TD Ameritrade has been around for quite some time as an online brokerage. When I first started using the platform, they were TD Waterhouse. A few years back they were acquired by Ameritrade. With the joining of the two companies, they offer number of tools to support both stock traders and options traders. They also support trading mutual funds,bonds and CDs. Recently, in the last few years, they've completed the acquisition of another options brokerage, thinkorswim. With this acquisition comes the addition of futures and FX trading.
Due to the blending of these several major online brokerage companies, there had been quite a variety of tools, both web-based and desktop-based. TD Ameritrade has largely completed the integration of thinkorswim and in the process dropped many of their trading platforms. Fortunately, for existing thinkorswim customers there haven't been too many changes. Since I already have an entire page devoted to the thinkorswim review, I won't spend much time here other than to point out where the combination enhances this brokerage's offerings.
Prior to completing the acquisition with thinkorswim, my largest complaint with TD Ameritrade as an options trading platform was concerned was the sheer number of tools to choose from. Now that some time has passed, TD Ameritrade has thinned down the choices leaving many of the trading tools contributed by thinkorswim. In this review, I want to focus on just the two platforms that are unique to TD Ameritrade.
What has remained is the web-based platform, which is different than the one offered if you have a thinkorswim account. Generally speaking, my recommendation for serious options trading is to use the thinkorswim desktop platform. That said, if you need to execute trades from your browser, there is a web interface for that. As web tools go, it's not too bad. Setting up a trade like a put vertical spread or a calendar spread is relatively easy. However, as many who have followed my trade tutorials know, I like to select strikes based on probability of expiring. That is next to impossible to do from the web platform. Even getting access to an option's delta is very difficult.
The web-based order entry has gotten a little better but is still kind of difficult to use. It's hard to find a situation where I'd want to use it but again... if I needed to, it's nice to have alternatives.It's at least nice that I can choose vertical spreads and calendar spreads and select both strikes at once. If I type in a underlying symbol and click the 'Select Vertical Call Spreads' button for example, a new window pops up that offers the option chains set up to show vertical spread combinations. I can select the option month, strike interval and such to get the right combination.
Clicking on either the bid or ask price of the spread causes the information to be transferred back to the order page. The options order page allows me to enter single options, vertical spreads, calendar spreads, straddles and strangles but not iron condors. This would be fairly limiting to me since I trade iron condors fairly often.
Trade monitoring is probably one of the weaker areas of the TD Ameritrade web platform. That said, there have been some improvements to allow the ability to customize my views, including displaying position greeks. In addition to out-of-the-box views, you can create quite a few custom views to display your position information as you like.
In addition, TD Ameritrade offers the Trade Architect tool. This is based on the Adobe Air platform, which is Flash-based. The big disadvantage I see to this is lack of support on the Apple products (iPad & iPhone) as Apple has taken a clear stand on not supporting Flash on these devices. Here's a quick view of the platform.
This tool, while very flashy (pun intended), lacks many of the capabilities of the thinkorswim desktop platform. There are many nice research and management features but setting up a simple vertical spread based on probability of expiring is VERY difficult. I also found the values for delta and probability of expiring to not match the equivalent options in the thinkorswim platform.
I'd keep an eye on this tool as I believe it will improve over time. I just think right now this tool is not quite ready for prime time.
I want to spend the remainder of this review discussing some of the other features provided by TD Ameritrade outside the trading platforms.
Depending on the type of research being done the tools available on the website may or may not satisfy. As I recently browsed the information available from the 'Research & Ideas' tab of the website, I found there was some pretty decent information regarding overall market, stocks and options. Let me give just a few examples.
Look at the image above and just take a moment to absorb the information contained. Of course there's the market behavior for the day but look at the summary of the DJIA, S&P 500 and NASDAQ.
The piece of information that jumps off the page for me is the 5-day trend. I sometimes find myself getting too caught up in what's happened today. This little view tells me there is a slight 5 day downtrend that is stronger on the NASDAQ than on the other two.
Scrolling down, I can get sector performance information that might help me pick a sector to trade from. I can also see general trend and status of stocks in a watch list I've defined. This is a great way to get a quick overview and quickly pick out over or under performers.
