Tom Sosnoff Will Teach You Trading

Summary

Podcast Summary: The Compound and Friends

Episode: Tom Sosnoff Will Teach You Trading
Date: September 19, 2025
Hosts: Downtown Josh Brown, Michael Batnick
Guest: Tom Sosnoff

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Episode Overview

This engaging episode features Tom Sosnoff, a pioneering force in online brokerage and options trading education. Sosnoff, the founder of thinkorswim and Tasty, shares his journey from Chicago’s trading pits to leading fintech innovation. The episode explores the evolution of retail trading, the mechanics of options markets, the psychology and probabilities of trading, and stories from decades spent at the frontier of finance. Listeners are treated to tactical market insights, personal philosophy on wealth and success, and a deep dive into the culture of trading.

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Key Discussion Points & Insights

1. Tom Sosnoff’s Origin Story (13:02 – 16:02)

• Sosnoff explains how he entered the market as a floor trader, taking the contrarian role out of necessity:

  "I grew up never having an opinion about the markets. I grew up just taking the other side of what anybody else wanted to do. So I'm a pure contrarian."
  — Tom Sosnoff (12:09)

• The physicality of the trading floor:

  "It was the last frontier of true capitalism in my mind back then. And I didn't even know what I was doing."
  — Tom Sosnoff (15:51)

2. Skills & Makeup of Successful Traders (17:54 – 18:47)

• Diverse backgrounds among successful floor traders: ex-athletes, PhDs, and those without formal education.
• Success in trading is unpredictable; winners often emerge from unexpected backgrounds.

  "Some kid from some south side parochial school in Chicago that didn't even go to college, and they kill it."
  — Tom Sosnoff (17:54)

3. The Shift to Quantitative, Math-Driven Trading & Retail Sophistication (21:48 – 29:34)

• Tasty’s focus is on math, probabilities, statistics, not stock picking:

  "We built Tasty to build a firm strictly around quantitative probabilities, statistics... We're a math freak firm."
  — Tom Sosnoff (21:48)

• The sophistication jump in retail trading—from 7% options trading volume at TD Ameritrade in 2000 to over 70% at the time of acquisition.

  "When they recently sold to Schwab, the TD Ameritrade, their business was over 70% options and futures."
  — Tom Sosnoff (28:45)

• Retail investors have benefited from better content, more efficient platforms, and superior access to information.

4. Trading Psychology and Probability Edge (30:25 – 33:38)

• The importance of stacking probabilistic odds, not seeking “theoretical edge.”

  "If you want a 70% probability of success on every trade you make, you can do that, no problem. And law of large numbers will deliver that win percentage to you, but they won't necessarily deliver return to you."
  — Tom Sosnoff (31:11)

• Why most retail traders lose: emotions, mis-sizing, expectations for outsized gains.

5. Outcomes for Retail Traders: The Distribution Curve (34:17 – 36:33)

• Breakdown of outcomes for Tasty’s retail traders:
  • 16% “blow out” (lose all funds or quit)
  • 16% outperform by a significant multiple over risk-free rates
  • The rest cluster around average/“the middle,” with 34% each above and below the median

  "16% of the people blow out. The attrition rate’s about 16% ... 16% deliver returns over 20 or 25%."
  — Tom Sosnoff (34:27)

6. Speculation, Making Decisions, and Trader Mindset (35:46 – 37:15)

• People trade because they crave quick decisions, asymmetrical upside, and the intellectual challenge.
• Sosnoff believes trading sharpens cognitive processing, leading to greater success in other business and life pursuits.

  "People that are very wealthy... make the quickest decisions you’ve ever seen... Their brain just works faster. It works for athletes."
  — Tom Sosnoff (35:52)

7. Active Trading vs Passive Investing & Platform Stories (43:50 – 47:49)

• Sosnoff does not advise against passive investing but focuses on providing robust tools and education for those who want to actively manage.
• Legendary user story: The now-famous “Karen the Super Trader” grew a $100,000 account into $100 million trading options on his platform.

  "She caught the absolute bottom in 2008-2009... Over that period, she made $100 million."
  — Tom Sosnoff (46:12)

• The episode notes this story did not have the happiest ending, illustrating both possibility and risk.

8. Building Thinkorswim, Tasty, and Selling to TD Ameritrade & IG Group (48:16 – 55:09)

• The design philosophy of thinkorswim: combining superior technology with user experience and a “cult-like” customer base.
• Insider stories of the sale—including the infamous 3-way deal with TD Ameritrade and the Ricketts family (the latter needed cash to buy the Cubs).
• After Tasty’s sale to IG Group for $1.1 billion, Sosnoff remains involved out of passion and camaraderie, not financial need.

9. What Drives Tom Sosnoff Today (55:36 – 58:05)

• Still works hard for enjoyment and the gratification of building and creating with friends.

  "I don’t give a crap about the money... What I do, I’m having fun. Like, the investments I make, I'm having fun. The businesses I build, I'm having fun."
  — Tom Sosnoff (57:30)

• Deep satisfaction comes from making those around him wealthy through opportunity and generosity.

10. Reflections on Culture & Industry – Chicago vs. New York, Robinhood, Innovation (70:36 – 72:07)

• Chicago: traders’ culture; New York: financial management, asset gathering.

  "Chicago, there are no traders in New York. There's a financial community in New York that is huge... But we would argue there's no traders."
  — Tom Sosnoff (71:09)

• High respect for Robinhood’s viral growth, but stays focused on the sophisticated segment.

11. Final Thoughts and What’s Next (72:12 – End)

• Hints at a forthcoming (but secret) next act or innovation.
• Sosnoff’s focus remains on invention, creating value, and never retiring:

  "For me, what’s really fun is building stuff... I’m not gonna ever retire. You’re right."
  — Tom Sosnoff (72:46)

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Notable Quotes & Moments

• On trading discipline:
  "The only way genius fails is when you trade too big." — Tom Sosnoff (30:56)

• On retail investing and options boom:
  "Teaching people about managing your own money is so fricking important... you're just as smart as the next guy." — Tom Sosnoff (42:57)

• On options-trading ETFs and structural flaws:
  "They can’t use the listed markets... so they are forced to go into the OTC markets and they just get, they don’t understand how bad they're getting ripped off..." — Tom Sosnoff (66:12)

• On building a business with friends:
  "I work with all my friends. Like, most of us have been together 25 to 45 years... These are my only friends." — Tom Sosnoff (55:44)

• On motivation today:
  "It didn't change my life at all. But, you know, I still work my ass off." — Tom Sosnoff (55:36)

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Timestamps for Key Segments

| Segment | Topic | Timestamp | | ------- | ----- | --------- | | 1 | Tom's Floor Trading Beginnings | 13:02 – 16:02 | | 2 | Who Succeeds in Trading | 17:54 – 18:47 | | 3 | Quantitative Trading, Platform Evolution | 21:48 – 29:34 | | 4 | The Reality & Psychology of Trades | 30:25 – 33:38 | | 5 | Distribution of Trader Outcomes | 34:17 – 36:33 | | 6 | Decision-Making, Wealth, and Mindset | 35:46 – 37:15 | | 7 | Options Myths & Success Stories | 43:50 – 47:49 | | 8 | Building & Selling Thinkorswim and Tasty | 48:16 – 55:09 | | 9 | Motivation, Wealth, and Working with Friends | 55:36 – 58:05 | | 10 | Reflections: Chicago vs New York, Robinhood, Innovation | 70:36 – 72:07 | | 11 | Closing: What’s Next? | 72:12 – End |

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Tone & Closing Thoughts

The episode maintains an energetic, candid tone—full of classic trading brashness, war stories, and irreverence for Wall Street orthodoxy. Sosnoff is portrayed as a relentless innovator with an enduring passion for the business and for making markets—and building opportunities for others. The hosts connect on a personal level about satisfaction, joy in work, and the realities behind financial success.

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Recommended For:
Anyone interested in financial markets, options, fintech entrepreneurship, or the psychology of risk and decision-making—whether you’re a retail trader or just curious about the evolution of market access and trading culture.

Transcript

[Josh Brown]

Tom, this is so exciting. I, I, I, I've been looking forward to this since we scheduled it and so happy to see her.

[Tom Sosnoff]

Nothing's off limits, okay? Nothing. Okay. You could go as long as you want. I have no agenda. My. I have a show tomorrow in town, but that's it.

[Josh Brown]

Okay.

[Michael Batnick]

Where you headed?

[Tom Sosnoff]

Awesome.

[Michael Batnick]

Stock exchange.

[Tom Sosnoff]

No, no, no, no. We have our. We do our own show. So I have a show at Webster hall. It's on 11th. It's on 11th Street. It's a. It used to be the Ritz, like, when I was a kid. And yeah, we've got like.

[Josh Brown]

So who comes to that?

[Tom Sosnoff]

Who comes to that shop retail? We have like a thousand. A little over a thousand people signed up.

[Josh Brown]

That's unbelievable.

[Tom Sosnoff]

But we do them all over the country. Like, two weeks ago, I was in San Francisco, and next weekend we're not. This coming weekend. The weekend after that, we're in la.

[Josh Brown]

Can I ask you a question?

[Tom Sosnoff]

Yeah.

[Josh Brown]

It's weird. So we started doing live events and we've done some really successful ones. You could put that on. Okay. And we did one in Chicago at the chop shop and we sold it out and it was great.

[Tom Sosnoff]

Yeah.

[Josh Brown]

One of the problems we're having.

[Tom Sosnoff]

Do I need to wear this?

[Josh Brown]

Yeah, it helps. Cause it helps for the recording. One of the. Cause when I. Cause when you see something really funny and I want people to acknowledge it.

[Tom Sosnoff]

All right.

[Josh Brown]

We have problem finding the venue that matches the size of the audience. So, like, what you, how many people do you have? That's the thing. It depends on where we are.

[Tom Sosnoff]

Okay. So I got a girl. I got a woman that works for me. She's been with me for 10 years. All she does is book venues around.

[Josh Brown]

The U.S. how many events do you do a year?

[Tom Sosnoff]

We do one every other weekend, so 25. So she knows every venue in America, basically. And we use all kind of. Really, we use all Live Nation or, you know, we use. We use theaters. We don't use, like in Chicago. We just did one at Value Hall. I don't know if you know, it's a concert venue. It's really nice. Yeah, but, but we know every venue. Like, she knows, she knows every venue.

[Josh Brown]

Just.

[Tom Sosnoff]

I'll give you her.

[Josh Brown]

Like, when you go to la, you do the L Theater.

[Tom Sosnoff]

We've done the L Theater. We're doing the Fonda Theater this time.

[Josh Brown]

Okay.

[Tom Sosnoff]

But we've done El Ray, like two or three times. Great place.

[Josh Brown]

So my team does a pretty good job. But it's always hard. Shouldn't be as Hard. It shouldn't stop that. It shouldn't always be as hard as it is. But it's like in this city, we have 300 people. In this city, we have 100 people.

[Michael Batnick]

We don't know how many tickets we could sell.

[Tom Sosnoff]

So are they. Is it free or do you charge? Oh, so when you pay, you have a pretty good show rate. Yeah, yeah.

[Josh Brown]

That's not the right. The issue for us is we don't know these places.

[Tom Sosnoff]

Yeah.

