or fees.
- Net Liq: This is an estimate for the total market value of a position. It is calculated from the mid-price. Unless you are trading very illiquid securities, the P/L of your position is the difference between the net liquidity value and the cost of your position.
- Mark: Typically, this is the mid-price between the Bid and Ask price.
- P/L Open: This is the total profit or loss of your position.
- P/L w/ Percent Bar: This displays the total profit or loss of your position alongside a small bar that represents the percentage of that profit or loss. If the profit or loss exceeds 100%, this bar will be fully filled and a dot will appear next to it.
- P/L Day Change: This is the percentage by which your P/L changed since the last market close. Your P/L at the previous market close is used as a reference for this calculation.
- P/L Day Gain Per Qty: This displays the normalized amount by which the profit or loss of a given position changed since the last market close. If you multiple this value by the number of shares/contracts of the selected position, you will get the P/L Day value.
- Quote Last: This displays the last traded price of the selected position.
- Quote Mid: This displays the mid-price between the Bid and Ask price of the selected position.
- Ex Dividend Date: This displays the Ex-dividend date of the underlying security of that position. This is the date after which you can’t receive the dividends anymore. Check out my article on dividends to learn more about the dividend process.
- Close Price: This is the closing price of the selected stock or option.
- Beta: The Beta of a security measures its volatility risk in relation to the overall market. A Beta greater than 1 means that the security is more volatile than the market, whereas a Beta of under 1 means that it is less volatile. A negative Beta means that the security typically moves in the other direction than the overall market. By default, the exchange-traded fund SPY that tracks the S&P500 index is used as a benchmark for the market. Note that the Beta displayed in the positions tab tells you the Beta of the underlying security and not the Beta of your actual position. To learn more about Beta and how to use it, check out my guide to Beta weighting.
- Realized Day Gain: This is the P/L Day of a position that was closed today.
- Unrealized Day Gain: This is the P/L Day of a position that was not closed yet.
- Realized Today: This is the total amount of profit or loss that was realized today. Here realized refers to locked in by closing the position.
I personally like to display the total P&L of each position (P/L Open) as well as some of the other option Greeks. Depending on what you trade, you should add metrics that are most relevant for you and remove those that aren’t.
When you right-click a position, the following menu pops up. Depending on the position, you now have multiple options. The first choice Close Position sets up a custom closing order. Alternatively, you could also send out a Good-Til-Cancel order at a certain profit target. To do this, simply select a profit percentage and click the blue arrow. This will prompt you to the order menu so that you can review and potentially send this order.
If you are trading options and want to roll your position to a different expiration date or strike price, you can also do this directly from this menu. Furthermore, you can also select Analysis to analyze the payoff profile of your position. We will cover the Analysis tab more thoroughly later in this tastyworks tutorial.
The last option would be to set up a bracket order. This will open up a separate window that looks something like this. A bracket order is an order type that allows you to set both a stop-loss and take-profit order. If one of these orders gets filled, the other one will automatically be canceled. This is a great way to automate the exit process of your trades. To set up a bracket order, you can either use concrete prices for the stop-loss and take-profit orders or you could use a percentage of your initial investment.
All the way to the top right of the positions tab, you can also view a more detailed report of the exact capital requirements for each position in each account by clicking on Cap Req. Right next to this, there is a CSV button. This allows you to download a csv file with all the data displayed inside of the positions tab. If you wan to analyze your positions externally, this can be useful.
The Trade Tab
Now that we covered the positions tab, let’s move on to the trade tab. This is probably the most exciting and powerful section of the entire platform. The trade tab has multiple different trading modes that can be selected at the top. Let me now go through each of these modes, starting with the table mode.
The Table Mode
The table mode of the trade tab displays an option chain with all the available options on the selected underlying. The layout of this option chain is fairly normal, but let me break it down nonetheless.
