Tastyworks Trading Platform: The Definitive Guide [2019]

Tastyworks Trading Platform: The Definitive Guide [2019]

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tastyworks trading platform guide

This guide has everything you need to know about the Tastyworks trading platform.

If you’re new to options trading through Tastyworks, I’ll show you have to get started with the Tastyworks trading platform.

And if you’re an options trading pro? I’ll reveal advanced tips, tactics and strategies that you can use to produce a better performing options portfolio.

Bottom line:

If you want to get the most out of the Tastyworks trading platform, you’ll love this guide.

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1

Getting Started With The Tastyworks Platform

In this chapter I’ll show you how to use the Tastyworks trading platform.


First, you’ll learn how to download the trading platform. 


Then, I’ll help you set it up to maximize your trading experience.

Step #1: How to download the Tastyworks trading platform

First, login into your Tastyworks account and click on “Technology”

Tastyworks download - technology

Then, scroll down to the Desktop section and click on “Download Now”.

Tastyworks download now

Next, you can install the trading software for Windows, Mac, and Linux just as you would install any other type of software on your computer.

Here are some recommended specifications that Tastyworks recommends for its trading platform:

  • RAM: Minimum 2 GB RAM, Recommended 8 GB RAM
  • Hard Disk Space: Minimum 200 MB for installation, 250 MB recommended
  • Connection Speed: 1.5 Mbps minimum, 6 Mbps recommended

Once you’ve done that, you can proceed to step 2.

Step #2: Configure your general settings 

Your 2nd step is to configure a few general settings.

To access the settings menu, click on the gear icon.

Tastyworks Gear Icon Settings

Tastyworks has made it very simple to access the settings menu by adding the gear icon in multiple places.

From here, navigate to the “General” tab.

Tastyworks General Settings

First, you can set how long trade notifications should show after each trade is execute.

By default, it is set to 2 seconds, meaning each trade notification will show for 2 seconds.

If you want these notifications to show for a longer or shorter period of time, you can adjust that here.

Second, you can set how fast the quotes refresh.

Tastyworks quote speed settings

By default, it is set to “Fastest (0.1s)”.

This means that your quotes will refresh every 0.1 seconds.

In general, you won’t want to slow this down unless you are having connectivity issues.

Step #3: Configure your Trade settings

Finally, let’s configure a few settings that affect the Trade tab.

Note:

Tastyworks does a pretty good job of configuring the default settings, so you likely won't have to update any of these settings for your trading platform.

First, let’s look at Display.

Tastyworks Display Settings

The checkbox for “Show Positions” determines whether you can see your existing positions in the Trade tab when you go to enter a new order.

I like to see what my existing position is so I leave this checked.

However, if you trade many positions, it may become cluttered if you show all of your positions.

If that’s that case, you can turn it off by unchecking the box here.

Similarly, the “Show Working Orders” determine whether any working or pending orders will be visible on your trade screen.

If you want to turn that setting on or off, you can do that here.

Next, let’s look at the “Price Range Overlay”.

This setting controls what type of stock price information is visible on your trade screen.

If you choose “Expected Move”, then the expected move will be overlayed on the trade tab.

If you choose “Daily Low/High”, then the Tastyworks trading platform will overlay the stock price low and high for the day.

If you don’t want to see either on your trade tab, then you can select “None”.

Tastyworks Display Settings Overlay

Next, let’s navigate to the “Order” tab.

Tastyworks Order Settings

Here you can configure the default price for single legged orders. You can pick between the natural price and the mid price.

Natural vs Mid Price

The natural price is the price you would get filled immediately. This isn't the best price. The mid price may take some time to get filled, but this is a better price. 

You would choose the natural price if you want to get filled immediately. However, you aren’t likely to get the best price.

Instead if you pick mid price, you will get a better price on your fill, but it may take a little longer to get a fill.

The next setting is the “Millisecond Delay before Send Order enabled”.

When you click “Confirm and Send” button to execute an order, there is a delay before the “Send button appears.

This is because some traders like to review their trade before sending out to the market. However, other trades like a quick execution.

If you would like a delay to review your order before sending, you can increase the delay time here.

Lastly, let’s discuss the setting in the “Stocks”, “Options”, and “Futures” tab.

Tastyworks Stock Option Futures Settings

Each of these tabs determine your default order quantity, quantity increment, and maximum quantity when you trade stocks, options, or futures on the Tastyworks trading platform.

Your default order quantity is the default number of shares or contracts the platform populates when you bring up an order ticket.