[Josh Brown]

So we do our best from long distance.

[Tom Sosnoff]

Yeah.

[Josh Brown]

And then we'll fly out and see something. But it's not easy to do. It's one of the more underappreciated aspects of doing a live event is the venue itself.

[Tom Sosnoff]

Yeah. I have somebody that. That's her full time job and she's amazing.

[Michael Batnick]

But wait, you said this is important. If people pay, they show up. So you're saying it's risky to have people not pay because then who gives a shit, right?

[Josh Brown]

It might have it. Yeah.

[Tom Sosnoff]

But we do. We don't charge because we don't have. That's not in our model. So we only charged once. But we did it as a. Because we had a slightly smaller venue. So we charged. And then if you showed up, you got your money back.

[Josh Brown]

And we had like, we had like a reservation.

[Tom Sosnoff]

Yeah, exactly. It was like a 95% show right there. Normally when you just do it free. So our show rate, like we have maybe 11 or 1200 people signed up for tomorrow morning, and we'll probably end up with a show rate about 65%. So we might get 650 to 700 in that range.

[Josh Brown]

And you just do your version of the show, but do it for a live audience or. This is a specific.

[Tom Sosnoff]

No.

[Josh Brown]

All right. This is a very specific thing that you're doing.

[Tom Sosnoff]

This is a live trading event. So we trade live for, you know, 90 minutes to almost two hours.

[Michael Batnick]

That's awesome. Are people. People are trading with you?

[Tom Sosnoff]

They can, but we don't care. I mean, we're just trading Nonstop for basically 90 minutes. And we trade everything.

[Michael Batnick]

Wait, what time is it? Where is it? I want to come.

[Tom Sosnoff]

You can come.

[Josh Brown]

You would love that.

[Tom Sosnoff]

It's. Doors open at 8. Show starts at 9 tomorrow morning at Webster Hall. I think it's on 11th. I think it's on 11.

[Josh Brown]

So I want to tell you about the time I figured out you were a genius. The year is 2014 or 2015. I never met you before.

[Tom Sosnoff]

Okay.

[Josh Brown]

But from afar I just said, this guy is smart. So I land at the Las Vegas Airport for the SALT conference.

[Tom Sosnoff]

And you see my ugly face up on the giving out Internet.

[Josh Brown]

As soon as I get off the plane, I go to the baggage claim and all of the Baggage claims in McCarran Airport, which, if people are listening, if you've been in the Vegas baggage claim, it might be the largest freestanding structure in the United States. It's so big. All of the baggage claims are sponsored by tastytrade.

[Tom Sosnoff]

Yeah.

[Josh Brown]

Then I go outside. I don't need a cab. Cause Joe Farmi's picking me up. But the taxis are lined up and they all have Tastytrade on the top. And I said to myself, look, this is like the one week of the year where every hedge fund manager in America is all in one place. Of course, Tom has the sponsorship thing.

[Tom Sosnoff]

Well, that was actually a great sponsorship. And they did us. Right.

[Josh Brown]

So you remember this 10 years ago? You remember?

[Tom Sosnoff]

Oh, yeah. No, I negotiated that deal with whoever had the space, and it was actually very reasonable. And we gave free Internet. You know, basically that's all it was, free Internet. Then you got some. You got some of their digital screens and all that other stuff, and it was great. We kept it for almost three years. And then somebody came over the top, I think it was Google, and offered them like five times what we were paying.

[Josh Brown]

You don't want to get into a bidding war with Google.

[Tom Sosnoff]

Well, we can't win that for the day. We can't win that.

[Josh Brown]

No one's winning that.

[Michael Batnick]

Does it feel good to be back in the studio?

[Josh Brown]

I love it. I love it.

[Michael Batnick]

We did a show at Future Proof last week, and we love doing live shows in front of the audience. But it's nice to be back home.

[Tom Sosnoff]

We don't ever do our show live.

[Michael Batnick]

Why?

[Tom Sosnoff]

Because it's not that interesting. Like, I mean, we find that the audience gets a little. You know, it gets a little bored. So what we do is all our live events are completely different. So we do, like, live trading and then we do some. You know, sometimes it's like we have all these. So we've been doing. I've been on the road for 25 years. And we have different events every year. We change it. Like, we'll do some fun events with the audience where we give away some money. And they're all like. Some of them are teaching, some of them are fun. You know, we create all these, like, challenging questions. They're all like. It's. Every show is a paradox of something of some math model of which we kind of don't tell them that in advance, but then at the end, we let them figure it out. And so we play all these games over the course, and we have, like, probably 10 speakers on the road, you know, But. But. But Tony and I draw the, you know, the best by a lot.

[Josh Brown]

How did you find these people and then elevate them and turn them into stars within your community? Is that just an organic thing or.

[Tom Sosnoff]

Yeah, it's organic.

[Michael Batnick]

They found you.

[Josh Brown]

They find you.

[Tom Sosnoff]

No. Most of us have been friends for decades. Like Tony and I, who I do show. We've been friends for 45 years. Scott and I have been partners for 35 years. Liz and Jenny, we were friends for 20 years. I mean, these are long relationships. We don't. The new kids are great, but they don't draw. That's the hard thing.

[Josh Brown]

Okay. Not yet.

[Tom Sosnoff]

Not yet.

[Josh Brown]

Yeah. Okay. Well, you got a really cool community, and we want to talk all about it today. So thank you so much for being here. When we're done zhuzhing the pumpkin bowl, are we ready to get the show on the road?

[Tom Sosnoff]

Yeah. Like I said, you go anywhere, I don't really care.

[Josh Brown]

All right. He's an important man, guys. Time is money.

[Michael Batnick]

I like your energy, Tom.

[Tom Sosnoff]

Thanks.

[Michael Batnick]

Let's go.

[Josh Brown]

Hey, Jon, what episode is this?

[Tom Sosnoff]

Episode 209.

[Michael Batnick]

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[Josh Brown]

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[Tom Sosnoff]

Welcome.

[Josh Brown]

To the compound and friends. All opinions expressed by Josh Brown, Michael.

[Tom Sosnoff]

Batnik and their castmates are solely their.

[Josh Brown]

Own opinions and do not reflect the.

[Tom Sosnoff]

Opinion of Redholtz Wealth Management. This podcast is for informational purposes only.

[Josh Brown]

And should not be relied upon for any investment decisions.

[Tom Sosnoff]

Clients of Ritholtz Wealth Management may maintain.

[Josh Brown]

Positions in the securities discussed in this podcast. Episode 209 Nicole's here. When Nicole's dancing, I know it's gonna be a great show. Duncan's doing a little bop. What do you got going on? You excited to be here too?

[Tom Sosnoff]

Of course. All right.

[Josh Brown]

You have a microphone in front of you. You know that, right?

[Tom Sosnoff]

I do.

[Josh Brown]

All right, John is in the house. Ladies and gentlemen, we have a first time guest today, somebody that I'm so excited to be speaking with and I've been aware of his work for a long time. I've met many of his acolytes over the course of my career in finance and financial media, and today's episode is going to be just an absolute blockbuster. So thank you so much for joining us. Tom Sosnoff is a trailblazer in the online brokerage industry, driving innovation and financial education for investors of all levels. He offers up expertise in the options market as co host of Tasty Live Live, airing daily on the Tasty Live network. A former floor trader, Tom became one of Chicago's most well known serial entrepreneurs in fintech when he built a breakthrough Options trading platform, thinkorswim, which was eventually sold to TD Ameritrade for $750 million. Leveraging over 20 years of experience as a market maker for the CBOE. One of the original OEX traders in the S&P 100 index pit, Tom pursued his vision to educate retail investors in options trading and build a superior trading platform. Tom Sosnoff, welcome to the show.

[Tom Sosnoff]

Thanks for having me.

[Josh Brown]

All right. And I know there were other things that I was supposed to read. It's just so much. You're extremely accomplished, man. Can I. Can we start with the markets question?

[Tom Sosnoff]

Yeah, sure.

[Josh Brown]

I was going to do this Whole thing like state of the markets and like, do this whole wind up about this is doing this and this is up that. But it's. It's almost like a stupid question, I feel like, because I think your ethos is, let's find a way to make money no matter what the state of the market is. Do I have that right?

[Tom Sosnoff]

I'm a strategist. If you. I'm a trader. I really don't care what the market.

[Josh Brown]

Okay. So that's what I wanted to get to. How. How did you come about that mindset as a market participant? Because most people don't start off as what they end up as.

[Tom Sosnoff]

Right.

[Josh Brown]

So I'd love to just hear that journey for you and then we can get into the state of the market.

[Tom Sosnoff]

So I started this business different than most people because I started in the trading pits, where you don't decide. So I spent 20 years in the S&P 100. So you don't decide what you want to do. You just take the other side of whatever order comes in the crowd. So I grew up never having an opinion about the markets. I grew up just taking the other side of what anybody else wanted to do. So I'm a pure contrarian.

[Josh Brown]

Okay. Because that's where the money. That's where the money is to be made.

[Tom Sosnoff]

That's the only way you can trade. So when you're a floor trader, the other traders. It's like going to. Do you play poker?

[Josh Brown]

Yeah.

[Tom Sosnoff]

Okay. So if you go sit down a poker table and it's just a bunch of professionals, you guys don't even want to play with each other.

[Josh Brown]

Right.

[Tom Sosnoff]

But you have to wait for people like me to come by, you know, to blow some money. It's the same thing in the trading world. The professional market makers don't trade with each other. They just wait for customer orders to come in. If there's no customer orders, they just stand there with their hands in their pockets.

[Josh Brown]

Okay. So what year did you start out trading and how'd you get the job?

[Tom Sosnoff]

I was. I got. I grew up in. So I'm 68.

[Josh Brown]

Okay.

[Tom Sosnoff]

I grew up.

[Josh Brown]

You look, by the way, look great. Nobody would guess that you're 68.

[Tom Sosnoff]

So I grew up in New York and I went to SUNY Albany.

[Josh Brown]

Okay.

[Tom Sosnoff]

And it was 1979 when I graduated college, and there was no fricking jobs. I mean, it was the middle of recession. Interest rates were 20%. 19. 20%. And it was hard to get an interview. I got an interview on Wall Street. I was a Political science major. I thought I was going to be like a lobbyist. And I got an interview on Wall street with Drexel. And if you remember Drexel Burnham.

[Josh Brown]

I do.

[Tom Sosnoff]

They were a good firm, like a boutique firm. And they offered me a job on the spot. So now I'm in finance. And I got a job with Drexel. I was there for probably about nine months in their training program. And one of the met a couple of guys there on their trade desk. And they were like. They didn't really like the retail business. They wanted to trade. So they go. They were all married, though. They go, you moved to Chicago and we'll put up the money.

[Josh Brown]

Okay.

[Tom Sosnoff]

And it was $50,000. I thought it was 50 million at the time. And so they put up 50 grand and I packed up my car and just left and went to Chicago.

[Josh Brown]

Never needed somebody physically on the floor in those days.

[Tom Sosnoff]

Yeah, you needed somebody, right? Yeah, but so it's like 1981, just before the market explodes, these guys get a little bit short. I forgot what stock it was. I'm on the floor three days. They lost all 50 grand. I made $18. I remember like it was yesterday. I made $18.75. Three teenies, three 16. That's 18.75. That's $18.75. Nothing.

