Which Broker is for you: Tastyworks or Etrade?
Tastyworks and Etrade are my 2 Favorite Options Brokerages, but due to certain elements I believe one of them is quite a bit better for most people.
The reason I believe this to be the case is because one of them has significantly lower fees/commissions than the other, as well as has a cleaner platform, and better customer service for options traders in particular.
Below we’ll go over the fees each platform has, the customer service, the ease of trading options, and other elements I’ve picked up from using the platforms. To be clear this is coming from someone whose intent is to use these brokerages as trading accounts, particularly for options and futures, but also stocks.
To not bury the lead, the better broker in my opinion is Tastyworks. They’re the brokerage I use for all my options trades and futures trades, of which I make more than a thousand per year. There are many reasons for this that I’ll cover below.
Which Platform has better features?
This depends on what you’re looking for, as Etrade offers more asset classes than Tastyworks, such as offering forex trading directly (rather than futures), as well as access to bond markets.
Beyond that though, tastyworks has all the actually useful features Etrade has, but with a better interface (in my opinion) that’s easier to understand, although I have to admit Etrade has a better options interface compared to other platforms like TdAmeritrade’s thinkorswim. Personally I use futures to trade currency (forex) markets, and have a small trading account with forex.com, and I like the compartmentalization of using different brokers for different things, so the benefit of Etrade isn’t a big selling point for me.
In short: This category is basically a toss-up in my opinion, some people may like Etrade more as they offer bond-markets and forex trading, while others will prefer Tastyworks due to the cleaner interface and easier access to margin.
What's that about Margin?
You’re planning on having a margin account, aren’t you? I’d assume so, as you’re familiar with tastyworks and their strategy (naked option selling) requires a margin account for you to make good returns and have reduced buying-power-reduction.
Well here’s the deal: Tastyworks will give you a margin accounts if you can deposit the minimum of $2000 into their brokerage — as that’s what’s legally required to have a margin account and have it matter.
Sounds good, right?
Well here’s the problem: With Etrade they’re much stricter about giving out margin accounts. You’ll usually be denied until you’ve traded options with them for many months to years on a cash-secured account. This is common practice with all the big popular brokerages and Etrades main competitor (TdAmeritrade) has the same issue.
For serious options trader this means Etrade’s platform just isn’t going to work for them. Trading without a margin account limits you to defined-risk strategies and makes you incapable of managing trades in some cases, and generally just puts you at a huge disadvantage. This is one of the big reasons I recommend Tastyworks.
Which Platform has lower fees?
Tastyworks has about 40-85% fewer fees/commissions depending on the product you’re trading (options, futures, futures on options, stocks, etc), which may sound pretty good, but for active traders this can be an absolute avalanche of savings. In the past 12 months I’ve saved over $500 using tastyworks compared to Etrade. That’s pretty significant in my book.
If you plan to actually use margin buying power rather than just have a margin account for naked options Tastyworks also has significantly less interest fees, averaging at about 2-3% per year less than Etrade’s margin rates.
Which Platform has better Customer Service?
I can’t fault either broker for their customer service: both tastyworks and Etrade have great customer service.
The only difference in my experience is Tastyworks has slightly more knowledgeable and personal customer service when it comes to options and futures, as that’s what they specialize in and all their customer service responses comes from the tastyworks team.
Etrade is a little more “professional” in their customer service and less personal, which is something I’m sure some people prefer, but personally I like the more personal relaxed behavior of tastyworks staff. They answer the questions you ask more clearly and honestly, and will try their best to help you and give advice, while thinkorswim support will strictly give you technical support and refer you to “professionals” to give you advice on what you may need help with or have questions about.
So who would actually be better off with Etrade?
Really the only people I think would be better off with Etrade is people who simply want a solidified all-in-one broker, but it’ll literally cost you. You’ll also need to have a big account and income for them to trust you with level 4 (uncovered) options if you plan to trade the tastytrade/tastyworks style.
Especially because Tastyworks has some bonuses/promotions that offer the potential for some decent signup bonuses, while Etrade doesn’t offer any signup bonuses currently. You can check out Tastyworks signup bonuses on this page.