At first, all the available expiration dates are displayed. The middle column tells you how many days each expiration cycle has left until expiry. Weekly options are marked with a ‘W’ and quarterly options are marked with a ‘Q’. It is also possible to exclusively see or hide these non-regular expiration cycles, by selecting the corresponding setting after pressing the configuration button in the top right corner.
As soon as you select one of these dates, you will be able to view all the available options on the underlying with that expiration date. In the top right corner, you can change the number of displayed options. Put options are displayed on the right-hand side, and call options are displayed to the left. The strike price of each option is displayed in the center column and the horizontal orange line represents the underlying’s current trading price. The call options above this line and the put options below this line are ITM. The other options are OTM.
If you currently have working orders for a specific option, there will be a yellow ‘W’ displayed at the side of that option. Open positions in an option will also be marked on the option chain.
The IVx display in the top right corner of each expiration date is a measure of the implied volatility of these options. Right next to this number, you can see the expected price move of the underlying security for this time-frame (calculated from the option prices). This expected price move is also marked with an orange bar right inside of the strike price column of each expiration date.
The first two (and last two) columns are customisable. Let me now quickly explain what each possible display means:
- Mid: This is the mid price between the Bid and Ask price.
- Delta: The option Greek Delta measures by how much an option’s price changes for a $1 increase in the underlying’s price.
- Theta: The option Greek Theta measures by how much an option’s price changes each day purely based on time passing.
- Gamma: The option Greek Gamma measures by how much Delta changes for a $1 increase in the underlying’s price. So Gamma is the rate of change of Delta.
- Vega: The option Greek Vega measures by how much an option’s price changes for a 1% increase in implied volatility.
Check out my article on options pricing and the Greeks to learn more about the Greeks.
- Open Int: This is the number of outstanding (open) contracts of this option. Open interest is a great measure of liquidity for an option.
- Volm: Volume refers to the number of contracts that were traded on this particular day. This is also a good measure of liquidity, but open interest usually gives you a longer-term perspective on liquidity than the daily volume.
- ITM%: This is the theoretical probability that an option will expire In-The-Money (calculated from the option’s price).
- OTM%: This is the theoretical probability that an option will expire Out-of-The-Money (calculated from the option’s price).
- Touch%: This is the theoretical probability that the underlying’s price will touch (or breach) the strike price of this option sometime before expiration.
Check out my article on options probabilities to learn the details behind these metrics.
- Impl Vol: This is the implied volatility of this option.
- Ext: This is the extrinsic value of this option. The extrinsic value of an option is its time value and can be calculated by subtracting the amount ITM from the option’s price.
- Theo: This is a theoretical price for this option (based on the Black-Scholes options pricing model). This can be used as a (very) rough gauge for ‘fair’ pricing.
- Last: This is the last traded price for this option.
- Open: This is the price that the option had at the open of the current trading session.
- Net Chg: This is the total amount that the option’s price changed since the last market close.
- Bid Size: This is the order size of the highest buy order.
- Ask Size: This is the order size of the lowest sell order.
- High: This is the highest price that the option had in the current trading session.
- Low: This is the lowest price that the option had in the current trading session.
The Bid/Ask prices of each option can be viewed in the four most-center columns of the option chain. If you click on the Bid price of an option, you automatically set up a sell order for that option, and clicking the Ask price sets up a buy order. You can do this for multiple different options to set up multi-leg option spreads.
Besides manually selecting which options to buy and sell, tastyworks also has a strategy setup tool at the top of the positions tab. This allows you to choose from a wide range of different strategies. This strategy selector is divided into 3 columns. The left-most column allows you to select whether you want to buy or sell the strategy. If the strategy allows it, the middle-column lets you decide between call and put options. The right-most column selects the given strategy. This feature can help correctly set up strategies, especially for beginners. But make sure to always customize the chosen strategy so that it is best suited to your situation. Don’t just trade the default created strategy.
Next up, we will discuss how to customize your trade order before sending it. The following screenshot shows you what the order screen would look like for a call credit spread. The top row displays important details about the position such as its probability of profit, max loss, max profit, and buying power requirements.