[Josh Brown]

That was your commission for whatever?

[Tom Sosnoff]

No, no, that was my commission. That's how much I actually scalped.

[Josh Brown]

Oh, my God.

[Tom Sosnoff]

18. And of the 1875, 12, 50 of it was given to me by the traders that just were like, hey, welcome to the business.

[Josh Brown]

Okay.

[Michael Batnick]

So that was the end of a 16 year bear market.

[Tom Sosnoff]

Yeah, basically. And that. And they blew out in. It was like less than two weeks. I'm there. So now I'm in Chicago. I got $1200 maybe to my name, you know, But I paid the rent for. I'm on a seat that I can't afford to pay for. And because seats are expensive. And I had to figure out, you know, and I figured it out.

[Josh Brown]

That's. Dude, that's an amazing origin story. And so your formative experience is not sitting as like a strategist trying to figure out what's the year end price target for the S and P. You have to figure out how to make money on Monday and then Tuesday you have to figure out, how do I make money on Tuesday?

[Tom Sosnoff]

I eat what I kill.

[Michael Batnick]

But that was such an interesting time.

[Tom Sosnoff]

Because it was the greatest thing ever. I had never been to Chicago. I grew up here. And they said, why don't you fly to Chicago and check out the city? So I land in Chicago and I took a cab. I went up and down Lakeshore Drive just to check it out. And then I met this guy who I didn't know, who was a lawyer from New York who hated law, and he was now a trader. He takes me on a trading floor. It's the old trading floor, and it's all options. And everybody's screaming and yelling, it's the most wild place I've ever seen. And I walked on there. Within three seconds, I'm like, this is where I got to spend the rest of my life. It was the most amazing place. It was the last frontier of true capitalism in my mind back then. And I didn't even know what I was doing.

[Michael Batnick]

So in 1981, like, how long did the psychology take to change when people were like, wait, maybe this bull market is real? How long did people fight it for?

[Tom Sosnoff]

I have no idea. Because when you're in the pit, you don't. All you care about is making 10/8 or 100/8, you know, like, so you.

[Michael Batnick]

Really don't give a shit.

[Tom Sosnoff]

You only care about what orders come in. Can you scalp that order?

[Josh Brown]

That's, it's, it doesn't matter if it's a bull market or a bear market because you're affecting trades right now that are going to close very quickly.

[Tom Sosnoff]

Yeah. I always tell the story of the kid sitting next. There was a kid sitting next to me, standing next to me, and we became friends over the years and we're still friends today. And when the Dow crossed through a thousand for the first time, he goes, take a picture because you're never going to see this again. The numbers we were talking about are insane.

[Michael Batnick]

Are you still a contrarian by nature?

[Tom Sosnoff]

Oh, my God, yeah.

[Josh Brown]

So trading back then was a physical job.

[Tom Sosnoff]

Very physical, all just big flow fricking guys.

[Josh Brown]

A lot of ex football players and. Right, like a lot of, like big guys because they could get close enough to the action.

[Tom Sosnoff]

But a lot of everything. Like, so I started, a couple years later, I started to make some money and I started a prop firm. And so we hired lots of traders, probably hired 50 traders over the years. And I hired a first round draft pick from the Kansas City Chiefs that blew out his knee. And so he was the largest. He was a offensive tackle, the largest human being ever. You couldn't move him no matter what you do. But. But he didn't make it. I hired a professional wrestler because he was just. He looked like Goldberg Remember what Goldberg looked like? Of course. He looked exactly like him. Who once broke three people's ribs. In the bond picture, he had the traps like he was steroided out. It was just insane. He was the largest, widest. He wasn't that tall, but he was the widest human. And people were petrified of him. But he never made it. And then I also hired, like, some crazy rocket scientists, some kids out of, like, Carnegie Mellon with master's degrees, PhDs, the whole deal, and they didn't make it, so you never knew. But then you get some kid from some south side parochial school in Chicago that didn't even go to college, and they kill it.

[Michael Batnick]

So who makes it and why?

[Tom Sosnoff]

It's a really good question. And we could never figure it out because back then, the learning curve was kind of long, and the people that made it, at some point, it just clicked. And I can't explain. We couldn't tell in the. We had no idea if we hired somebody, if they were going to.

[Michael Batnick]

What about now? Can you tell now? Like, is it a personality type or.

[Tom Sosnoff]

Now it's now. It's now. There's no more. Now it's all computers.

[Josh Brown]

But what I love about what you're saying is that we had Mark Fisher on the show.

[Tom Sosnoff]

I know Mark Fisher.

[Josh Brown]

You know Mark?

[Tom Sosnoff]

Well, I don't. I mean, I only had. Did one interview with Mark Fisher.

[Josh Brown]

Yeah.

[Tom Sosnoff]

I did not know him as a trader.

[Josh Brown]

Right. So. But Mark told us the same thing.

[Tom Sosnoff]

Yeah. He's like.

[Josh Brown]

A lot of people try to do this, and you'd be amazed at who actually can do it.

[Tom Sosnoff]

Yeah. He's a new. He was a New Yorker junkie. He's a futures trader. You know, like, futures traders are very different. Like, in Chicago, you had the cme, which was one kind of trader, and then you had the cbo. You know, like, I did a really fun interview years ago. I did a documentary on Louis Borsalino.

[Josh Brown]

Okay.

[Tom Sosnoff]

Do you remember?

[Josh Brown]

No.

[Tom Sosnoff]

Okay.

[Josh Brown]

Should I know who that is?

[Tom Sosnoff]

He was for years in the 80s and 90s, he was, like, the biggest futures trader.

[Josh Brown]

Oh, wow. Okay.

[Tom Sosnoff]

Yeah. And then he. He's got a great story. I'll send you a link to documentary. It's unbelievable.

[Josh Brown]

Yeah. I would watch the shit out of that. I love. I love that stuff.

[Tom Sosnoff]

Yeah.

[Josh Brown]

All right, so let's do state of the markets, though. So I would assume a year like this one. Gotta be a lot of fun for traders. There's a lot of ups and downs, but predominantly, like, the bias is high. Maybe the volatility is not as much as you'd want it to be if you're intraday.

[Tom Sosnoff]

So our business is volatility based.

[Josh Brown]

Okay.

[Tom Sosnoff]

So we do better. And Tasty is a firmware 90 plus percent. Almost 95% of our business is listed options, futures and futures. Options.

[Josh Brown]

That's what the users on the platform are trading.

[Tom Sosnoff]

That's right. Okay, so we're like the largest derivatives boutique in the world, but we don't trade a lot of stocks. So customers don't come to us for stocks. They'll go to Schwab or E Trade or Fidelity or whatever, but they come to us to trade options and futures.

[Josh Brown]

Okay, well, they'll do that separately from where they're doing their stocks.

[Tom Sosnoff]

I mean, some people do.

[Josh Brown]

Okay. Why? What is it about Tastytrade that makes them want to trade?

[Tom Sosnoff]

Oh, it's just, it's just a way better platform. I mean, it's just the technology is faster. Everything, everything is from a single interface. You can do all the different stuff. Like the other interfaces are all legacy interfaces. They're old and clunky.

[Michael Batnick]

Okay, so did April make your year?

[Tom Sosnoff]

No.

[Michael Batnick]

Why not?

[Tom Sosnoff]

Because we don't like when people get hurt.

[Josh Brown]

Okay.

[Tom Sosnoff]

And, and you know, April, the trading volumes were great, but you get situations where like some of your best customers.

[Michael Batnick]

And they don't come back.

[Tom Sosnoff]

Well, they come back. Everybody always comes back. There's nobody ever goes away. But some of our good customers got hurt, you know, because we're a premium selling firm and you know, you got slapped in April. April's kind of, you know, it was good for business but not good for the overall.

[Josh Brown]

Could you explain what you mean by that when you say we're a premium selling firm?

[Tom Sosnoff]

Well, the way we teach and the way that we. So we're a think tank. We have two businesses. Our primary business is our brokerage firm and that pays everything. That's our business, that's our revenue. We're a 300,000,000 million dollars revenue brokerage business. Way more than that actually. But then we have a network which is actually for content marketing. And we don't charge anything. That's all free. And that's how we kind of get. That's how we compete marketing wise with all the big firms and the network. When we built it, the reason I built it is I didn't like financial media, traditional. I didn't like cnbc. I mean, listen, I like those guys. I just didn't like the content. I don't like interviews with people I don't like. I Don't care what somebody else has to say. Cause that goes back to my mentality. So I didn't like Bloomberg, you know, I didn't like cnbc. It doesn't make any sense to me. Why would somebody listen to what somebody else thinks? Who cares? They don't know anything. So we built Tasty.

[Josh Brown]

Duncan, we could edit all that out, right? All right, go ahead.

[Tom Sosnoff]

So we built Tasty to build a firm strictly around quantitative probabilities, statistics. Quantitative, just math. We're a math freak firm. And you can do that in the options world because the options, everything is a derivative of lectures. So everything you can figure out expected move, everything's based on volume.

[Josh Brown]

Trying to figure out like what's in the premium. How much of this is time value, how much of this is intrinsic.

[Tom Sosnoff]

No, we're really trying to figure out is, is, is the premium pumped relative.

[Josh Brown]

To, is it priced correctly or not?

[Tom Sosnoff]

No, it's always priced.

[Josh Brown]

Yeah, it's, I'm trying to understand what is the math trying to figure out.

[Tom Sosnoff]

Okay, so everything's always priced perfectly. That's why firms like Citadel and all the other firms, they're amazing and they price everything perfectly. So nothing's mispriced. But sometimes volatility is high relative to itself and sometimes it's very low. And so what we do is we try to help customers when it's high, tell them what they can do. It's like optimized strategies and people really love math. You know, here's our basic premise and everybody told me this would never work. People are super smart and I believe people are smart. People are good and they're smart. When I say good, they're just. Most people are decent. So the premise behind Tasty was we're going to give you, we're going to tell you everything we know about trading. And hopefully you use our platform because it's a goodwill, good faith marketing platform and it worked. And the reason people liked it is because we challenge them with math rather than tell them, you know, tomorrow, you know, Nvidia is going down or tomorrow Nvidia's going up. What we do tell them is based on the way options are priced, Nvidia for the next 30 days has a $17 move higher or $17 move lower. So set your strikes wherever you want because that's gonna be right 70% of the time.

[Josh Brown]

Okay.

[Tom Sosnoff]

Cause that's just a math model.

[Michael Batnick]

Who are these people? Who are your customers?

[Josh Brown]

Who are your hardcore users?

[Tom Sosnoff]

Oh my God. Well, we have, I don't know, half a million Customers, okay.

[Josh Brown]

All walks of life.

[Tom Sosnoff]

Oh, yeah.

[Josh Brown]

Is there anything that they have in common? They're probably very intelligent, but everybody's intelligent.