Quantity increment is the amount that the quantity of shares or contracts increases or decreases if you change from the default quantity on the order ticket.

And maximum quantity is fairly self, explanatory. This is the maximum number of shares or contracts the system will let you trade in one order.

If you haven't already, click this link to open your own Tastyworks account today!

2

How To Navigate The Tastyworks Positions Tab

In this chapter, I’ll share the tactics I use to navigate the Tastyworks “Positions” Tab.


As you know, this is where your options trading portfolio lives inside the trading platform.


And the Tastyworks trading platform has a TON of features to help you understand where your positions stand and execute closing or rolling orders.


Here’s how to use them:

Navigating the Positions Tab

If everything on your Tastyworks Positions tab is setup right, you can quickly

  1. Understand your existing positions and
  2. Quickly execute closing or rolling trades

Let’s go through the details.

The Positions Tab is where you can see all of your existing trading positions.

Tastyworks automatically groups your trades together by symbol.

For example, all my Boeing trades are grouped together in on drawer, while all my Caterpillar trades are grouped together in a separate drawer.

Tastyworks Boeing position tab
Tastyworks Caterpillar position tab

This makes it incredibly easy to understand your positions that you have for each trading symbol. 

Next, by default Tastyworks displays the quote for the stock or future you are trading. You can see the price change for the day and the current stock price.

The rest of the real estate on the Tastyworks Positions tab is dedicated to a number of customizable columns.

I’ll show you these next.

Tastyworks Position Tab Columns 

Tastyworks allows you to customize the different columns visible on the “Trade” tab based on your own personality and preferences.

These columns tells you different data points about your trading positions.

Here are the columns I’m currently using:

Tastyworks Position Tab Columns

Let’s go through each of the columns I have.

  1. ETF Delta - This is the number of deltas I am either long or short for that particular symbol. A delta of 10 means I am long (bullish) 10 shares of stock. A delta of -10 means I am short (bearish) 10 shares of stock. This number is very important because it will tell you your directional risk for that particular underlying.
  2. Theta - This is the amount of money my options positions are either making or losing as each day passes. Most of my positions are positive theta meaning my positions are making money every trading day as time passes.
  3. P/L Day - This number represents your profit or loss change on the day relative to the previous trading day.
  4. P/L Open - This number is your total profit or loss on your trading position since initiating the trade. This is where you go to see if you are making or losing money.
  5. PoP - This the probability of profit. This number is the probability that you make one penny or more on the trade by expiration. I typically like to keep this number above 50%.
  6. Ext - This is the extrinsic value of the position. As an options seller, extrinsic value is the maximum potential profit on the trade. I use this number to gauge how much I have left to gain on the position.
  7. Cost - This number is the amount that you initiated the trade for. A number in red means you paid money to initiate the trade, while a number in green means you collected money to initiate the trade. I use this number in combination with NetLiq to help determine profit and loss.
  8. NetLiq - This is the current market value of your trading position if you were to liquidate the position. NetLiq relative to your cost will show you your profit or loss on the position.
  9. Indicators - This column will show me if there are either earnings or stock dividends approaching in the underlying.
  10. Beta-weighted Delta - This is my delta beta-weighted to the SPY. I’ll explain beta-weighted delta in Chapter 8.

To customize which columns are showing, you simply click the gear icon.

From the settings menu, you can drag and drop the different columns to either show new columns or remove columns or reorder existing columns. 

Positions Tab - Actions (close, roll, quick roll)

Based on all the information your columns are telling you, you have the ability to either execute closing or rolling trades right from the positions tab.

First, you have to highlight all the legs you want to either close or roll.

Tastyworks Highlighted legs

Then, you right click to bring up the action menu.

Tastyworks Action Menu

If you have a profit on your trading position, you can click “Close Position”. 

This will automatically populate an order ticket that will close your position. 

Tastyworks Closing Position Order

From there, all you need to do is click confirm and send to ship the order to the market.

The Tastyworks trading platform also has a unique feature that will close your position at a percentage of maximum profit.

Tastyworks Close Position Percentage Profit

This will automatically populate an order ticket that will close your position when you reach a profit target.

These orders are good-till-cancel orders so they will sit on your order book either until it is filled or until you manually cancel the order.

If you have a losing position that you need to roll, you can click either “Roll” or “Quick Roll”.

By clicking “Roll”, the trading platform will automatically set up to close your existing position and open a new position at the same strike in a further out expiration cycle of your choosing.

Quick roll will simply populate an order ticket that closes your existing position and opens a new position at the same strikes in the next immediate expiration cycle.