Right below that, you have different buttons to customize the order. These buttons allow you to change strike price, order quantity, undo past changes, or clear the selected order. Instead of using these buttons, you can also just customize the selected options by dragging and dropping in the options chain. The bottom layer of the order box shows you the selected position, order price, as well as Bid/Ask spread. As long as you are trading fairly liquid securities, you can often get away with ordering at the mid price. The small lock sign next to the price box allows you to lock the selected price. Otherwise, this price would change together with the security’s price.
All the way on the right hand-side, you can choose which order type you want to use. Here you can decide between Net Credit and Net Debit. If your are short selling, you can open your trades for a net credit. Otherwise, you will typically have to open your positions for a net debit. When trading stocks, you can also choose between a Limit or Market order. A market order fills you at the next possible price, whereas a limit order allows you to set a specific entry price. I always recommend using limit orders only.
Next to the order type, you can also select the ‘Time In Force’ TIF of your order. The default setting is DAY which is an order that expires after the current trading session unless it is filled. An alternative is ‘Good-Til-Cancel’ GTC which is an order that won’t expire unless it is either filled or manually canceled. ‘Good-Til-Date’ GTD orders work just the same with the only difference being that you can select a fixed date after which the expire. Last but not least, the EXT order type is for orders during extended trading hours (pre-market, after-hours). Note that most options don’t have any extended trading hours.
After setting up your order, it is time to review it one last time. This can be done by clicking the ‘Review & Send’ button. Always make sure to double-check your order before sending it!
Before we move on to the next section of the Trade tab, here is one last useful thing to know about the option chain. By right-clicking the Bid or Ask price of an option, you can view the price chart of specific options. This is a great way to view an option’s price history as well as its liquidity by looking at the volume indicator inside of the chart tab. But since options usually aren’t nearly as liquid as their underlying, you shouldn’t put too much emphasis on the price chart of an option. For instance, please don’t use technical analysis on option’s prices.
The Curve Mode
The curve tab is an alternative to the options table for setting up your trades. After selecting which options to buy and sell in the table mode, you can see the profitable and unprofitable ranges of that position here. Furthermore, you can change the strike price of these options by dragging and dropping. Even though this can be useful, I personally am not a big fan of the curve tab. It gives you very limited functionality and doesn’t really display much more information than the options chain. Especially since the release of the Analysis mode, I can’t think of a reason to ever use the classic curve mode. Instead, I recommend using the table tab in conjunction with the Analysis mode.
The Analysis Mode
The analysis tab is a powerful tool that allows you to visually analyze the payoff profile and potential risks of potential and existing trades. At first glance, it might seem quite intimidating as there are so many different buttons, numbers, and displays. But as soon as you understand the overall layout, it is actually quite easy to understand.
To be able to use the Analysis mode, you have to have selected some kind of position. This can either be an existing position from the positions tab or a theoretical trade from the order menu. Next up, you have to be in curve mode, and the Analysis button has to be selected. Instead of just seeing the profitable and unprofitable zones of this position, you should now be able to see a concrete payoff profile.
Just like in all payoff profiles, the x-axis represents the price of the underlying asset, and the y-axis represents the profit or loss of the selected position.
To effectively use the Analysis tab, you will also have to use the Analysis tab inside of the right-hand sidebar. The top of this sidebar tab allows you to select which position(s) you want to analyze. If you already have existing positions on the selected security, they will also be displayed here. The rest of this sidebar tab allows you to set market conditions for the Analysis curve tab. If you, for instance, want to know what would happen to your position in 10 days, when the underlying price dropped by $5, and implied volatility increased by 3%, you would be able to do this here. All you would have to do is select a date which is 10 days out from now, enable Theo spot price and decrease it by $5, and decrease the IV of that expiration cycle by 3%.