[Tom Sosnoff]

I know you don't think so, but in the world of self directed trading, everybody's our customer. Here, I'll tell you a quick story. So once we built a institutional platform years ago, I built a platform that's still used today by Schwab. It's their institutional platform now. But I built it 25 years ago. And when I built it, I built it with partners. We had partners at abn, Ambro and ubs, you know, a couple of big institutional firms. And I built it because I thought it would help us, you know, grow our business and our name and stuff like that. And every firm that signed up for it, I would say they go, we want it exclusive with our customers. And I go, I can't do that. Because Merrill lynch says every customer is their customer. And UBS says every customer is our customer. And then ABN Ambrose says every customer is our customer. So I look at business the exact same way. Every customer at Robinhood, every customer at Thinkorswim, every customer at E Trade, every customer at Fidelity, they should be our customers, but obviously they're not. But that's the way I look at the business. We don't have, you know, we could have a 18 year old kid, we could have a 90. I think our oldest customer is like 99, you know, I don't know.

[Josh Brown]

Very short. They never leave at that age.

[Tom Sosnoff]

You don't buy, right? But you know, you don't buy.

[Michael Batnick]

So you mentioned zero day.

[Tom Sosnoff]

You don't buy the green bananas.

[Michael Batnick]

You mentioned your customers got hurt in April. So yeah, sure, most, most options expire worthless. We know that. So is your thing like, all right, instead of being the sucker who buys the options, sell them. Is that the deal?

[Josh Brown]

Yeah, but don't a lot of institutions do that trade also? Like, how do you, how do, how do.

[Tom Sosnoff]

Institutions are pretty on, on, on balance, they're pretty dumb. First of all, they don't have the expertise, they don't have the technology, they don't have the expertise. And they're very limited by liquidity. So institutions have to trade in a very narrow set of, you know, that's why you have such a concentration of just all, you know, equity wealth. But it's the same thing for options. If you're an institution, you can't move $25 million in option, which is nothing if, you know, in very many stocks you have like five or ten, five or ten different underlyings, Max. So the, the futures world with respect to options is. I mean the institutional world with respect to options is pretty limited and we don't do any institutional business.

[Josh Brown]

Okay.

[Tom Sosnoff]

We're 100% retail.

[Josh Brown]

So options trading is at record highs. Yes, but I thought there was an interesting juxtaposition that I wanted to show you. Can we put up this cash and money markets chart? It's weird to be in an environment where people have never traded more in options. Whether it's volume of contracts or dollars, any way you want to look at it, it's an absolute explosion. But then at the same time, total cash in money market funds is at an all time record high and like a very pronounced one. Almost vertical.

[Tom Sosnoff]

Yeah.

[Josh Brown]

People will look at that options chart and they'll say it's a speculative mania because they're stupid and they just infer. And then people will look at this cash and money markets and they'll say everyone's bearish. Neither of these two things are true.

[Tom Sosnoff]

Not even.

[Josh Brown]

There just is a lot of cash and a lot of activity. And neither one of those things have to signal anything about the environment. They could just be things that are happening in and of themselves. I think you'd agree with that.

[Tom Sosnoff]

Yeah. The markets that The S and P's are at 6700. I mean there's, you know, you're talking about an enormous amount of wealth that's created. That's why there's. You could take a little bit of money off the table and you still have the same position you had on, you know, a year ago. So that's why cash is so high.

[Michael Batnick]

So you said people are smart and investors today are more informed than they've ever been. Of course, Fidelity made this video in 1994. We've got a four second clip. John, chosen.

[Josh Brown]

When I say the word stock market to you, what comes to mind?

[Tom Sosnoff]

Confused. I don't even know how to read the. Too much of a gamble for me.

[Michael Batnick]

Unbelievable. That was 30 years ago. Where. How did, how much more informed is the public today than they were 30 years ago or even 20 years ago?

[Tom Sosnoff]

I mean the dissemination of everything. Because we all, you know, we all have everything in whatever in TikTok bites now it's gotta be significantly, you know, it's significantly higher here. I'll give you a number that's really interesting. When we built thinkorswim was 1999, 2000 and the amount of option business that TD Ameritrade did was between 7 and 8% of all their volume now they had a web based platform, but remember they had bought a bunch of different firms. They're pretty big and 7, 8% of their volume was options. And they did zero futures business. When they recently sold to Schwab, the TD Ameritrade, their business was over 70% options and futures. When you add them together, they're mid-70s.

[Josh Brown]

Wow.

[Tom Sosnoff]

That wasn't that much, you know, that wasn't that many years later.

[Josh Brown]

Right. So the investing public has grown more sophisticated over time.

[Tom Sosnoff]

Well, also they've grown more capital efficient. So the problem right now is you got stocks. Like you take 100 shares of spiders just as an example, $67,000 for 100 shares. Or the average retail customer has a 50, 40 or $50,000 portfolio. And so, you know, I mean, that's the average online customer. You know, there's obviously places like Schwab where the customer size is bigger, but you can't even buy 100 shares of stock. So why would you, why wouldn't you either sell a put where you put up, you know, eight or $9,000 or sell a put spread where you put up $250 or buy a call. Spread or buy a call, whatever you want to do.

[Josh Brown]

What is the limiting factor? It's the lack of understanding of how these instruments work.

[Tom Sosnoff]

Not really anymore. And now there's so much content out there. There's. The technology's so fricking good. You can't believe how good the technology is today.

[Josh Brown]

Yeah, well, one of the reasons why I think people feel more comfortable with stocks than options is not having to constrain their opinion of what's going to happen into a set predetermined window of time.

[Tom Sosnoff]

So people will say, that's old school way of thinking.

[Josh Brown]

I understand. Yeah, but, but I wanted to ask you about that. So people will say like, all right, I'm going to buy Alphabet.

[Tom Sosnoff]

Yeah.

[Josh Brown]

If I'm wrong, it'll go down $20, but I'll just hold it until it goes up because that's how people operate. No option. You're.

[Tom Sosnoff]

Nobody in our world thinks like, okay, like I couldn't, I haven't found a person, you know, I mean, I respect, you know, the, the people that can do that, they can get away with that. Like, you know, the Warren Buffett's of the world where you can hold something for 20 years until it's right because nobody's ever leaving you. But in today's world, you're only. If you're a money manager, you're only good as, as good as your last quarter or your last month. And if you are a trader, you know, none of that plays well.

[Josh Brown]

You won't survive as a trader.

[Tom Sosnoff]

You're dead.

[Josh Brown]

You couldn't do that.

[Tom Sosnoff]

You're dead. You're dead. So the only way to keep yourself in check is kind of is trade size. There's nothing else. But again, the technology today and the information that's available to you, like, I mean, our platform, we'll, we'll show you, you're like, you get your worst case. Like, we'll give you a CVAR number. We'll basically give you everything to 99% of the occurrences. Now there's only 1% outliers, and that's kind of. So the only way genius fails is when you trade too big.

[Josh Brown]

Okay, so you're showing people, here's the mathematical probabilities of what could happen here. Of course you don't know what will happen, but you're stacking the odds in someone's favor by at least presenting them with upside downside.

[Tom Sosnoff]

No, we're not giving, we're not, we're, we're stacking the probabilities in their favor. But it's not a theoretical edge. Do you understand? If it's quantifiable, it's, sure, it's kind of quantifiable, but it's not a theoretical edge. What it is, is, it's just, we are just explaining to somebody. So in other words, if you want a 70% probability of success on every trade you make, you can do that, no problem. And law of large numbers will deliver that return, will deliver that win percentage to you, but they won't necessarily deliver return to you.

[Michael Batnick]

I was about to say, what's the gain if you're, if it's that high, it's got to be relatively low.

[Tom Sosnoff]

So the gain is less, you take more risk. Of course you risk more to make less, but you have a higher win percentage.

[Michael Batnick]

So you mentioned edge and how the market makers are so good, the prices are always right, the technology is so good, the information is so good and quantifiable. Does that make alpha or edge much harder, paradoxically? Because everybody knows everything, of course.

[Tom Sosnoff]

Yeah. I mean, yeah, there is no such thing as edge anymore.

[Josh Brown]

Are there a lot of retail options traders who make a living and that's their sole source of income is the money that they're pulling out of the stock market?

[Tom Sosnoff]

Yes.

[Josh Brown]

That's pretty impressive for somebody to be able to do that.

[Tom Sosnoff]

It's really impressive.

[Josh Brown]

Is that one in 10,000 or is that one in a million. Like what are the odds of somebody getting good enough and being consistent enough and emotionless enough to be able to really do that? It's extremely rare.

[Tom Sosnoff]

We do.

[Josh Brown]

I'm sure you've seen it.

[Tom Sosnoff]

We do a shitload of research on this. Okay. This is my work.

[Josh Brown]

Well, this is what I want to learn.

[Tom Sosnoff]

But let me just finish up with what you said because I think it's important. So the reason that we take that high probability approach to trading is not because it means you're going to make a certain return. We do it because we teach people to win all we care about because we can't make you money or whatever. All we care about is you learn how to be, how to have a winning, how to win more than you lose. And then hopefully you figure out how to turn that into a positive return and position size.

[Michael Batnick]

So I'm a gambler.

[Tom Sosnoff]

Yeah.

[Michael Batnick]

And I would much rather do a three leg parlay where I buy points and it's plus 120 as opposed to an eight leg part. That's, that's plus 1300. That's never going to.

[Tom Sosnoff]

But the problem with that trade. The problem with that.

[Michael Batnick]

Oh, I know. I lose money, believe me.

[Tom Sosnoff]

Yes. Is you have, you have an embedded negative return. You cannot over time make money.

[Michael Batnick]

Correct.

[Tom Sosnoff]

In the trade. So. So I'll give you a couple of stats. Interesting. So in the gambling world, you bet $100,000, you're basically paying $10,000 in fees. Okay. You bet $100,000. In the trading world, you're paying $1. Because if you're trading something that's liquid, like $100,000 of Apple, $100,000 Nvidia, whatever it is, the difference between the bid ask differential is one penny. So it's $1 to 10,000. That's why, you know, if you want to gamble, have some fun. But it's not, it's impossible to make money.

[Michael Batnick]

So I used to lose 3 to 5 cents for every dollar that I was betting. And fanduel.

[Tom Sosnoff]

Yeah.

[Michael Batnick]

And the bottom fell out for me thanks to the Chiefs and the Texans and Char. Down to like 6 to 7 cents loss for every dollar. But that's.

[Tom Sosnoff]

Right.

[Michael Batnick]

Yeah. I lose 6 to 7% of my bets or the dollar of every.

[Tom Sosnoff]

So in the trading world, it's, it's, it's, it's a level playing field. And that's it. You know, it just depends on how you do it. There's.

[Michael Batnick]

But is it as much fun? Maybe more fun?

[Tom Sosnoff]

I don't know. It really depends I have fun gambling too, but it's different.

[Josh Brown]

Okay, so the question, the question about how many people could realistically be professional traders.

[Tom Sosnoff]

So think of it like a. Because it's such a level playing field, if you, you know, make enough trades, it's all about making enough trades because then you average out what you're supposed to, which is just classic, you know, law of large numbers.

[Josh Brown]

That's like, that's like poker. Of course, if you have an edge, the longer you play, of course, the longer that, like, the more money that edge should deliver to you.

[Tom Sosnoff]

Of course. But even poker, the rake is, is pretty big compared to trading. But so, so I'm going to break it down like just a nor. Like this is how our customers go. 16% of the people blow out. The attrition rate's about 16% within.

[Josh Brown]

How much time does it take for that to happen?

