Gatsby is a simple, free options trading platform that makes trading long options easy. Make trades for or against companies and ETFs, and with no commissions or contract fees. Trade With Friends. Earn Rewards. Commission Free. Higher Risk, Better Potential Returns and No Needless Jargon. Trade options alongside your traditional investing strategies for when you want to really go for it.
How you make money
Make trades for or against companies and ETFs. Options allow for potential profit during both volatile times, and when the market is quiet or less volatile. A 'call option buyer' stands to make a profit if a stock rises above the strike price before expiry. A 'put option buyer' makes a profit if the price falls below the strike price before the expiration. The exact amount of profit depends on the difference between the stock price and the option strike price at expiration or when the option position is closed. Also earn points for every trade you make that are redeemable for gift cards.
How Gatsby makes money
Gatsby charges a $0.05 LQT fee per contract. While Gatsby does not charge commissions on self-directed trades on US equities and options contracts, nominal SEC & FINRA fees do apply to certain transactions. Specifically, options incur an ORF fee and sales of securities incur TAF and SEC fees, which are passed through to the client. This means each contract on Gatsby likely costs around $0.10. Gatsby has a number of other fees that are commonly associated with trading platforms that can be seen on their fee schedule. Gatsby also likely makes money through:
- Rebates from market makers and trading venues: Market makers (typically big institutions/funds) buy directly through the brokers to have discounted purchases. For that ability, the market makers pay a rebate to the brokerage to receive their orders . The brokerage sends your orders to the market maker that is most likely to execute at the best price for you and makes a few cents on each trade.
- Income generated from cash: They borrow the cash sitting in your account and invest it into interest earning accounts and keep the profit.
Is it safe?
Gatsby offers securities through ViewTrade Securities, Inc., who is a member of the Securities Investor Protection Corporation (SIPC). Funds are available to meet customer claims up to a ceiling of $500,000, including a maximum of $250,000 for cash claims. In addition, their clearing firm has purchased an additional insurance policy through a group of London Underwriters (with Lloyd's of London Syndicates as the Lead Underwriter) to supplement SIPC protection. This additional insurance policy becomes available to customers in the event that SIPC limits are exhausted and provides protection for securities and cash up to an aggregate of $600 million. Although Option trading involves a high degree of risk and is not suitable for all investors, you can be confident that the Gatsby platform is safe and reliable thanks to their SIPC qualification and additional insurance.