Hello all I have recently opened and funded an account with the Tastytrade brokerage. As some will know, they are a relatively recently established brokerage who specialise in options, predominantly. My options strategy involves selling vertical, calendar, diagonal spreads deep on deep ITM options. I exclusively do this using index options such as NDX, SPX etc. Since these are cash-settled. Upon funding my account last week with an initial deposit of only $100, I attempted this strategy in my live account, having had success doing it in paper trading on IB and Thinkorswim in the past. My main strategy involves selling say, a vertical spread for the full credit of the width of the spread. For example, a deep ITM NDX with strikes 15700/15800 for a full $100 credit. Since the margin required for a credit spread = width-credit received, there would be no margin for this type of trade. However, upon creating and sending many of these orders in my account, they would only sit 'working' and didn't fill. That was fine, I knew these would be difficult to execute in a real environment. The only trades I could get to execute were one NDX position and one SPX position, both 5 contracts each. Both of these had a maximum risk of $5 dollars per contract, so $25, since I was aiming for mid price, which was the full width of the spread. Still I couldn't get them to execute for 0, so next best thing was the lowest amount possible. Then, as profit was showing for both trades in my account, I went to close both positions. So I set a buy to close order for each, and they also would not fill. At one point, my NDX trade was in profit by $6,000!! I kept lowering my limit price, even to the cent, and still would not fill. Since I had traded short dated options here, both of these ended up expiring worthless. I was also charged assignment fees, which I knew to be $5 per leg with Tastytrade. Now my account is set to closing only. I emailed their trade desk, to be informed that my trades I was trying to place were 'uneconomical'. What does this even mean? Why must my account be monitored so strongly? Once I have the required margin for a trade, who are they to tell me what I can and cannot trade?? I am very annoyed about this, and I don't believe that other brokerages would be taking this approach. I also believe that my exit trades were deliberately unfilled for the reason they did not want to pay out. I have attached an image of the reply to my email I sent to them. What is my recourse here? Does this sound ridiculous to any of you? Should I move my business elsewhere? Thanks for any input
Interactive won't even let you close a spread if you have less than 2k balance. 100$? Seriously? LOL They also say that the only time you managed to get a fill was by locking a loss.
Well, I simply wanted to test the platform and my strategies before committing a larger sum towards this. I'm glad I didn't now, as Tastytrade is taking on a hugely authoritive approach, telling me 'They will not be supporting these order types'. I am not aware of any broker requiring a minimum amount to close a trade. Seems very counterintuitive to me really. If one starts very small, and the strikes prices can be traded effectively, why then would any broker object to a customer placing such trades? That is what I am truly failing to understand.
That part about 'locking in a loss' was actually factually inaccurate. When placing a spread trade on deep ITM options, the price will fluctuate as any other price would. I mentioned I was up 6k with the ITM NDX trade at one point, but I could not close it out!
I read the attachment. they are saying your orders aren’t reasonable (selling a 10 wide vertical for 10, no rational party will trade that) and somehow you actually arbitraged yourself. my guess is they realized you are a walking timebomb.
Oh dear. Seems you are a bit obsessed with a previous post I made, asking a very genuine question. Paper money on Thinkorswim allows you to open unlimited contracts. That's why I was inquiring about this. However, now that I am live, I don't expect to trade 1 million options contracts. And even with 5 contracts, my profit was still displaying $6,000, on a trade that I subsequently could not close. Is that ok with you?
No. I attempted to open the spread for a credit of that width, but no fill. I attempted this same strategy with different strokes, same result. But I did manage to fill for 99.95/100, therefore only $5 risk per contract*5. As close as possible. Still an incredible return on investment, if I could have closed it out. I don't see how actually profiting in my account poses any risk to me or Tastytrade