[Tom Sosnoff]

I have no idea. It could be three months, six months in Michael's case.

[Josh Brown]

First trade.

[Michael Batnick]

When you say blowout, you mean account goes to zero or they stop trading.

[Tom Sosnoff]

The account goes to zero or they stop trading.

[Michael Batnick]

And that's why they stop trading.

[Tom Sosnoff]

Yeah, the reason people stop trading is because the account goes to zero.

[Josh Brown]

So 16. All right, 16%.

[Tom Sosnoff]

16% blowout. 16% outperform some crazy multiple of risk free rates. So let's say risk free rates are 4%. Right. So 16% deliver returns over 20 or 25%.

[Josh Brown]

Wow.

[Tom Sosnoff]

Okay, so that's both sides of your distribution curve. Everybody else falls in the middle. Everybody.

[Michael Batnick]

And what's the middle?

[Tom Sosnoff]

Just whatever the middle is. Whatever. So. So you have 34% above the midline, which now for me, the midline is some multiple diversity rates. And then 34% fall below the midline, which is you don't beat risk free rates.

[Michael Batnick]

So if there's no edge, why do people trade with you?

[Tom Sosnoff]

Well, we tried to optimize the mechanics because it's fun.

[Michael Batnick]

Hell yeah, it is.

[Tom Sosnoff]

Because here there is such a demand for speculative. There's such a speculative demand because of either asymmetric upside or just, hey, I want to do something. You know, I want to take some risk. So I will argue the reason people trade is so that they make quicker decisions. So their brain processes decision making faster. So they're probabilistic in the way they think about everything and they become a much. They build wealth at a rate that is higher than if you run into anybody you've ever met that's very wealthy. They make the quickest decisions you've ever seen. And the reason for that is their brain just works faster. It works for athletes.

[Josh Brown]

Is that real?

[Tom Sosnoff]

100%. That's why you have athletes like that can play. Brady.

[Josh Brown]

Can I pause you though?

[Tom Sosnoff]

Yeah.

[Josh Brown]

So then why are all the famous investors obsessed with telling you how slowly they operate? Howard Marks, Warren Buffett, Charlie Munger.

[Tom Sosnoff]

They're 100. That's from a year's past.

[Josh Brown]

You find that interesting?

[Tom Sosnoff]

No, I don't. I used to hate. I hate like Charlie Munger used to drive me crazy. I couldn't listen to that guy. You know when you start. When you start. When you start. Like. I mean, I used to until he died. I used to rant against him all the time. I'm like, shut the up. You know, you're. This is not good for a business.

[Josh Brown]

Okay?

[Tom Sosnoff]

I. There's so much so quick.

[Josh Brown]

Decision making is alpha, even if they're not good decisions. Just the fact that you were able to be decisive, you're saying, is how you get rich.

[Tom Sosnoff]

So I've been doing this on the retail side now for 25 years. 20 years I spent as a market maker than 25 years building thinkorswim and tasty. And if I told you the number of people that said, you know what, I couldn't trade for shit, but my business exploded from what I learned from trading.

[Josh Brown]

Oh, I love that.

[Tom Sosnoff]

It's incredible. Okay, it's incred. The numbers just off the charts.

[Michael Batnick]

Well, you know what? Money won is better than money earned. And the reward, the dopamine hit from seeing that exponential growth in a short period of time. I mean, what's nothing better?

[Tom Sosnoff]

I'm a grinder, so I'm a little different. Like I'm. I'm somebody that, like, you know, I don't really get that kind of asymmetric.

[Josh Brown]

Upside because I'm not looking for lottery. Ask a feeling you like to win consistently over time. Yeah, okay. I think I'm that way too.

[Michael Batnick]

But you can't have longevity in the trading business if you're just shooting for long shots. It just.

[Tom Sosnoff]

You'll, you know, you die.

[Michael Batnick]

You'll bust.

[Josh Brown]

Can we talk about that 16% that are at the top of the distribution?

[Tom Sosnoff]

Yeah.

[Josh Brown]

Okay, so These are the 16% of people who are earning far in excess of the risk free rate. Multiples of the risk free rate.

[Tom Sosnoff]

That's the only way you can measure it, right? That's the only fair way.

[Josh Brown]

Okay, fine. So what is it about those people and how do you replicate them? How do you find them and how do you bring more of them on platform?

[Tom Sosnoff]

I mean, first of all, we try to bring everybody on platform so it's not like, you know, we don't the, the.

[Josh Brown]

But those are great customers because they'll be with you forever.

[Tom Sosnoff]

Forever.

[Josh Brown]

Yeah, yeah.

[Tom Sosnoff]

I mean in this business, remember in the brokerage business, you know, at TD Ameritrade I think it was 6% of the customers did 80% of their business. At Tasty, it's like 20% of our customers do 80% of our business. So you're right, that's what we want. I mean those, we want to teach people to hang around for 40 years and you know, Tom, are you born.

[Josh Brown]

That way or can anyone become that top 16%? Oh, anybody, anybody can.

[Tom Sosnoff]

Yeah, anybody.

[Josh Brown]

So you, so you agree with the turtle traders, like the idea, what they said, like basically if anyone walks in off the street and does this method, they can become a trader. So you sort of believe.

[Tom Sosnoff]

Not exactly the trading places thing, but it's a little different. I think anybody can become a successful self directed investor. I think the key for me is teaching people to improve their basis. Like when you first start, you know what's the greatest thing to do? Just improve your basis. Just give yourself a better statistical chance than somebody that buys something. It's a 50, 50 shot. Give yourself a better statistical advantage. And then also teaching people about financial strategies and also how to use like this technology and how, you know, how the markets work. It's so valuable. You understand everything, you know, I mean we've probably taught 5 million people over the last 25 years.

[Josh Brown]

Okay, if someone's going to, if someone's going to go on that journey with you, how much of their day does it monopolize? Because if you have options, trades on, it's not set, and then forget it. Yeah.

[Michael Batnick]

Don't have to buy hedging trades right now.

[Josh Brown]

Yeah. You haven't traded in 10 minutes since we've been talking. No, but like somebody has to.

[Tom Sosnoff]

I am a junkie, just so you know.

[Josh Brown]

Somebody has to be committed to like I'm gonna have alerts set.

[Tom Sosnoff]

I don't give a shit.

[Josh Brown]

No, but I know, I don't care. Is that relevant to the, to the people?

[Tom Sosnoff]

I mean, you don't have to.

[Josh Brown]

Okay.

[Tom Sosnoff]

You do whatever you want. Like it's, it's like, you know, all right, you like to gamble on sports. Okay. How many times on a Sunday do you look at your phone to see what the score is?

[Josh Brown]

Looks away from his phone.

[Tom Sosnoff]

Okay, there you go. Same thing. I mean, you know, and you still work, you know, you figure it Out. It's just like anything else.

[Michael Batnick]

The 16% of the elite traders. I would imagine that there's a lot of turnover in that group. Or are you saying that it's okay?

[Tom Sosnoff]

There's some. Yeah, there's always. There's turnover at everything. Okay. But you know what? Like, you can't, can't overthink this stuff. Like, the, the world's moving. There is no question that on the retail side, I'm not talking about the institutional side, because that never changes. It's old, it's legacy. It just stays way it is until somebody completely disrupts it. But on the retail side, everything's moved short term. You know, whether it's zero dt options, whether it's, you know, trading. You know, the biggest growth we have is in futures options. The biggest growth. It's like we're like 25% year over year in futures options.

[Michael Batnick]

There's not enough leverage in futures options.

[Josh Brown]

On futures options. On futures as opposed to just straight trading futures?

[Tom Sosnoff]

Yeah, we're the largest. We do the largest percentage of options on futures of any firm in the world. Okay. And it's crazy, but that's what customers are attracted to.

[Josh Brown]

What's the purpose of options on futures? More leverage? $.

[Tom Sosnoff]

No, strategic. Tell me more strategic. You can, you can, you can, you can make money if you're wrong, potentially, and you can lose money if you're right. You can, you can bet on something staying inside a range.

[Josh Brown]

Okay.

[Tom Sosnoff]

You can risk a little to make a lot, or you can risk a lot to make a little, depending on what probability says you want. The model for futures options is the exact same as this for listed options. It doesn't make a difference.

[Josh Brown]

Do you think that overall, the explosion in retail trading that I would put like the beginning of that, let's say March, April of 2020. I know retail trading has been growing in popularity forever since Charles Schwab, you know, in San Francisco. But just in the last four years, five years, it really feels like a renaissance. Do you think that, on balance that's been a great thing for most people or a really great thing for a small group of people? Or, like, do you have like a philosophical take?

[Tom Sosnoff]

Yeah, I think it's been a. I think, I think you're. You're talking.

[Josh Brown]

I'm positive on it.

[Tom Sosnoff]

I think you're talking about, like, kind of really that meme stock movement in 2021 and what exploded from that?

[Josh Brown]

You know, I don't know, like 30 million new retail traders or whatever the.

[Michael Batnick]

Number that was the inflection Point.

[Josh Brown]

Most of them young.

[Tom Sosnoff]

I agree. I think it was transformational moment. And of course, I'm going to say it was amazing for the business. And I don't care if some people lost money because we introduced life. Yeah. And we introduced markets and trading to maybe 50 million new people in the end, because there was obviously carry on after that. So, I mean, no, it's huge. It's great. Introducing. Teaching people about managing your own money is so fricking important. And nobody wants to touch this because they're all scared, but nobody realizes, hey, you know what? You're just as smart as the next guy. You're maybe probably even smarter. Yeah.

[Josh Brown]

What do you say to somebody who says, all right, I tried this. I tried to be very active.

[Tom Sosnoff]

Yeah.

[Josh Brown]

Made a lot of decisions quickly. They weren't great decisions, it turns out, in hindsight. And it made me very anxious. Would you ever say to somebody, hey, you know what? I actually think you would be better off with ETFs and don't do this?

[Tom Sosnoff]

Well, we would never say that, but I'd be totally fine. Like, I wouldn't, like, like, I. We don't tell people. I build technology and I write content. I don't talk to people about their, you know, their stuff.

[Josh Brown]

I mean, you're not anyone's financial advisor, right?

[Tom Sosnoff]

I'll answer. I'm an email junkie, too, so I answer like a gazillion emails a year. But I will help people with. They have a question, but I don't tell people what to do.

[Josh Brown]

Okay. What's the coolest story you ever heard from somebody who learned to manage their own money and trade on your platform and what happened for them as a result?

[Tom Sosnoff]

The coolest story.

[Josh Brown]

Yeah, like, what's like a. What's like an awesome outcome?

[Tom Sosnoff]

I'm not sure how the outcome ultimately resolved itself because there were some negative things.

[Michael Batnick]

Can't wait to hear this years later.

