In this month’s Trade Journal post, I want to explore what to expect when my TdAmeritrade accounts are transferred to the Charles Schwab platform. There’s going to be a little sphincter tightening for me until the transfers are completed.

Td Ameritrade to Charles Schwab

In this month’s Trade Journal post, I want to explore what to expect when my TD Ameritrade accounts are transferred to the Charles Schwab platform. This transition will be automatic with the promise of improved functionality. But the term “improved functionality” is just a code word for “expect big changes.”  There will be a little sphincter tightening for me until the transfers are completed.

At stake, for me, is a couple of IRAs, a trading account for my Buy/Holds, and my Options Trading Account. I also have nearly 23 years of relationship with the Ameritrade’s websites and trading platform (logged many hours with their Client Support). And most concerning, I’m a daily user of TD Ameritrade’s thinkorswim Trading Platform.

So, I personally have a lot on the line.

I don’t want to be blindsided by logging into Ameritrade and seeing all my accounts set to zero. Nor do I want to start using my Charles Schwab platform to find critical functions I depend on missing. So, I will do a little due diligence in the next several days.

Most of the hand-pick information below is from the copious FAQ I found in the “Schwab Transition Center when I logged into my Ameritrade account via my workstation’s browser.

COMMENTARY CONTENTS

• Merger Backstory
• About the Transfers
  • Is ThinkorSwim available on Schwab?
  • 1099s For My 2023 Income Tax Reporting
• What steps should I take before my account moves to Schwab?
• What steps should I take after my account moves to Schwab?
• What’s the difference between a TD Ameritrade account login and a Schwab user login?
• Will the beneficiaries on my account automatically transfer to Schwab?
• Will I receive my dividends for the month that I move to Schwab?
• Differences Between Ameritrade and Schwab
  • Negotiated Commission and transaction Fees

Merger Backstory

• The merger of TD Ameritrade and Charles Schwab was announced on November 12, 2019, and completed on October 6, 2020 (done deal).
  • Created the largest brokerage firm in the United States, with over $6 trillion in client assets.
  • The combined company is called Charles Schwab Corporation – giving Ameritrade the heave-ho.
  • Thinkorswim will be available, but “later” in late 2023.

About the Transfers

• Transferring TD Ameritrade individual accounts to Schwab started the past Labor Day weekend (Sept 2-4).
• Accounts are being moved to Schwab in groups. I will be notified a month prior by mail, email, and messages in my TD Ameritrade account.

To date, I’ve received:

• A separate email from each of my accounts.
• An in-your-face banner with a countdown in each of my linked accounts.

• Transfers will happen on weekends (not during trading days). My account will be unavailable during that transition weekend.
• If I use the thinkorswim platform with my Ameritrade accounts (which I do), my accounts will not transfer until after thinkorswim is available at Schwab.

Is ThinkorSwim available on Schwab?

(Using Excel with thinkorswim)

Open the login dialog box

Click the gear icon in the lower-left

Open the drop-down list and select Schwab

Gotta restart

Enter the Charles Schwab’s Login ID

(Note: this is NOT my ID)

Enter my Charles Schwab’s password

Yep – it seems like ThinkorSwim is available on Charles Schwab.

Since my trading accounts have not yet been transferred, no accounts are listed

• All the thinkorswim educational resources, analysis tools, research features, and virtual trading on paperMoney^® will be moving too.
  • Under the category of “analysis tools,” I really hope that includes my Chart Drawing Sets.
• My options approval level will move with my account to Schwab.
• Complete details on filled orders will move to Schwab.
• Most open orders will move to Schwab. Some order types may not transfer, including conditional orders, trailing stop orders, and direct routed orders.

1099s For My 2023 Income Tax Reporting

• Since My TD Ameritrade account will transition from one broker-dealer to another in 2023, I will receive two 1099 forms for the 2023 tax-reporting year—one from TD Ameritrade and one from Schwab.
• The information on the forms will be exclusive, and I’ll need to report the amounts from both TD Ameritrade and Schwab on my taxes.
• If I need to see or get my historical tax documents, I can access them after My account transitions by logging in to Schwab.com and going to Accounts > Statements > Doc Type: Tax Forms.