This makes executing orders very simple.

3

How To Navigate The Tastyworks Trade Tab

In this chapter, I’ll show you how to navigate the most important part of the trading platform.


Why is that?


Because this is where you execute all your trades.


So without further ado, let’s get started…

Table Mode

The “Table” mode shows you a typical options chain.

If you’ve ever trade options contracts before on other trading platforms, the table mode will be familiar to you.

For you newer traders, this is where you can get all your information about the expiration cycles and strikes available for you trade for a particular underlying.

Tastyworks Table Mode

The middle column is all of your strike prices for the underlying.

To the left are all the call options and to the right are all the put options.

There are two columns by default that you cannot change: bid and ask.

These are the two prices for any option contract.

If you want to sell the strike, you would click on the bid price. If you want to buy the strike, you would click on the ask price.

There are two columns that are configurable.

Currently, I have them set to “Open Interest” and “Delta”.

  • Open Interest helps me gauge the liquidity for a particular strike price. A high number for open interest is good because this indicates there are many players in the market for that particular options contract.
  • Delta shows risk or probability for a particular strike price. When selling options, I typically stick to 16-30 delta range.

Curve Mode 

The curve mode on the Tastyworks trading platform is a more visual way of setting up your trades, completely unique to Tastyworks.

This mode has drag and drop functionality that allows you to visually place each leg of your options order relative to the current stock price and its normal distribution (probability zone).

Tastyworks Curve Mode

Here are all the steps to creating an options order on the Tastyworks curve mode:

Step #1: Click the Stock, Call or Put button 

If you click the “stock button”, it will automatically populate the order ticket with your default quantity shares of stock.

Tastyworks Curve Mode Stock Order

If you want to add options to your position, you can click either call to add a call option or put to add a put option.

This is what that looks like if you click call.

Tastyworks Curve Mode Call Option Order

At first glance, there is a lot going on here, so let me break it all down for you.

Step #2: Select Your Option Contract

Here’s the “menu” of options contracts that are available to trade for this particular underlying.

The vertical axis shows all the available expirations that you can trade.

The horizontal axis shows all the available strike prices that you can trade.

So, all you have to do is click the cell that corresponds with the expiration date and the strike price call option that you want to trade.

Note:

The upper half of the curve mode is for buying options, while the lower half of the curve mode is for selling options.

Once you click on the option contract that you want, it populate the order ticket with all the corresponding information.

Tastyworks Curve Mode Order Ticket

If you everything you see, all you have to do is click the “Review & Send” Button. 

If you want to make adjustments to options contract you can either drag the tile to adjust the strike price or use the navigation buttons in the order menu to adjust the options contract parameters. 

Analysis Mode

One additional feature inside the Curve mode is the Analysis mode.

You can only use the Analysis mode in conjunction with the Curve mode.

The Tastyworks analysis mode allows you to see where your options position will either make or lose money relative to the stock price and time to expiration.

This is what the Analysis mode looks like.

Tastyworks Analysis Mode

The Analysis mode requires its own section to discuss in more detail, so if you like to learn more about this feature, visit Chapter 7. 

Active Mode

The “Active” trader mode is for all the day traders and scalpers.

This is the trading mode that you would want to use if you are making quick trades in and out of either stocks or futures.

Tastyworks Active Trader Mode

In this trading mode, you can load up a watchlist of your favorite day trading stocks or futures. 

Here are the steps to execute trades using the Tastyworks Active trader mode.

If you haven't already, click this link to open your own Tastyworks account today!

Step #1: Click on the Bid (Sell) or Ask (Buy)

Your first step is to click on either the bid or ask price of the stock or futures that you want trade.

Click bid if you want to sell or click ask if you want to buy.

Step #2: Adjust your order parameters

After clicking on either the bid or ask price, the trading platform automatically populates an order for your trade on the active trader “ruler”.

Tastyworks Active Trader Buy Order

From here, you can adjust your quantity and price for the order.

Step #3: Click Send

Once you are happy with your order, all you have to do is click send.

If you have already send the order, but want to adjust your trade price, Tastyworks makes it super easy to click and drag your order to cancel and replace the old order.

4

How To Navigate The Tastyworks Activity Tab

In this chapter, I’ll show you how to navigate the “Activity” Tab.

 

Why is the tab important?


Because this is the section of the trading platform where you can see all of your past order activity.

 

Let’s dive in.

The Activity Tab is where you want to go if you want to see all your past order history.

Tastyworks Activity Tab

You can filter the orders by “working”, “filled” or “cancelled” orders.