[Tom Sosnoff]

But the coolest story I ever heard, which was back when we owned thinkorswim, was there was this woman who came to an event that we did. She was. She was nice. She was an accountant, she was a cpa, and she was. She'd gone to Wake Forest. She really smart, Master's degree. And we started talking because she was a huge North Carolina basketball fan because she grew up there. She loved Michael Jordan, the whole deal. And we started talking and she moved $100,000 from wherever she had her money because she was really intrigued. We did an options seminar. It was like 2005, and she emailed me a Couple times. And I had no idea. And she moved $100,000 in. So my partner Scott comes up to me one day. This is probably 2007, 2008. And he goes, do you know this woman? Because she says she knows you. And I go, yeah, yeah. I met her in, like, you know, North Carolina. I was doing a show, whatever. Super nice. She writes me emails all the time. He goes, she's up $10 million this year. And she's firing. And she's firing, like, thousand lots, you know, in the SPX. Yeah, it's like 2008, 2009. And I'm like, what? Like, I go, she moved 100 lot thousand dollars. And I go, no, she's up 10 million right now.

[Josh Brown]

Okay.

[Tom Sosnoff]

And. And she's like, you know, probably early 60s. Like, the quietest, nicest southern woman, you know, like, like. And I'm like, what the hell? So. So they're watching her because when you get. When you start trading a certain size, you know, you pop up on her wrist monitors. So, you know, and. And she's a premium seller and all this other stuff, but she mostly sells puts. And she caught the Absolute bottom in 2000, end of 2008 to the beginning of 2009. She sold a ton of puts. And over that period, she made $100 million.

[Josh Brown]

No way.

[Tom Sosnoff]

Started with $100,000, she made $100 million. Now she. The story has a bad ending, and I don't really want to get into it because.

[Josh Brown]

Married her.

[Tom Sosnoff]

No. I got my own problems there. But she legit made. And people would be like. And we did a series on her for a while. Like, we. We told the story because it was great. And so many people write to us. Like, it's all. You guys are so full of, you know, like. And I'm like, dude, we watched this. We watched everything because we were worried about firm risk.

[Josh Brown]

Yeah.

[Tom Sosnoff]

We couldn't shut her down.

[Michael Batnick]

Did you copy her trades?

[Tom Sosnoff]

No. No. And she traded. She was. By the time.

[Josh Brown]

What was she doing, though? She's so special.

[Tom Sosnoff]

She was just selling size. She was just selling 5,000 lots of. Of different strangles and condors in. In the spx. And that's a lot back then. She was the biggest trader in the world for a short time.

[Josh Brown]

So when she was right, she made a lot of money.

[Tom Sosnoff]

Yeah. But she didn't have a lot of drawdowns because what she did is she always stayed long, Delta, which means long. She always stayed on balance, long, theoretically long in the market. And so she caught from 2009 to like 2013. And she just caught.

[Josh Brown]

She developed this on her own.

[Tom Sosnoff]

Just using your platform, Using the analytics on our platform. And when I interviewed her, I was just like, Tony and I interviewed one night. We were just shaking our head. We're like, it's not possible. Like, it doesn't. Because. And the guys at the SPX Pit, who we're all friends with still. Cause that's where we grew up, you know, on the trading post. So she would route through and they'd be like, they'd be calling us and feel like, what. What the going on? How does this woman write, you know?

[Michael Batnick]

Can you share what you nicknamed her? Cause you definitely had a nickname for this whale.

[Josh Brown]

Oh, yeah, yeah.

[Tom Sosnoff]

Oh. Our nickname was Karen the Super Trader.

[Michael Batnick]

Karen the Super Traitor.

[Josh Brown]

Karen the Super Trader.

[Tom Sosnoff]

Yeah.

[Josh Brown]

Okay. What did that tell you about the power of your platform?

[Tom Sosnoff]

It didn't. It didn't. That wasn't it. Because, I mean, that was the thinkorswim days. And then when we built Tasty, you know, we changed the game again. Like, thinkorswim changed the whole industry, you know, and it also.

[Josh Brown]

I was going to ask you about this later. Tell us for the audience that is not aware of what thinkorswim is. Let's do this. Now.

[Michael Batnick]

My first Trade was on thinkorswim 2008.

[Tom Sosnoff]

There you go.

[Josh Brown]

Why was it called that? Why do people still talk about it in glowing. People love thinkorswim. Beautiful platform. What was it about it? And then why'd you sell it?

[Tom Sosnoff]

It was a cult like firm. So I was trading in the OEX pit one day in the S&P 100, and my partner was Scott Sheridan. We've been partners for 37 years or something, and we still are. And I turn to him, I go, you know, everything was going electronic in the end of 1999, and we were also short the market and those stupid Internet stocks were exploding. So we're like, I was just in a bad mood and I go, I'm ready to try something different. I've been doing this for 20 years, standing in one spot, literally like in two feet of space. And I'm like, I'm sick of all these guys spitting on me and sweating on me and all this stuff. Like, let's try something different. And we had already built a money management firm, so we were managing a half a billion dollars of like some institutional money on top of trading all this stuff. But I'm like, I want to try something different. I want to build something. And I got a great name. Thinkorswim Nobody will ever. I made it up. I was just walking through my house, I tell my wife, I go, thinkorswim, what do you think? She goes, idiotic.

[Michael Batnick]

It's a great name.

[Tom Sosnoff]

So I go, nobody will ever know.

[Josh Brown]

To have been a great name.

[Tom Sosnoff]

Nobody. And when we launched the platform Crane Chicago, which is like a business paper, they go, worst name for a brokerage firm ever. Someone wrote a whole story. And I'm like, I told Scott, I go, we nailed it. Because if this person hates it, we got it. And so we built thinkorswim. And we had. You know, we had built it with seven guys originally and a bunch of Russian developers because there was nobody around in the US and it turned into be an amazing cult firm with a really beautiful piece of technology. And it still exists today. It's one of the best platforms. And the reason we sold it was because, first of all, we're traders, right? And at the time was the meltdown in 29, because we didn't know that.

[Josh Brown]

Was the era that.

[Tom Sosnoff]

Yeah. So. So we were trading over a billion dollars, and then we dropped down to like, you know, let's say 600 million because of. They killed all the financial stocks in 2000, end of 2008, early 2009. And then all of a sudden, you know, TD had tried to buy us twice before, and we turned them down both times. And then Options Express started talking to us and another couple of firms. We had three firms bidding for us.

[Michael Batnick]

Was there offer lower than the previous ones?

[Tom Sosnoff]

They were all about the same. But here's why we did. TD merger.

[Josh Brown]

Who you negotiate? Is this Moglia or is this Ricketts Moglia?

[Tom Sosnoff]

No, it's not. Ricketts Moglia was the CEO at the time.

[Josh Brown]

Okay.

[Tom Sosnoff]

And so I was negotiating with Joe, who I'm friends with to this day.

[Josh Brown]

Yeah, we're friends with Joe.

[Tom Sosnoff]

Yeah. So my favorite Joe Mowgli story is we're sitting, we're negotiating this deal, and Joe. And I'm in New York doing a show because I'm just always promoting. And I'm in New York doing a show, and Joe calls me up and I go, why does your phone sound so bad? He goes, because I'm taking a shit. He goes, are we done? Are we done with this deal yet? And I go. I go, I guess. Okay.

[Josh Brown]

How could you say no?

[Tom Sosnoff]

Exactly.

[Josh Brown]

Yeah, yeah, yeah.

[Tom Sosnoff]

Anyway, so. And. But. But here was the problem. This is even a better part of the story. So we agree to the deal and. And. And we're, you know, we Think this company's worth. We think they're paying a little bit more than we're worth. But. But that's because all the financial stocks are killed. And TD Ameritrade's trading for $11 at the time. Yep. So remember, they killed their, their stock. So we're like, we don't want cash.

[Michael Batnick]

Smart.

[Tom Sosnoff]

We want stock.

[Josh Brown]

Like selling a putt, basically, contrarian.

[Tom Sosnoff]

Because I thought their stock was too cheap and I thought buying it in the hole. So I thought our stock was too cheap, but I thought their stock was even cheaper. So I'm like, I want your stock. And they're like, we want to give you cash. Because it's a creed up to them if they do cash. It was not a good deal. I shouldn't say it wasn't a good deal. It was a great deal for them, but they wanted to all stock. But then the beautiful thing is at the exact same time, the same exact day, month, whatever, the Ricketts, Tom Ricketts wants to buy the Cubs.

[Josh Brown]

Okay.

[Tom Sosnoff]

And the Cubs. So to buy the Cubs, he needs cash.

[Josh Brown]

Oh, it's perfect.

[Tom Sosnoff]

So he needs about 350 million cash. Over what? So they could buy the Cubs from. I think it was Sam Zeller, whoever owned the time. So Ricketts. The Ricketts need 350 million. We want stock. And TD wants to do the deal for stock rather than, I mean, for cash rather than stock. So we did a three way deal and we never announced this like to the public, but the Ricketts got their $350 million cash, we got our stock, and TD was able to, you know, was able to keep their stock.

[Michael Batnick]

What a story.

[Tom Sosnoff]

Perfect timing. A three way deal at the exact same time.

[Josh Brown]

There would have been a cool way if you would have gotten the Cubs, but I, But I guess.

[Tom Sosnoff]

Well, the biggest mistake I made from that is that. So when he did that, then Tom Ricketts goes. Because we're all kind of friends, you know, and we even sponsor the Cubs today. We're one of their lead sponsors.

[Michael Batnick]

He still owns them?

[Tom Sosnoff]

Oh yeah, yeah, they're great. He's the best owner in sport in Chicago for sure.

[Josh Brown]

Well, he delivered. He delivered. Finally.

[Tom Sosnoff]

But we're on the mound.

[Josh Brown]

What do you mean? Tasty trade?

[Tom Sosnoff]

Tasty trades on the mound, on Wrigley, every, every, every, you know, every, every telecast. But. So Tom goes, listen, he goes, tom, you should. We still need a little more cash. You should throw some money into the Cubs because it's a good deal. And I'm like, I think it kind of is a good deal, but I just was like, you know, going through this intense deal to do the whole deal. So I didn't buy to the Cubs, so I missed that. But anyway, that's why we sold it.

[Josh Brown]

How long did you sit around until you said, I got to do this again?

[Tom Sosnoff]

So it was two years, and then Moglia left, and this guy named Fred Tomczak took over td. And Fred was great. He's a great CEO. And we're very good friends, even to today. And Fred comes in and he says he wants us to work there, me and Scott, for a couple years. We signed a three year deal. After two years, I went to him, I said, fred, this is not for me. This is too corporate for me. I'm T shirt wear. I mean, this is not me. So he goes, what do you want to do? I go, I have an idea. I go on to build this financial network called. And I didn't tell him what, right? Because I know he hates all my names. He hated the name thinkorswim, and now I know he's going to hate tastytrade. And I go, all right, I'm going to build this financial network called tastytrade. He goes, that's the dumbest idea I've ever heard. He goes, but I'm in for 20 million because.

[Michael Batnick]

He goes, he was betting on you.

[Tom Sosnoff]

He goes, whatever you do, I'm betting on. And so they were our first investor. We never even took the 20 million. We took a piece from them. And so he supported it, which is great. And then Tasty Chair was born in 2011. We sold it in 2021 for 1.1 billion.

[Josh Brown]

Wow. Unbelievable. Unbelievable. Michael wants a fist bump. So you sold it, but you're still there. You're still part of it?

[Tom Sosnoff]

Yeah.

[Josh Brown]

Well, no, I don't need the specifics in your contract, but you. You. You sold it.

[Michael Batnick]

Who bought it?

[Tom Sosnoff]

IG Group out of London.

