Gatsby is an options-trading mobile that doesn’t charge any trade commissions or per contract fees. As such, Gatsby is one of the few platforms that offers completely free options trading.
If you’re unfamiliar with options, they can provide a great deal of leverage for your investments. And they can also help to hedge against a downturn in stocks or ETFs that you own.
However, options trading also requires more speculation. Unlike with index fund investing, options trading requires you to have an opinion about the short-term direction of the underlying security. Learn more about how options trading works.
Options trading isn’t for everyone. But if you are someone who understands options and enjoys trading them, Gatsby could help you reduce your costs. Here’s what you need to know about the Gatsby options trading platform.
Also, see how Gatsby compares to the best places to trade options here.
- Completely commission-free options trading
- Includes a social trading feature and rewards program
- Allows easy options spreads, and has equity trading
Gatsby Options Details
$0 per trade / $0 per contract
Who Is Gatsby?
Gatsby is a mobile app that provides commission-free options trading. Its CEO is Jeff Myers. Gatsby is a Division of ViewTrade Securities, Inc., Members FINRA and SIPC. Securities and investments are offered through ViewTrade Securities, Inc.
Gatsby took in $1.5 million in seed funding from SWS Venture Capital in July 2019. At the time, it did not have a public product. It’s beta product launched in the summer of 2019. Gatsby’s big selling point was commission-free options trading. It’s main (only) competitor at the time was Robinhood.
“Gatsby brings a complex and difficult to grasp product to the masses through an intuitive, easy to use platform. With options’ ability to generate returns in both bull and bear markets, we think the Gatsby platform could unlock tremendous value and opportunity for the masses,” Kirby Ryan, COO of SWS Venture Capital, said to Fintech Futures.
However, after Charles Schwab announced commission-free trading in October 2019, so did virtually every other brokerage. But while trade fees have virtually disappeared, most brokers do still charge a per contract fee of $0.50 to $1.00 for options trading. However, Gatsby charges no trade OR contract commissions, which is what really sets them apart.
What Do They Offer?
With Gatsby, you can trade options on companies and ETFs. Gatsby also integrates social trading, letting you seek out trading ideas from other traders through the Gatsby mobile app.
You can invest in stocks and options, and Gatsby makes trading spreads easy.
Gatsby Rewards allow users to earn reward points with each trade and then redeem their rewards for retail store gift cards.
All Gatsby accounts are cash accounts by default. Many options traders use margin accounts, which provide more leverage. Gatsby customers can request a margin account but must email support at firstname.lastname@example.org.
Day trading is not allowed with Gatsby. Like margin accounts, retirement accounts are not a standard feature. To use a retirement account, customers must email support.
Gatsby determines account valuation using bid price. Some brokerages may use other techniques such as last trade price, ask price, or midpoint price (between the bid and ask prices). Gatsby believes the bid price is a more conservative but also more accurate method of determining account value.
Level 2 Options Trading
Gatsby restricts options trading to Level 2 investment types. In other words, you can only buying long puts and call. That means you won't be able to do more advanced options trading like multi-leg debit and credit spreads.
The upside to this restriction is that its usually easy for most investors to get approved for Level 2 options trading. The Level 2 options approval application will include questions related to:
- Liquidity needs
- Risk tolerance
- Total net worth
- Liquid net worth
- Annual income
- Investment experience
- Investment Objective
- Time horizon
These are common questions across all brokerages for Level 2 options approval.
Order Types and Limits
Gatsby defaults to market orders. But, for options trading, you’ll most likely want to stick with limit orders. Spreads (the difference between the bid and ask prices) can be large on options. Going in at the market price can mean getting in a terrible price. When you set a limit (order), you’re restricting the price you’ll get, which usually means you’ll get a better price than a market order or the order won’t fill at all.
Gatsby market orders also use 1.1x buying power. This is to cover slippage in price. There is a limit on the maximum number of contracts per trade. For buy orders, it is 349. For sell orders, it is 1,500. $500,000 is the maximum dollar amount per order.
Gatsby’s support is strictly through email — email@example.com. There’s no mailing address, phone number, or chat. So if fast customer service or multiple contact options is important to you, you might want to try a different options trading platform.
Mobile App Experience
Are There Any Fees?
As previously discussed, Gatsby doesn’t charge any fees whatsoever for trades on its platform. However, the stock exchanges do charge their own small fees (usually a few cents). These fees are unavoidable no matter which trading platform you choose. See Gatsby’s full fee schedule.
How Do I Open An Account?
You can download the Gatsby app at trygatsby.com to open an account. Gatsby says that it only takes a few minutes to get your account up and running. And you can open an account with as little as $10.
Is My Money Safe?
Investments are not FDIC insured. However, SIPC insurance coverage is offered through Gatsby’s brokerage provider, ViewTrade Securities, Inc. SIPC is to investments what the FDIC is to deposit accounts.
SIPC doesn’t cover your investment losses due to regular trading. However, it protects your investments in the event the brokerage firm fails. SIPC investments are protected up to $500,000, which includes a $250,000 limit for cash.
Is It Worth It?
For those who are just starting out with options trading and want something simple, Gatsby may fill that need. And the fact that it charges $0 contract fees in addition to $0 trade fees could help you save money over other brokers.
However, some investors may find it too limiting that Gatsby restricts trades on their platform to only long calls and puts. Their lack of a desktop platform and bare bones customer service options may also be a non-starter for frequent traders.
If options trading is important to you, you’ll want to compare all your options before choosing a platform. Here are the best brokers for trading options in 2020.
Gatsby Options Review
- Commissions & Fees
- Customer Service
- Ease of Use
- Tools & Resources
- Investment Options
- Specialty Services
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
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