Tastyworks Activity Filters

Working vs Filled vs Cancelled

  • Working - an order that is pending a fill
  • Filled - an order that has been executed
  • Cancelled - an order that you manually cancelled

You can also filter on a date range and symbol.

Tastyworks Date Filters

After setting up your filters, this screen will show you all the relevant information such as price time in force, time of execution, and each leg of the order. 

Why would you use the Activity tab?

There are some cases where you either forgot how a position came to be or maybe you are trying to figure out all the credits you’ve collected from rolling a position multiple times.

This section of the Tastyworks platform is where you can do all of that.

5

How To Navigate The Tastyworks Watchlist Tab

In this chapter, I’m going to show you the Watchlist tab of the Tastyworks trading platform.


Why is the tab important?


Because this is where you can find new trading opportunities based on IV Rank.


Let’s get started.

The Watchlist tab is where you can built out a list of stocks, ETFs, or futures you want to monitor for potential trading opportunities.

Tastyworks Watchlist tab

Building a Watchlist

Tastyworks already has a few pre-built watchlists that are fairly comprehensive with the liquid trading symbols.

Tastyworks prebuilt watchlist

But if there’s a custom watchlist you want to build, here’s how to do that. 

Step #1: Click the Gear Icon to Access the Settings Menu

The first thing you want to do is click the gear icon from the Watchlist tab to access the settings menu.

Tastyworks watchlist settings

Step #2: Add a New Watchlist

From here, you have the ability to add a new list, clone a list or delete an old list. 

To add a new list, click on the corresponding button and add a watchlist name.

Tastyworks add a new watchlist

Then, you can start adding the stock, futures, or ETFs symbols you want to add to your watchlist. 

It’s that simple.

Watchlist Columns

Every trader has their own preferences when it comes to what information they want to see on the watchlist.

Here is a list of columns that I use on my watchlist.

Tastyworks watchlist columns
  • Last - shows the last trade price for the symbol
  • Chg - shows the dollar change from the previous trading day
  • Chg% - shows the percentage change from the previous trading day
  • IV RANK% - shows how high implied volatility is for the options relative to the implied volatility from the last 52-weeks
  • Corr SPY - shows the correlation to the SPY.
  • Liquidity - shows the liquidity of the underlying options
  • ATM IV - shows the implied volatility percentage for the at-the-money options
  • Indicators - shows whether the underlying has any earnings or dividends approaching
  • Earnings At - shows the date of any upcoming earnings

If you want to update any of these columns or rearrange the order of them, you can do so in the settings menu.

From the settings menu, you can easily drag and drop between the “Displayed” and “Not Displayed” areas and reorder the columns as needed.

6

How To Navigate The Tastyworks Chart Tab

In this chapter, I’ll show you how to navigate the Chart tab in the Tastyworks Trading Platform.

 

This is one of the least important parts of the trading platform.


Why is that?


Because stock prices are completely random. Looking at past price data gives us no edge into the future.

 

However, it’s sometimes nice to see where the price has been.


Let’s take a look.

Here’s what the Tastyworks chart tab looks like.

Tastyworks chart tab

The Tastyworks trading platform was created by and designed for options traders.

This means that they know charting analysis and technical analysis plays a small role in the day to day trading decisions options traders make.

That’s why the charting package in the Tastyworks platform is very minimal.

Indicators

Tastyworks has a standard set of charting indicators available.

Tastyworks chart indicator

This set includes indicators like moving averages, MACD, stochastics, and other oscillators.

You can configure which indicators you want to look at here.

Aggregation and Time Interval

The aggregation and time interval settings configure how much data to display on the chart (time interval) and in what increments (aggregation).

You can select anywhere between one day to 20 years of data from one minute to monthly aggregations.

Tastyworks chart time interval aggregation

Drawings

Tastyworks allow has features that allows you to draw lines and shapes on the chart

Tastyworks chart drawing tools

Standard drawing tools include trend lines, channels, and Fibonacci retracements.

7

Cool Tastyworks Platform Features

In this chapter, I’m going to show you some of the coolest features in the Tastyworks trading platform.

 

First, I’ll teach you how to use the Analyze mode to strategically analyze your options trading positions.


Then, I’ll show you the extra bells and whistles of the trading platform that enhances your trading experience.

Analyze mode

Let’s dive into the Analyze mode that I briefly discussed earlier.

The purpose of the Analyze more is to visually see where your options positions make or lose money in relation to the underlying price, time to expiration, and volatility.

Tastyworks analysis mode

What makes this feature powerful is that you can simulate different scenarios that you think may occur.