Another area I found particularly nice was the Stocks section under the 'Research & Ideas' tab. One thing I like to do in researching ETFs is find out what the holdings are of that ETF. By going to the 'Stocks' section and typing in my favorite ETF and then clicking on the 'Portfolio' tab within the page, I can quickly see what sectors are covered by the ETF and what the top 10 holdings are.
Here's a bonus. For those that love printouts, I can turn all the information on the webpage from all the tabs into a report that can be printed out.
I wasn't overly excited about the options research capabilities. Compared to what I can do on the thinkorswim platform, the web tools feel kind of clunky. For web-based analysis, I actually like the tools on the OptionsXpress website better.
Like many web tools, there is a screener that can enable one to filter by various criteria. I found the screen tool for options was quite limited and didn't allow me to filter by the type of criteria I would typically use. In fact, the only two strategies I could search for were covered calls and calendar spreads.
Given that we're talking about web-based research and analysis, I wasn't expecting much in the way of charting tools. Of course I'm spoiled by the charting tools that are part of the thinkorswim platform but the charting package on the website wasn't too bad. I was able to do basic things like set up my favorite indicators (MACD & Stochastic) and add moving averages. My preference is still to use the tools on the thinkorswim platform but in a pinch, it's nice to have alternatives.
TD Ameritrade offers basic reporting capabilities including the ability to get a list of transactions within a certain date range and the ability to filter by specific symbols. I was really interested in the ability to to generate a report on a set of spread trades for a given month but was unable to test this. It appears though that this is possible. The question I'd have is whether the reporting tool is able to match up opening and closing trades to produce a profit or loss amount for the trade.
It appears as though they have some fairly decent tax reporting tools including the ability to generate gain/loss reports for a given date range. In fact, even if you had a thinkorswim account, all tax reporting is now done from the TD Ameritrade tax center.
Unfortunately, TD Ameritrade still does not offer any kind of live chat support method. In place of that, they offer an "Ask Ted" tool that allows me to pose a question. Many questions can be answered using this tool. However, there are just times when I'd like to have a conversation. I have found that I can get quite satisfactory help by calling. They are always cheerful, capable and eager to help.
Generally, the sign up process is pretty straightforward. However, be prepared to convince them you are a serious investor with options. I answered the questions about looking at speculation and income as motives for trading options, I listed my years of trading experience, contract sizes, etc and yet I was still denied. They legally can't tell you what they are looking for, nor can I.
I haven't directly traded options with TD Ameritrade except as a covered call trade. Unfortunately, without approval, I can't say much about the trading experience. That said, I had a conversation with an Options Specialist regarding some of the more sophisticated trades. He was very helpful and was able to answer all my questions.
In terms of education, there isn't as much as I'd like to support a newer options trader.
You can now see the results of integrating with thinkorswim and Investools®. If you go to the website and look at the Education tab, they are showing a number of live (free) workshops in various cities. In addition, the Investools education is now being offered for the higher end education experience. They have added someonline pages to outline some of the option basics. The basic options online course used to be part of a fairly expensive Investools course so this is quite a bonus for TD Ameritrade customers. In addition, they offer webinars to customers on various topics including understanding volatility, trading spreads and so forth.
TD Ameritrade sticks pretty tightly to the advertised commission rate of $9.99 base rate and $.75 per contract. Be aware that for a trade like an Iron Condor, this would be two trades so you'd pay the $9.99 base rate several times.
With the full integration of thinkorswim and Investools, many of my initial complaints about TD Ameritrade have been resolved. Keep in mind this review is coming from a complex option trader's perspective. Mileage may vary if you are trading stock, CDs, Mutual Funds, etc.
That said, TD Ameritrade has a well deserved reputation as a solid brokerage supporting both stock and options trading.
|Key Strength:||The thinkorswim platform. This acquisition is huge in my mind as it positions TD Ameritrade as a serious option trader's brokerage.|
|Key Weakness:||Trade Monitoring - This is probably the weakest aspect of the platform and their web site in general. I would really love to have a better picture of my overall position and exposure to market movement. The ability to display the greeks would be a huge improvement.|