What steps should I take before my account moves to Schwab?

Most of my account features and settings will transition to Schwab (so they say). Below are stated exceptions.

• User ID and password: About one month before my transition, the Transition Team will instruct me to create a Schwab Login ID and password. But I would have already done that because I am a curious nerd.
• Research screeners: Download my saved screens to a spreadsheet to save them for future reference.
• Balance history chart: Download my balance history chart data to a spreadsheet to save it for future reference.
• Alerts and notifications: Alerts cannot be downloaded, but I can make note of any alerts I’ve set at TD Ameritrade and then set up alerts at Schwab after my account moves. 
• Mobile watchlists: Log in to the TD Ameritrade Mobile app to confirm that my watchlists are saved to the server, not my mobile device. Any watchlists saved to my device will not move to Schwab.
• Open order details: If I have any conditional orders working at Ameritrade, I must record the details before my account moves to reestablish them at Schwab.
• Education courses. I need to finish any courses I’m in the middle of. My progress will reset after my account moves.
• Secure Message Center messages. I should print any important messages for future reference.
• Linked accounts. All my Ameritrade accounts are separate (account numbers, logins, and passwords). Because I can link these, some of my linked accounts haven’t been logged into for years. I need to record the username and password for all my accounts.

What steps should I take after my account moves to Schwab?

When I log in to Schwab after the transfer, I will visit the Welcome Center, review what was transferred, confirm my profile, and update account features.

• Direct debit/payments with my bank: The Transition Guides suggest that most of my “move money” instructions and bank connections will transition to Schwab, along with the rest of your account details. But I need to double-check that everything came over as expected. 
• Dividends Reinvestment: I need to reestablish any dividend reinvestment instructions on Schwab after the assets have moved.

What’s the difference between a TD Ameritrade account login and a Schwab user login?

At Ameritrade, each account has a separate user ID and password. Having multiple Ameritrade accounts, I digitally link them together so I can access them all by logging in with one user ID and password.

At Schwab, login info is tied to an individual person. I will have just one unique login ID and password, automatically linking all the accounts.

Will the beneficiaries on my account automatically transfer to Schwab?

Most accounts with beneficiaries will transition to Schwab. However, some account types that are eligible for beneficiaries at Ameritrade are not eligible at Schwab. After my accounts move, I need to check and confirm my beneficiaries.

will I receive my dividends for the month that I move to Schwab?

For equity cash dividends:

• Where the record date is before my move and payment is after my move, the dividend will be paid as cash in my Ameritrade account and then swept overnight to my Schwab account. The cash will NOT be reinvested per dividend instructions.  
• Where the record date is after my move to Schwab, the dividend will be paid to the transitioned Schwab account and will follow any reinvestment instructions you have set up. 

For mutual fund dividends:

• Depending on the time of month my account transitions to Schwab, accruals may be paid in cash to my TD Ameritrade account and will move to my Schwab account overnight, or accruals may be paid to your TD Ameritrade account based on my dividend reinvestment selection, with any securities moved to my Schwab account at the next weekly residual conversion.

Differences Between Ameritrade and Schwab

I’m sure there will be many differences between the two brokers that I will not discover until after the transfer. So, I need to be vigilant at the start to avoid getting myself in trouble.

The below table is just a few of the differences and unknowns that I’ve found for this month’s Journal Entry:

Stock Borrow Fees for Short Selling

(Vertical Spread Assignments – The Good The Bad and the Ugly)

My Options Lever does not allow me to open an Uncover Options contract (Shorts), but if I have a Vertical Bull Put Credit Spread where the Short is ITM and is assigned, and the OTM Long expires worthlessly, then I will have to borrow stocks from my broker to sell.

Ameritrade: TD Ameritrade does not charge stock borrow fees. In fact, TD Ameritrade offers a Fully Paid Securities Lending Program that allows clients to earn income from the securities they already own by loaning shares to TD Ameritrade while clients maintain ownership of the shares.