Above the displayed graph in the main section, there are a couple of buttons. The first three of these buttons allow you to select which lines are displayed:
- P/L Theo: In the Analysis sidebar tab, you can change market variables such as time till expiration, underlying price, and implied volatility. This line will display the theoretical payoff profile of your position for the selected variables. If nothing is manually selected, it will just use the current market conditions (current time till expiration, underlying price, and IV level).
- P/L Exp: This displays the payoff profile of your position at expiration.
- Greeks: This is a drop-down menu that allows you to choose and display a theoretical chart of one of the Greeks for the selected position.
The next two buttons allow you to choose which bell curves are displayed. The distance between the dotted vertical lines of these bell curves represents a one and two standard deviation move.
- Default Curve: The default curve plots a blue bell curve around the current underlying trading price. This represents a theoretical probability distribution of the underlying’s price which is calculated from implied volatility.
- Analysis Curve: This is the theoretical bell curve that is calculated from the chosen values in the sidebar.
Finally, it is also possible to mark the profitable zone of a trade with green and the unprofitable zone with red. This can either be done for the theoretical payoff line or the expiration payoff line.
It is also possible to change the scale of the y-axis in this top bar. Furthermore, you can enable the Quotes of options to displayed around the x-axis. The last option allows you to enable or disable an info flag that tells you the price, P/L at expiration, and theoretical P/L of the selected position while hovering over the chart window.
Trader’s Tip: The Analysis tab is a great tool to analyze your trades before opening them. It allows you to evaluate how the trade would perform for different market scenarios. Furthermore, it visualizes the risk and profit potential of your positions. With that being said, it is important to note that most of the values displayed here are theoretical. Therefore, you should also treat them as such. Nevertheless, they can be a great guideline for your trade process.
The Active Mode
Last but not least, let’s take a quick look at the Active mode inside of the trade tab. This mode was built for the very active (short-term) trader that wants as few time delays as possible. That’s why this mode is great for futures scalpers or other short term traders. If your trade entry and exit isn’t that time-sensitive, I don’t see a reason to use the Active mode over the other ones. Furthermore, the Active tab currently does not allow you to trade options.
Let’s now start to break down how the Active mode works.
All the way to the left (marked in red), you can set up your order settings. The top button here is the so-called safety. By default, the safety is turned on. This means that before an order is sent out, you will be prompted to review it. By turning off the safety, all orders will immediately be sent as soon as you click a Bid or Ask price (anywhere in the platform). So if you turn off the safety, you are always one click away from an active trade order. This can be a powerful tool for very short term traders. But for anyone else, this is a gateway to accidental trades. Therefore, I don’t recommend ever turning off the safety unless you are 100% aware of the consequences and really know what you are doing.
The other settings in this column allow you to customize the default order in the Active tab. The QTY TK sets in which increments you want to increase or decrease your order size. The PR TK allows you to set the increment in which you change your order price, and the PR OFF sets by how much your order’s price will be offset from the current market price.
The next section (marked in yellow) allows you to display the trading symbols from the watchlist selected at the top. Besides displaying the Bid and Ask price, and daily change, you can also see active orders and open positions for each security in the selected watchlist. At the right end, you can even edit these orders or flatten (close) open positions. To set up a buy order inside of the Active tab, you have to click on the Ask price and to set up a sell order, you have to click on the Bid price. If the safety is turned on, you can then review your order one last time before sending it.
The last (blue) area displays the price of your order(s) relative to the current trading price alongside information regarding the selected security and open position(s) in it. Here the current Bid and Ask price are marked by two white lines and a purple sideways histogram tells you the distribution of where orders are being filled.
Trade Tab Settings
Finally, let’s take a peak into the settings menu of the trade tab. To access it, simply click on the gear icon in the top right corner of the trade tab. This trade tab settings menu has 5 sections. The first one allows you to customize what is displayed inside the options chain. If you don’t want open positions and working orders to be displayed inside the options chain, you can deselect them here. Furthermore, you can choose what is overlayed on to the middle column of the options table. By default, a purple bar represents the expected move of the underlying security. This can be changed to display the daily price range of the underlying. Alternatively, you can also choose nothing to be displayed.