[Josh Brown]

Okay.

[Tom Sosnoff]

All right.

[Josh Brown]

Are you having fun now that you took all that risk off and you can just do what you do, do the shows and.

[Tom Sosnoff]

You know what? I don't give a crap about the money. I know it sounds weird, but, like.

[Michael Batnick]

Well, you were doing okay before this.

[Josh Brown]

Yeah, you were okay before that. You need the money from this.

[Tom Sosnoff]

Well, I mean, it's always like. You always, like, you want to be like it's your legacy kind of thing. Like, it doesn't. It didn't change my life at all. But, you know, I still work my ass off. I mean, the company, we sold it four Years ago. It's worth double that today.

[Michael Batnick]

So what still drives you? You're just competitive. You're a maniac.

[Tom Sosnoff]

Yeah. And plus, I don't have any hobbies.

[Josh Brown]

Well, this is your hobby.

[Tom Sosnoff]

You love hobby.

[Michael Batnick]

Same with us.

[Tom Sosnoff]

Plus, you know, so this is gonna sound weird, but I work with all my friends. Like, most of us have been together 25 to 45 years. Like, these are my only friends. Like, this is what we do. And so, you know, so I work with my friends. I still have fun, dude.

[Josh Brown]

I get a text from Michael, like, every three months, and he's always like. It's always some version of like, I feel really bad for you that you can't enjoy the ride that we're on. Like, we're working our asses off.

[Michael Batnick]

He's a miserable prick.

[Josh Brown]

I'm such. I guess I'm. I guess I don't appreciate what you just said enough.

[Michael Batnick]

Say it again.

[Josh Brown]

You're working with your friends.

[Tom Sosnoff]

Yeah.

[Josh Brown]

It's not about the money. So I. I check every one of those boxes that you just said, I'm working with my friends.

[Tom Sosnoff]

Yeah.

[Josh Brown]

Like, I do need the money. I'm not in your situation, but, like, I'm okay. It's not every day is do or die the way it used to be when I was a retail broker. So I'm fine on money, but I just can't, like, on a daily basis. I have ups and downs.

[Tom Sosnoff]

Yeah, sure.

[Josh Brown]

But I don't appreciate it enough. And can I read this?

[Michael Batnick]

Yes.

[Josh Brown]

This is what Michael texted me.

[Michael Batnick]

They make me cry, but yes.

[Josh Brown]

No, because Michael's my friend, like, first and foremost. Right? So. And I feel bad about it. Cause I know he's right. So he goes, I wish you could. This is yesterday. Two days ago. 7:30 at night. I wish you could enjoy the ride. It's going to end one day. These are the best days we're ever going to have. Literally doing everything we ever dreamed of and more. It breaks my heart that you can't find the joy in this. Or if you are having fun, you have a weird way of showing it. You don't have to respond, but I had to get this off my chest. And that's maybe the fourth time he said some version of that.

[Michael Batnick]

I'm a good friend, right?

[Josh Brown]

You are a good friend. I wouldn't say that I'm not having fun, but I'm definitely underappreciating the aspect of it that you just described. Well, fix me.

[Tom Sosnoff]

So the only thing that money is good for, the only thing that I mean of course, there's. I shouldn't say only thing, but the really nice thing about making some money is that you can afford to do things that you have fun with. Like, I don't give a crap about buying. I don't even own it. I'm a. I'm a minimalist. I don't own anything. But I. I'd love to be able to do things where I'm having fun. And so, like, what I do, I'm having fun. Like, the investments I make, I'm having fun. The businesses I build, I'm having fun. I'm not going to do anything. At my age, I'm not doing anything anymore, which is not fun.

[Josh Brown]

Okay. I don't believe. And you don't have to, so. All right, so I'm not.

[Michael Batnick]

How does Josh have fun?

[Josh Brown]

Well, no, no, no. But I'm not in the. I'm not in you. I still have to deal with.

[Tom Sosnoff]

I got enough problems. I can't help either.

[Josh Brown]

I still have to do. Do things that I don't want to do, but it's okay. Like, this is what I'm. This is part of my journey, part of my adventure. You have a lot of years on me. You probably did a lot of things that you didn't want to do, but you knew you had to. And then your success, the point that you're at now is, like, you don't have to do those things anymore. So I'm not there yet, but I'm closer to being there than I ever in my life thought I would be, where I am able to say no to a lot of shit.

[Tom Sosnoff]

Yeah, it's good.

[Josh Brown]

And I think I under. I think I underappreciate it, but that might just be. This is the way I am. I can't do anything about it.

[Tom Sosnoff]

You know, One of the things also that's a really fun takeaway is that I like the fact that I have made people that have hung around with me, like, very wealthy, too.

[Josh Brown]

I love that.

[Tom Sosnoff]

Scott and I and Christy, we gave away $50 million. We gave $20 million to our employees when we sold thinkorsimmon. 30 million when we sold Tasty. This is in addition to everything else we just gave them, like, just handed out checks for $30 million on top of everything else we've done. So we.

[Michael Batnick]

That's gotta be the best. The best feeling in the world.

[Tom Sosnoff]

The best.

[Josh Brown]

Okay. And you see these people still every day or often.

[Tom Sosnoff]

So one of the things with wealth is that you do lose a few friends because some people can't handle it. It's a weird thing. Somebody that I know when we were a lot younger, sold their business to Goldman Sachs. And I said, it's amazing, right? And he's like, yeah, but I lost a couple of friends. I go, why? And he's like, cause some people couldn't handle it.

[Michael Batnick]

Meaning people that don't have the money that you do can't be your friends anymore.

[Tom Sosnoff]

Yeah. Maybe from jealousy or whatever. It's something, but. And I see it sometimes in business, but my friends, we've been, like. The hardest thing was like, there's a bunch of people that, you know, that I've hired over the years that I think have done your show. I think. Did JJ do your show?

[Michael Batnick]

Not yet.

[Tom Sosnoff]

Oh, not yet. But, like, Q did your show, right? Steve Quirk.

[Josh Brown]

Steve Quirk.

[Tom Sosnoff]

So, like, these are guys that we all traded together in the pits, you know, and it's hard, you know, like. And Tony, same thing. The first time I offered Tony a job, he's like, I'm not working for you. And the second time I offered a job, he's not working for you. J.J. was the same way I offered him a job, he goes, I'm not working for you. And then. And then Q is. You know, Q is. The first time he's. I. I tried to bring him in, he's like, I'm not working for you. Like, we stood next to each other in the pit, you know, and then. And then. And then a year later.

[Josh Brown]

You get that, though, because if the situation were reversed, I totally get it. You would probably, like, if you were JJ Kinahan and you were like, yeah, working for Tom.

[Tom Sosnoff]

No, I totally get it. And then. And then. But, you know, then years later, you know, they're. They've amassed a ton of wealth because they. They just bought in and they learned so much, and, you know, it just. It's. It's cool. Like, that kind of stuff is cool. Like, we have a tree that goes to every firm, like Robinhood and E Trade, and every single firm out there has thinker swimmers and everything.

[Michael Batnick]

You're like the Bill Parcells.

[Josh Brown]

I actually. Tom. I think that's actually the coolest thing in the world. What do you think about Robinhood? What's your. I mean, this is the most. I would say I don't give a crap. No, no, no. I mean, the success that they've had and what they built, I think it's amazing.

[Tom Sosnoff]

Yeah, it's amazing.

[Josh Brown]

Okay. So I think.

[Tom Sosnoff]

I mean, if you.

[Josh Brown]

In the last 10 years, it's definitely the most exciting new brokerage business to come along.

[Tom Sosnoff]

Sure. I mean they, they, you know, they clicked the viral button and it worked. And the virality that they did. I was trying to do that for, you know, I mean, I mean I'm not. I had an amazing career. But like what they did, incredible. I don't, I don't give a crap. Like, I mean I like those guys. You know, on balance I like those guys. But I'm also a competitor. I want every one of their customers.

[Josh Brown]

They kind of bent the industry to their will. 100% with 0% commission.

[Michael Batnick]

Dude. That's why TD had to get bought by Schwab is because of Robinhood.

[Tom Sosnoff]

Why?

[Michael Batnick]

Because the commission free trading destroyed the business.

[Tom Sosnoff]

No, no.

[Michael Batnick]

Of TD Ameritrade. It didn't.

[Tom Sosnoff]

No chance.

[Michael Batnick]

Come on.

[Tom Sosnoff]

No. What do you think it was that TD sold? Yeah, because they had a bunch of idiots on their board who just wanted to take the money. They were so they.

[Michael Batnick]

You don't think commission free trade is productive?

[Tom Sosnoff]

No. Here, TD Ameritrade was owned 40 some odd percent by TD Bank.

[Josh Brown]

Right.

[Tom Sosnoff]

TD bank was in trouble for like, you know, bunches of crap. But they also. They hated each other.

[Josh Brown]

They wanted to hit the bid.

[Tom Sosnoff]

They just wanted out of that thing. Everyone was like, you know, I mean. No, the Rickus, Joe Ricketts and Schwab, they hate each other. They don't wanna do the deal.

[Michael Batnick]

I'm sure that's true. The way that I see it is that when Schwab.

[Tom Sosnoff]

No, that had nothing to do with.

[Michael Batnick]

But when Schwab said we're going commission free too, Schwab's stock got hurt. Let's just say 10% of make money.

[Tom Sosnoff]

They only went commission free.

[Michael Batnick]

But TD got destroyed. And then Schwab said, we're buying you with our stock. We're just gonna swallow you.

[Tom Sosnoff]

No, that's not. And TD at that point was doing 70% of their business and options. They didn't go commission free.

[Michael Batnick]

Okay.

[Tom Sosnoff]

They only were commission free in stocks. They didn't care is nothing to them.

[Josh Brown]

They had a. They had a. They had a no commission platform of ETFs for the RIA side of the biz here.

[Tom Sosnoff]

When we, when we went to. When we did the thinkorsome TD deal, at first they were doing about 300,000 to 400,000 darts a day. That's trades daily average trades. Yeah, it's the number of trades. That's. Back in 2009, they were doing about three or four hundred thousand at the first board meeting. I walked in, I said, we're going to do a million trades a day because of our platform. Because you bought toss, you're going to do a million trades a day. They're like, no way. Within six years, they were doing 4 million trades a day. When they sold to Schwab, they were doing over 4 million. They were killing it. They sold because they were dysfunctional. They didn't sell because they had to sell.

[Josh Brown]

Do you think they could have stayed by themselves better than we did?

[Michael Batnick]

I'll take your word for it.

[Josh Brown]

They could have survived with $0 commissions.

[Tom Sosnoff]

They don't. Nobody. We all have $0 commissions. Everybody has $0 commissions.

[Josh Brown]

So payment for order flow, margin lending, that, like, would have been enough. Enough reason to stay independent, of course. Okay.

[Tom Sosnoff]

The Robinhood going to zero. None of us have have gone to zero on options or anything else. And so we've all just went to zero on stock because nobody makes any money on stock anyway.

[Michael Batnick]

Let me ask you a question.

[Josh Brown]

Options is the better business.

[Tom Sosnoff]

The questions.

[Michael Batnick]

And futures, is it because the spreads are so wide? Like, why are options such a great business?