Schwab: Schwab can charge a Stock Borrow Fee. The fee is calculated as the end-of-day short market value multiplied by the quoted interest rate divided by 360. This Stock Borrow Fee is subject to change daily and can be charged as long as you hold the open short position.

Negotiated Commission and transaction Fees

(Handicapped by Brokers’ Fees)

According to an emailed FAQ, negotiated commissions, transaction fees, or margin rates that I have with Ameritrade will be honored by Schwab.

Granted, 65¢ is only 15¢ more than my negotiated rate of 50¢. But last year, I made 763 options contract transactions. At 65¢, that would have cost me $495.95. At my negotiated fee of 50¢, I only paid $381.50, saving $114.45.

Other Posts from Options Trades By Damocles

This Month’s Market Sentiment

This Market Sentiment Section is typically completed the first week of the month. By the time this journal is published, it will be mostly old news.

(As of Sept 2023)

Ecopolitical Influencers

Ecopolitical (Sociopolitical-Economics) Influencers (EPIs) can be breaking news, political machinations, Federal Reserve musings, or even Twitter Trends. They are events that can abruptly change the dynamics of the current markets. U.S. political polarization’s impact on Wall Street cannot be glossed over.

EPIs are like a lit fuse to a bomb. The fuse can be fast or slow, and the bomb can easily be a dud. But I need to watch this closely as an indicator. The EPIs can significantly disrupt all the other indicators at the drop of a tweet.

Yikes – Yawns – Yays

• China’s eco-woes – Yikes
• China gives Apple the boot – Yikes
• Trade war with China escalates – Yikes
• Funding the Feds – Yikes

• Chip for Tat – Yawn

• US unemployment rate at 3.4% (lowest since 1969) – Yay
• Feds hold Interest Rate steady – Yay

Geopolitical

• China is struggling with economic stability that could throw the second-largest economy into a stall (GDP of $18.1 trillion compared to the US’ $25.3 trillion). After flying on afterburners for the past few decades, the shady practices to overtake the US economy are starting to fly apart at the seams.
  • Their Real Estate segment is in a tailspin. The Central Committee has approved a scheme to allow buyers with low credit ratings to get preferential mortgage loan terms (think 2008 subprime debacle). Exports have dropped dramatically as an aftermath effect of their Zero-COVID policy. An aging population (think one-child policy for many decades) is straining their slowing economy that will continue for many years. And they are running on empty as their debt to GDP ratio is 279.7% (compared with 122.8% for the US).
  • The Chinese government has funded efforts to boost their economy through debt. And the lack of intrinsic production is making repayment nearly impossible. I expect drastic actions on China’s part to circumvent an implosion, like invading Taiwan and holding the world’s economy hostage. (That is, after all, a page in the Communism’s playbook.)  

• In another layer of US vs. China eco-struggles, China is giving Apple’s iPhones the heave-ho (This won’t sit well with the millions of devoted Chinese iPhone owners) as the US is banishing Huawei’s phones. Although this is causing havoc with my Apple Stock, I don’t expect this to harm my open 1-year Vertical Bull Put Credit Spreads.

Socioeconomics 

• The Republican Congress is more fractured and more resolutely-disabled than the Democrat coalition. Staunch Conservatives are willing to eat their young to force big changes, whereas the Democrat Sheeples are unified in Socialism. (Note: the right’s Freedom Caucus is every bit as debilitating as the left’s Progressives.) Even though the Debt Ceiling has been postponed until after the 2024 elections, the Fiscal budget still needs to be passed before the end of the 2023 Fiscal Year (end of September). But intransigent Fiscal Warriors are forestalling any Continuing Resolution (AKA, kicking the can down the road) until they can win significant concessions. This will pressure my open Vertical Bull Put Credit Spreads and may delay my decision to enter another later this month.
  • Two days before the end of the month and the end of the 2023 Fiscal Year, the GOP passed four budget packages to be voted on next week. A CR will be voted on this Friday.

• Even though politicians are well-practiced in histrionics (only second to the craze-manic US Journalism), the promise of a public spat over the upcoming appropriation bills is designed to generate fodder for next year’s elections. I do expect the Marketeers to have their usual caffeine-infused knee-jerk reactions. Still, Congress will pass CRs (Continual Resolutions) to keep the engine humming until they can get their fiscal points across to the voters.