The other tabs allow you to customize the default order settings for each asset class. This can be useful if you are trading in a very large or small account since you can adjust the default order size to your account size. But otherwise, there aren’t many reasons to change these default settings.
The Activity Tab
The activity tab is rather self-explanatory. It allows you to view your trade activity. This activity includes all filled, working, canceled, and other orders that you tried to send. The activity can be filtered by time-frame, trading symbol, and more. By right-clicking an order, it is possible to set up a similar or opposite order. This tab is a great way to get an overview of your recent trade activity. If you have many open orders at a time, this tab can also be a great way to analyze and manage your working orders. Otherwise, there really isn’t that much to do in the Activity tab.
The Watchlist Tab
The Watchlist tab is another great and very useful section of the tastyworks desktop platform. At its top, you can choose which watchlist you want to display. Here you can either select from preset default watchlists or display your own custom watchlist. You can create your own watchlist in the settings menu. If you have your own watchlist selected, you can add more symbols to it by using the ‘Add Symbol’ field at the top of the watchlist section.
By default, the following metrics are displayed for each symbol inside of the selected watchlist:
- Last: The last traded price of the security.
- Net Change: The total amount by which the security’s price changed since the last market close.
- Bid X: This is the highest price someone is willing to buy the security for as well as the accompanying exchange code.
- Ask X: This is the lowest price someone is willing to sell the security for as well as the accompanying exchange code.
- Net Change %: The total amount by which the security’s price changed since the last market close expressed in percentage points.
- Beta: The Beta of a security measures its volatility risk in relation to the overall market. A Beta greater than 1 means that the security is more volatile than the market, whereas a Beta of under 1 means that it is less volatile. A negative Beta means that the security typically moves in the other direction than the overall market. By default, the exchange-traded fund SPY that tracks the S&P500 index is used as a benchmark for the market.
- Dividend Yield: This is the annual dividend amount of a security divided by its price.
- Correlation SPY 3 Month: This displays the 66-day correlation of the security to SPY. The correlation is expressed on a scale from -1 to 1, where 1 means that the two securities are perfectly correlated and -1 means that they are perfectly inversely correlated. A correlation around 0 means that they aren’t correlated at all.
- Liquidity Rating: This is a rating scale that varies from 0 to 4 out of 4 stars. This rating takes the Bid/Ask spread, volume, and open interest (of the options) into account.
- IV Index: This is the 30-day implied volatility of the security.
- Description: This displays the full name of the security. For instance, the full name of SPY is SPDR S&P500 ETF Trust.
- Exchange: This displays on which exchange the security is traded on.
In the settings menu, you can customize which metrics are and aren’t displayed. Here are all the other possible displays:
- Last X: This is the last price that the security was traded for as well as the accompanying exchange code.
- Last Size: This is the order size of the last trade on the security.
- Bid: This is the highest price someone is willing to buy the security for.
- Bid Size: This is the order size of the buyer with the current highest order price.
- Ask: This is the lowest price someone is willing to sell the security for.
- Ask Size: This is the order size of the seller with the current lowest order price.
- Mid: This is the mid-price between the Bid and Ask price.
- IvPercentile: This displays the percentage of days of the last year where implied volatility was lower than right now. For example, an IV Percentile of 20% would mean that 20% of the days of the last year, IV has been lower than it is right now. This implies that the current IV is relatively low. The difference between IV Percentile and IV Rank is that IV Rank tells you where the current IV level is compared to the one year IV range, whereas IV Percentile tells you how often IV has been lower during the past year. Both metrics can be used to gauge how high/low the IV of a security is.
- Day High: This is the highest price the security traded for during the current trading session.
- Day Low: This is the lowest price the security traded for during the current trading session.
- Open: This is the price that the security opened the current trading session at.
- Earnings Date: This displays any known upcoming earnings dates.
- Dividend Date: This displays any known upcoming dividend dates.