You can configure parameters for the days to expiration, current price, and implied volatility.

Tastyworks analysis mode parameters

Based on your simulated parameters, the Tastyworks Analyze mode will display an update profit and loss diagram, show you how your position will do based on your assumptions.

Let’s go through an example.

Here I have an iron condor with 24 days to expiration in BABA.

Right now, the theoretical profit is $26.

But what happens if I fast-forward one week?

Let’s simulate that by moving time forward one week.

Tastyworks analysis time example

All else being equal (stock price and volatility), I can expect to have a $60 profit on the trade due to simple time decay.

Tastyworks analysis simulated profit

The Analyze mode on the Tastyworks platform is a great tool for you if you are a visual learner.

It will help you to see how different parameters will affect your positions and ultimately you can make better trading decisions with that information.

Tastytrade 

Tastytade is the content arm of the Tastytrade business, while Tastyworks is the brokerage arm.

On this tab in the Tastyworks trading platform, you can watch 8 hours of market content a day each and every trading day.

Tastyworks provides trading content, insights, and strategies that may be helpful for your trading education.

Follow 

Tastytrade has a handful of “follow-traders” on the trading platform.

Tastyworks Follow Traders

These traders post their traders to the follow feed so you can see what they’re trading and why.

Warning:

This is not supposed to be used as a signal service where you blindly follow every trade someone makes.

Instead, use this as tool to understand why someone is trading what they are trading and a way to identify potential trading opportunities.

Strategy menu

The strategy menu in the trade tab is a quick and easy way to populate the order ticket with many of the popular options trading strategies.

Tastyworks strategy menu

The benefit of the platform feature is that it allows you to quickly create trades without all the manual work.

All you have to do is click on the options strategy you want to trade and click “go”.

From there, you can adjust the strike selection to your liking.

8

Advanced Tips And Strategies

Now it’s time for some advanced tips and strategies.

 

In this chapter, you’ll learn how to to use the portfolio beta-weighted delta and portfolio theta to strategically analyze your trading portfolio.

Mastering Beta-Weighted Delta

Beta-weighted delta is one of the most important metrics to understand for your options trading portfolio.

Let me explain.

What is beta-weighted delta?

As a net seller of options contracts, the only way for you to lose money is if your deltas get out of hand (stock price moves too far in one direction).

So, to manage the directional risk of your trading portfolio as a whole, you want to get a portfolio delta.

The portfolio delta number would represent your directional risk for your overall portfolio.

The thing is not all deltas are created equal.

So it’s an unfair comparison to just add up all of your deltas.

This is because different underlyings have different notional values, volatilities, and correlations.

You can think of it as trying to compare apples to oranges.

The answer to this issue is beta-weighted delta.

By beta-weighting all your deltas to a common underlying (SPY), it makes a fair comparison between deltas.

Basically its a math formula that takes your stock deltas and translates them into SPY (S&P 500) deltas.

So now you can compare apples to apples.

Tastyworks and Beta-weighted Deltas

The process of beta-weighting deltas is a tedious mathematical process that you won’t have to calculate on your own.

Luckily, the Tastyworks trading platform does all the calculations automatically for you and spits out.

Tastyworks Portfolio delta and theta

How to use beta-weighted delta

Now that you have a beta-weighted delta to the SPY, what are you supposed to do with it?

The answer is that you use beta-weighted delta to gauge your directional exposure across your entire portfolio.

If your directional exposure gets too large in any one direction, you can initiate trades that offset those deltas.

Portfolio Theta

Similar to portfolio beta-weighted delta, your portfolio theta is the sum of the theta from all of your options positions.

However, theta between all underlyings is the same so there no need to do any additional calculations to compare apples to apples.

Typically you want your portfolio theta number to be positive.

Theta

Theta is one of the "Greeks" that measures the change of an options price relative to time.

A positive theta value means that your portfolio is making you money everyday that passes by. A negative theta value means that your portfolio is losing money everyday that passes by.

In general, you want to make money as time goes by. That’s why I’m in the options trading business.

You can use your portfolio theta number in relation to your portfolio beta-weighted delta to determine the health of your options trading portfolio.

If you've enjoyed this guide, here's a link you can use to open your own Tastyworks trading account!

Now It's Your Turn

Now I’d like to hear from you:


Which strategy from today’s guide do you want to try first?


Are you going to use the Analyze mode?


Or maybe you’re ready to consider beta-weighted delta in your trading decisions.

 

Either way, leave me a quick comment below to let me know.

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