[Tom Sosnoff]

Because you can actually make money with them and because the customers like them because they're strategic and the firms like them because they can actually make a little bit of money. Can't make any money in stocks.

[Michael Batnick]

Yeah.

[Tom Sosnoff]

Technology is really expensive to deliver and the marketing is really expensive. Everything's expensive. And nobody helps you. So you've got to get market share.

[Josh Brown]

I want to ask you about options strategies in ETF wrappers. How do you feel about that?

[Tom Sosnoff]

I don't care.

[Josh Brown]

So we do. So do you think that those products are worthwhile? Do you think they're like, executing that, those strategies? Well, what are they missing? Like, why. Why aren't they working as well as they should?

[Tom Sosnoff]

Because they stink. You have to get called for help.

[Josh Brown]

With any of that stuff.

[Tom Sosnoff]

Well, I have one friend that's really good trader that manages one of those funds, but I'm not going to bring him into this. But the other.

[Michael Batnick]

Is it Yield Max or No, I.

[Tom Sosnoff]

Don'T know the name.

[Michael Batnick]

Okay, so let me. Let me read this real quick.

[Tom Sosnoff]

Okay.

[Michael Batnick]

This is from our friend Jeffrey patek at Morningstar Yieldmax Coin Option Income Strategy ETF gained 42% per year from its 2023 inception through 2025.

[Tom Sosnoff]

Okay.

[Michael Batnick]

Over that period, the ETF received nearly $2 billion in cumulative net inflows. And his daily assets averaged around $560 million. So Jeffrey says, how much money did investors in this ETF making dollar terms over that period because there's a 42% a year still in two years, but still they didn't make any money. They lost $35 million in total. How do investors lose $35 million in an ETF that's gained nearly 42% per year and Amazing.

[Josh Brown]

Missed. So they're. They're buying and selling at the wrong time.

[Michael Batnick]

No, horrifically.

[Tom Sosnoff]

What else? Here's, here's the problem with these. And I don't want to get into like a lot of the problem is that they can't use the. They can't use the listed markets because the listed markets are not big enough for what they want to do. So what happens is they are forced to go into the OTC markets and they just get. They don't understand how bad they're getting ripped off by JP Morgan, Goldman Sachs and everybody else. And so they're at like where customers are trading one tick off mid price. These guys are trading 10 or 20 ticks off mid price. And they don't give a shit because it's not their money.

[Josh Brown]

So the ETF sponsor, the asset manager, can't go into the same options market that you and I can go into, because these are $500 million funds.

[Tom Sosnoff]

Right?

[Josh Brown]

Okay. So there's not enough size in the contracts they want to buy. So they go into an OTC market where it's a little bit more of a wild west.

[Tom Sosnoff]

Like the pricing, the counterparty is just some bank and the bank has to lay it off in the public marketplace in some way. So the bank has to have enough edge to fall.

[Josh Brown]

They have to capture something in between.

[Tom Sosnoff]

Sure. So the difference is. I'll explain the difference. So the difference is when our customers trade and Citadel is the counterparty. Citadel makes money on scale, not on. The edge is tiny. It's like a fraction of a penny. But it's all about scale. It's all about doing billion trades. A billion trades. So it's all scale. It's just the high frequency game is a scale game. The game that these guys are playing is the old school way where they're giving up the edge to the counterparty and then the counterparty is Goldman Morgan, whatever. And, and that's a. Just an absolute, like conceptually I'm okay with it. It's just not my thing, you know, I don't like the product.

[Josh Brown]

I mean, they've gotten popular amongst investors, which is why we're asking you about it.

[Tom Sosnoff]

But remember what happened in 2007, 2008. Remember what the most popular fund was then? Closed end. Closed end, covered call funds.

[Josh Brown]

Oh, yeah.

[Tom Sosnoff]

150 of them were created. Every single one of them went out of business.

[Josh Brown]

Yeah. They did not survive the financial crisis.

[Tom Sosnoff]

Right, Exactly.

[Josh Brown]

Counterparty risk or was it something else?

[Tom Sosnoff]

It was structural risk.

[Josh Brown]

Structural.

[Tom Sosnoff]

Yeah, structural risk. And it was counterparty structural, the whole deal. But they didn't survive. None of them did.

[Josh Brown]

Because you mentioned ABN AMRO. There was a moment in 07 where the entirety of the retail brokerage business was selling structured notes. ABN was one of the biggest counterparties. Lehman.

[Tom Sosnoff]

Well, those were different, but the LaSalle Street. When you think about the whole credit default, like, era then. So we were just having this conversation the day. So firms like us, we sit on a lot of cash. Let's say we have $8 billion in customer capital. I think it's something. But it's all cash because nobody buys stocks. I mean, nobody brings their portfolio over to us. It's all just trading. So we probably have four or $5 million billion dollars in cash all the time. So in 2008, it was a little less than that. But in 2008 or seven, every firm on the street was like, why are you guys leaving your money in overnight repos and Treasuries, you know, because you could get 4, 6% more because that's your revenue. That's your only revenue. And I'm like, yeah, but who's the counterparty? Like, this is customer funds. And if you remember what happened when the meltdown in 2008, E trade almost went out of business.

[Josh Brown]

Commercial paper started blowing up. Money markets were blowing up.

[Tom Sosnoff]

Not only Lehman, but, you know, Merrill lynch basically had everybody who laddered out. Just like a couple of years ago when the, you know, with the silicon. Yeah, but, but this was even way worse in 2008 because everybody jumped into those credit just to get, just to ladder out and get a little bit more money on their money. Even TD Ameritrade, if you remember, then they, their money funds went under a dollar.

[Josh Brown]

Yes. Famously.

[Tom Sosnoff]

Famously. So the firm that had zero risk was, was thinkorswim back there because we didn't do any. We only left all the money because we're like, that's not our business. So in the middle of the crash, I called Ken Griffin and I said. Because he had bought all the E Trade, which crash.

[Michael Batnick]

Oh, eight, zero, eight.

[Josh Brown]

I forgot that Ken Griffin bought E Trade.

[Tom Sosnoff]

He basically bailed out E Trade.

[Josh Brown]

Yeah.

[Tom Sosnoff]

Okay. So I called him and I said, Ken, we're doing great. We had no problems. We had no issues at all maybe we lost five or ten million dollars and just customers blowing out, but other than that, we had no other issues. So I go, I want to buy part of E Trade from you. Okay? And he was like, listen, Tom, it's a shit trade because I don't know if this company's gonna make it. He goes, I wouldn't feel good about selling you. He goes, if you really want one, I'll sell you a piece, but I wouldn't feel good about it. And I was like, okay. And I didn't do anything for that reason.

[Josh Brown]

You're saying why was it a shit business at that time?

[Tom Sosnoff]

Because he wasn't sure that they were going to make it. He was like, they got so many mortgage issues and so many credit default swap issues that I don't know if they're going to be able to pull out of this. And he goes, I don't know if you know what you guys can afford to lose. And I'm like, that's fair. Thank you. And I didn't do it. And to be fair, it took a couple years for him to make any money on it.

[Josh Brown]

Okay, I want to. I want to.

[Tom Sosnoff]

But that would have been fun if we bought E Trade.

[Josh Brown]

I want to finish by asking you a culture question. New York versus Chicago. Where'd you grow up? You grew up in New York?

[Michael Batnick]

Queens?

[Tom Sosnoff]

New York? No, I grew up in. I was born in Manhattan. My mom was a grad student at Barnard area, and then we moved to. Just outside of White Plains.

[Josh Brown]

Okay. Westchester.

[Tom Sosnoff]

Yeah.

[Josh Brown]

Okay.

[Tom Sosnoff]

About 20 miles from here.

[Josh Brown]

All right. You obviously are the center of the universe in terms of the Chicago trading scene. At least that's the way I've heard it.

[Tom Sosnoff]

Yeah.

[Josh Brown]

Okay, but you've worked in New York, too.

[Tom Sosnoff]

Yeah.

[Josh Brown]

What do you think is the big. What are the big cultural differences between traders in New York, traders in Chicago, Wall street versus Chicago? Like what?

[Tom Sosnoff]

Well, the first thing we would say in Chicago, there are no traders in New York. There's a financial community in New York that is huge.

[Josh Brown]

Yes. There are a lot of lawyers and bankers in New York.

[Tom Sosnoff]

There's a lot of money managers, and there's a massive business here of assets under management, things like that. But we would argue there's no traders.

[Josh Brown]

You would say the activity at the New York Stock Exchange, the nasdaq is more public relations at this point, less trading. But I could say the same thing about the CBOE is gone. The physical floor at the CME is gone.

[Tom Sosnoff]

Yeah, but those exchanges are still. They're the monsters. And Mostly all the high frequency firms. I mean, Citadel moved to Florida, but mostly the high frequency firms are still in Chicago, and there's still a pretty dominant trading community there, but, like, Pro Tail and that kind of stuff. Professional prop firms.

[Michael Batnick]

Tom, you're never going to stop, right? You have. You have another trick up your sleeve. What's next?

[Tom Sosnoff]

I do.

[Michael Batnick]

Of course you do.

[Josh Brown]

Do you know. Do you know what it is yet?

[Michael Batnick]

Or tomorrow?

[Josh Brown]

This is tomorrow.

[Tom Sosnoff]

Why?

[Josh Brown]

Do you have a big announcement coming?

[Tom Sosnoff]

Maybe. Maybe.

[Michael Batnick]

Wow.

[Josh Brown]

All right.

[Michael Batnick]

Good for you.

[Tom Sosnoff]

Yeah.

[Josh Brown]

Tom, this has been such a pleasure. We. We've. We've followed you from afar, and I've always looked forward to asking these questions and having this conversation. So thank you so much for being here. We. We always end this podcast by asking people what they're most looking forward to. Sounds like the thing that you're most looking forward to. You can't say, but maybe. What's the second most exciting thing?

[Tom Sosnoff]

I shouldn't. I don't want to make it seem like it's some mystery thing, but. But there's. For me, what's really fun is building stuff.

[Josh Brown]

Okay.

[Tom Sosnoff]

You know, so I'm. I probably most look forward to seeing, you know, like. Like, what kind of cool stuff can we build in the future?

[Josh Brown]

Okay.

[Tom Sosnoff]

Like, that's it. I mean, I'm not, you know, I'm not gonna ever retire. You're right.

[Josh Brown]

Oh, it's tasty. AI.

[Tom Sosnoff]

I mean. I mean, when I'm doing something on stage, I always say, you. When I'm. When I drop dead here, just roll me in the dumpster in the back. I'm cool with it. That's okay. Like, I want to die doing this stuff.

[Michael Batnick]

Love it.

[Tom Sosnoff]

So the man.

[Josh Brown]

Thank you so much, Tom.

[Tom Sosnoff]

Thanks.

[Josh Brown]

All right, guys, we want to say thank you so much for listening. Please, like, and subscribe. Do all the things. We appreciate you. Great job on the show all week. Sean, Duncan, etc. Whole team. Shout out to the whole team, and we'll talk to you guys soon. Thank you.

[Tom Sosnoff]

Thanks so much.

[Josh Brown]

Is that fun?

[Tom Sosnoff]

It was great.

[Josh Brown]

You want to do it one more time just to make sure we got it?