Besides the watchlist in the main section, you can also add or remove the just-mentioned displays to the watchlists in the right and left sidebar.
Trader’s Tip: Besides using the watchlist to keep track of certain symbols, it can also be used as a stock screener for potential trades. Depending on what kind of setups you are looking for, you can filter the symbols by the desired metric to get an ordered list of potential trades.
For instance, when trading options, I like to select the ‘High Options Volume’ watchlist and filter it by IV Rank. Doing this gives me a detailed list of potential securities to trade options on.
The tastytrade Tab
If you don’t know about tastytrade, they are an educational financial media network. They create around 8 hours of live, mostly educational trading content every trading day. Furthermore, the team behind tastytrade is also (at least partially) behind tastyworks.
The tastytrade tab allows you to watch tastytrade directly from the tastyworks platform. You can either watch tastytrade live during the day or watch old videos by selecting them below. Furthermore, you can view short research reports (Research’s Cherry Picks) on a few selected symbols here.
The Chart Tab
This is another interesting tab that is probably one of the most-used sections of the tastyworks platform for most traders. The default style of the price charts inside of tastyworks is a dark theme. But all the colors and other layout settings can be changed by clicking the gear icon at the top of the chart tab. Right next to the gear icon, you can change the chart style to one of four styles (candlesticks, line, area, bar chart). Otherwise, you can also change the time-frame of the displayed chart. The left time-frame setting sets the time-frame for a single tick on the chart (e.g. what a single candlestick represents), and the right option sets the total time-frame that is displayed. Everything from minute data to monthly charts can be displayed.
All the way to the left, you can add (or remove) different indicators to the chart. In total, there are over 100 indicators to choose from including volume indicators, VWAP, moving averages, Bollinger bands, and everything that you’d ever want.
When hovering over the chart, the open, high, low, close, and indicator values for that date and time are displayed. Whether and where this is displayed can be changed in the second-most right setting above the chart.
Last but not least, you can choose from 20 different drawing tools including trend lines, channels, arrows, Fibonacci retracements, etc. for technical analysis purposes.
After customizing your chart, you can also save these settings in a downloadable file which allows you to always load them into the platform. This can be especially useful when switching to a new computer.
Trader’s Tip: To view the price chart of a specific option, simply right-click the option’s Bid or Ask price inside the option chain.
You can add the (tw) IVR indicator to see a historical chart of IV Rank below the price chart of each security. This is a great way to analyze past IV moves.
Alternatively, you can also view a historical chart of a symbol’s IV Rank by adding the extension .IVR to the ticker symbol. For instance, entering AAPL.IVR will display a historical chart of Apple’s IV Rank.
The History Tab
The history tab is where you can see all your past transactions. Unlike the activity tab, this includes all your transactions including interest payments, regulatory fees, deposits, withdrawals, dividend payments, and more. Just like in the activity tab, you can filter your transactions by date, symbol, or type. Furthermore, you can also download your activity to a csv file. If you have more than one account, you can choose the transaction history of which account should be displayed at the top.
Besides viewing all your transactions, the history tab can also be used to analyze your year to date profit by clicking the year to date button at the top. Alongside your realized and unrealized P/L, you can also view your total commission costs here. This is a great way to calculate your actual net profit since all the other P/L displays do not account for commissions or fees. Otherwise, you can also view the total P/L in each symbol that you traded during the current year. This is a great way to get a rough idea about the distribution of your profit and losses.
The Follow Tab
The last real tab inside of tastyworks is the follow tab. The follow tab allows you to view and even copy trades from the tastytrade team. By default, a list of the most recent trades from tastytrade team members is displayed. But you can change who’s trades are displayed by selecting one or multiple people at the bottom. Alongside the name of each trader, you can also view their level of experience, account size, and market assumption. The market assumption is expressed in Delta, where Delta-short means bearish, Delta-neutral means neutral, and Delta-long means bullish.