Ecopolitical Influencers: Cautious DEFCON = 4

This Month’s Guidance

For the long-term (one year out): Over the balance of this year, I don’t expect any 2022-like inflation/interest rates crisis (in fact, there is evidence of a coming Santa Claus rally). There is still a lot of growth potential as the Marketeers continue to transition back into the small-caps markets.

A June ’24 expiration is too early to have an election effect.

For the short-term (Oct ’23): September was not very nice to my Vertical Bull Put Credit Spread inventory. The S&P 500 started the month at 4,514, which crept cautiously down as speculation of an interest rate hike was debated. But then took a nose dive the third week by 3% as the public speculation of a government shutdown ramped up.

I fully expect that the government will not shut down in Oct, and the Marketeers will have taken a deep breath and continue their meandering through the bull wilderness.

As long as I follow my Entry and Exit Rules, I’m confident that any new Vertical Bull Put Credit Spread I open this month should succeed.

Profit and Loss Statements

(As of 09/29/23)

My Performance vs. SPY

Hypothetically, instead of depositing $20,000 in my Options Trading Account, could I have done better if I bought $20,000 of the ETF/SPY instead?

¹ Calculated separately by averaging each position’s (open and closed) individual ARORs.
² Unrealized Profit or Loss (M2M value of all open assets + actual dollars received)
³ Actual dollars received.

This Month’s Trade Activity

(As of 09/29/2023)

Spread Count Summary:

Current Dollars at Risk:

Note: no new Spreads this week.

Options Buying Power:

Unallocated dollars available to open new Vertical Credit Spreads:

Vertical Spreads Opened This Month

(09/04/2023 – 09/29/2023)

This month saw a steady drop of 5.5% since its beginning.

The hysteria associated with the Federal budget battles pulled everything down. Now, with two days to go, there is an approved budget framework and the general assumption of a CR on Friday. But, until the FY 2004 Federal Budget is approved, there will be continued pressure on my ETFs. I will wait until the budgets are passed, and the market bounces to open my next Spread. (Note: a market bounce = 20-day bull trajectories.)

The entry signals for the two Spreads I did open this month were okay – but quickly changed negative after opening.

QQQ:315p/310p/X4 – Open 09/13/23 – Expires 06/28/24 – Max Gain = $272.00 – Open Price = 372.24
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 78.3%, Headroom= -15.4%, Max Loss= $1,728, AROR= 19.6%
Currently: Prob. OTM= 73.7%, Headroom= -12.0%, AROR= -134.7%

(9/12) CV has breached the 1-Year Resistance line. RSI is rising but undecided. With a P/C low (1.5) and IV% above 25%, consensus may be a continued rise in value. (Note: QQQ is heavily influenced by interest rate changes.)

IWM:160p/155p/X4 – Open 09/05/23 – Expires 06/28/24 – Max Gain = $269.00 – Open Price = 353.21
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 77.7%, Headroom= -14.6%, Max Loss= $1,744, AROR= 17.8%
Currently: Prob. OTM= 71.2%, Headroom= -9.3%, AROR= -106.4%

(9/5) The 60-day trend is negative, but the CV is well about the 1-Year Support Line. The general trajectory remains bullish as the 50-Day SMA is above the 200-Day. The rising RSI and P/C is low (2.1), suggesting a continuing bull.

The last Bull Run lost steam at the end of July for a tune of @7.4%. It then road the Bear Trend Channel’s Support line for about a week before returning to the Bull side. Since then, it rose @2.5% by the time I opened this Spread.

The 1-year Support line remains bullish, and the current value of IWM is 8.2% above that. IWM will have to experience a significant correction (a drop of more than 10%) to 14.5% before this position goes ITM. (Knock on wood – don’t tempt fate!)

Vertical Spreads Currently Cooking

(As of 09/29/2023)

Note: hysteria over a shutdown happens multiple times every year. Highly partisan politicians go on national interviews stating Armageddon if they don’t get their minuscule way, and the Chicken Little media loves exacerbating the historic catastrophe upon us.

DIA:315pp/310p/X4 – Open 08/09/23 – Expires 06/28/24 – Max Gain = $260.00 – Open Price = 353.21
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 76.6%, Headroom= -10.8%, Max Loss= $1,740, AROR= 16.6%
Currently: Prob. OTM= 69.2%, Headroom= -6.4%, AROR= -73.2%

SPY:405p/400p/X4 – Open 07/19/23 – Expires 06/28/24 – Max Gain = $284.00 – Open Price = 452.13
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 74.5%, Headroom= -10.5%, Max Loss= $1,716, AROR= 17.2%
Currently: Prob. OTM= 67.1%, Headroom= -5.5%, AROR= -50.1%

QQQ:325p/320p/X4 – Open 07/12/23 – Expires 06/28/24 – Max Gain = $336.00 – Open Price = 371.09
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 73.9%, Headroom= -12.4%, Max Loss= $1,664, AROR= 20.7%
Currently: Prob. OTM= 69.8%, Headroom= -9.2%, AROR= -29.4%

QQQ:305p/300p/X4 – Open 06/27/23 – Expires 06/21/24 – Max Gain = $296.00 – Open Price = 363.60
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 76.7%, Headroom= -16.1%, Max Loss= $1,704, AROR= 17.4%
Currently: Prob. OTM= 77.3%, Headroom= -14.8%, Max Loss= $1,664, AROR= -3.6%

IWM:165p/155p/X2 – Open 06/16/23 – Expires 05/17/24 – Max Gain = $326.00 – Open Price = 186.96
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 71.8%, Headroom= -11.7%, Max Loss= $1,674, AROR= 21.0%
Currently: Prob. OTM= 67.8%, Headroom= -7.1%, Max Loss= $1,674, AROR= -13.1%

QQQ:300p/290p/X2 – Open 06/08/23 – Expires 03/28/24 – Max Gain = $292.00 – Open Price = 355.66
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 77.4%, Headroom= -15.7%, Max Loss= $1,734, AROR= 19.0%
Currently: Prob. OTM= 82.8%, Headroom= -16.2%, Max Loss= $1,734, AROR= 9.0%

Note:

Vertical Spreads Closed This Month

(As of 09/29/2023)

No Spreads closed this month. The following will be stubs for when I do close a position.

QQQ:300p/290p/X2 – Open 06/08/23 – Expires 03/28/24 – Max Gain = $292.00 – Open Price = 355.66
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 77.4%, Headroom= -15.7%, Max Loss= $1,734, AROR= 19.0%
Currently: Prob. OTM= 82.6%, Headroom= -18.8%, Max Loss= $1,734, AROR= 69.2%

Income to open: $1.42 premium collected * 100 shares * 2 contracts = $284.00
Cost to close: $0.65 premium paid * 100 shares * 2 contracts = $130.00 (closed 259 days early)
Net Profit = $284.00 to open – $130.00 to close – $4.00 fees = $150.00
AROR = ($150.00 / 55 days in play) * 365 / $1,716 = 58.0%

Conclusion

Can selling options for income be considered a Home Business? Can I make money at home by selling Vertical Bull Put Credit Options Spreads? These are questions that I am trying to answer for myself.

My Options Trading activities include cover calls, cash-secure puts, Vertical Spreads, and other options strategies. Cover calls and cash puts assume that I already have a sizable portfolio and accumulated cash to generate a meaningful income. But short-term Vertical Spreads do not require a substantial cash investment to make some fun money. – This blog’s sole focus is short-term Vertical Spreads.

This blog is my Options Trading Journal. I will record my weekly Option Contracts buys and sells in hopes of gaining experience.

Experience is the ability to recognize that
I’m about to make the same mistake again.

-Damocles

Disclaimer

Even though I have tried to make it clear that this blog is my personal trading journal, it has been suggested by others that I, nevertheless, include a general disclaimer. So here goes…

“This blog and the information contained herein are not intended to be a source of advice or analysis concerning the material presented. The information and/or documents contained in the blog do not constitute investment advice.”