In the main section, you can see what kind of trades each trader made, the time of entry, original and current price, a short description alongside a trade action, and the symbol of the underlying. By selecting one of the displayed trades, you can see the exact position together with a reason for the trade. To duplicate one of these trades, you simply have to click the ‘duplicate this trade’ button.
Generally, I do not recommend directly following anyone’s trades since you otherwise, never really know the exact thought process behind the trade. Furthermore, the risk level of someone else’s trade might not be suitable for your trading style or account size. Nevertheless, the follow tab can be used to get some inspiration which can be especially useful for beginning traders. If you are actively watching tastytrade, this can also be another way to engage with the tastytrade team.
If you are looking for specific trades, you can also filter the displayed trades by symbol, date range, strategy, person, and type of trade.
If you ever need help with anything related to tastyworks, you can always just click the question mark button below the follow tab. This will open the tastyworks support website. Here you will find a big database of frequently asked questions and topics. If you can’t find the answer to your question there, you can always click the ‘Get Help’ button in the bottom right corner. This will open a text box and during trading hours, this allows you to access a live support chat. I personally have used this feature many times and I have always received a reply within very few minutes.
Besides the settings already mentioned, there are a few other things that can be changed. To access the settings menu, simply click on one of the gear icons (can be found in any sidebar or in the top right corner of the watchlist/positions/trade tab). The first section of the settings menu is the ‘General’ tab. This allows you to change how long notifications are displayed and customize which quotes to use. I personally highly recommend using the fastest (default) setting. I have never experienced any problems with the standard quotes which is why I don’t recommend changing them.
Most of the other settings tabs allow you to customize the displays of different sections of the platform. I explained what each of these displays means when covering the associated section of the platform in this tastyworks tutorial.
One last noteworthy section is the ‘Sound’ settings. Here you are able to change which sounds are played for which action.
If you don’t want to overcomplicate anything, you can just leave everything in its default setting. The only thing I recommend changing is the displays of each section so that the displayed information is relevant to your trading style.
Next to the desktop platform, tastyworks also offers a mobile app as well as a web-platform. The mobile app is available for both android and IOS. I won’t cover these platforms in-depth in this tastyworks tutorial. But if you want me to create a tutorial for these as well, definitely let me know in the comment section below.
In my opinion, the desktop platform is by far the best out of the 3 available ones. But as of right now, certain features are only available inside of the web-platform. One of these features is the portfolio payoff graph. This is a graph that displays a (beta weighted) payoff profile for your entire portfolio. It can be found inside of the portfolio tab of the web-platform. Once in a while, it is a good idea to view this graph to analyze and manage the payoff profile of your portfolio.
Tracking your trade progress is one of the best ways to develop and improve your trading skills. By thoroughly tracking your trades, you can find out which mistakes you make and what your strengths are. This allows you to uncover areas to focus on and cut out everything that doesn’t work. In my opinion, this is the best way to dramatically improve your trading.
If you have a U.S. tastyworks brokerage account with at least $2000 deposited, you can receive a FREE copy of my Excel Trading Journal Template!
All you have to do is go to the following page and log in to your tastyworks account: https://manage.tastyworks.com/index.html
There you have to scroll down until you see the ‘Refer Your Friends’ section. In that section, you will see a field in which you can submit a referral code. If you submit the following code and send me proof of it, I will send you a free copy of my premium Excel Trading Journal Template:
Referral Code: KKVTVYQE8N
You can send me proof by sending a screenshot of the referral field after submitting my code to Louis@TradeOptionsWithMe.com
The standard price for this template is $49. To learn more about it, check out my excel trading journal template page.
Any Questions Left?
I really hope you enjoyed this tastyworks tutorial and learned everything you need to know about the platform. However, if you still have any unanswered questions or comments left, make sure to let me know in the comment section below. I typically respond within a couple of hours. To leave a comment, just scroll down to the bottom of this page.
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Note that some of the links within this tastyworks tutorial are referral links. This does not affect the quality of the content and comes at no added cost to you.