I am a software engineer by training. I got my B.S. in computer science in 1994. My first love was and is software development and IT technology.
In 1999 I pursued my CCIE certification and got as far as taking the written exam. My intention was to shift my career into high end network management. By the time I got to taking the 2 day, $2000 lab exam, the bottom fell out of IT and all the Dot Coms. So I stayed in software and took a job working for a software company that makes various IT software including a network management application. I’m still there today.
I’m married to the lovely and gracious Sherri. We have two awesome children, Emily Abigail and Adam Criswell, who also happen to be twins. Yes, it is very cool having twins and yes it’s a ton of work having twins. Yes, I do think people who don’t have multiples are missing out.
Trading is my other passion and is mostly what this blog is about. I’ve been trading stocks since about 1998 with varying degrees of success.
Yes I like Cramer. I can’t help it. He’s just so darn entertaining. Plus he has given me ideas that have helped make me money. I have to at least like him for that.
My favorite broker of all time is Thinkorswim (Tos). Phenomenal trading platform and the customer service is superb. They also have piles of educational info and tons of cool trading videos.
Sean's Trading Journal 
Hi Sean,
I stumbled upon your blog, and really love reading it.
I once used to play BLPS and BRCS too, but was very unclear on the bail out point, really hope you can help me out here.
EX:-
I have an account of $10k.
I open a BLPS of 90/91 on the SPY for a 0.25 credit. (so the BEP should be 90.75)
I normally open a $1 wide spread on SPY. but I’m not sure on a few things:-
1. how much capital should be allocated for each trade?
2. when is the point that i should bail out when the price goes against me?
3. Or is there any other strategy to cover it?
Would really appreciate if we could have a discussion on this.
Thanks in advance.
Hi,
I think Vertical spreads are the easiest to trade and are good to help give people options trading experience. So they are a good place to start trading options. Exit plans are different for each person but you should always know your exit before you place the trade.
I like trading the SPY, IWM, QQQQ etfs because they are very liquid, you get dollar wide spreads, and the bid/asks are many times penny or two wide. Those are all advantages for the retail guys.
You are right about the BEP and risk. I started with $10K so I know that’s enough to start with if you are careful. Risk no more than 2-5% of your total capital on one trade is a good rule of thumb. You can risk a little more if you have less money but I like to not have more than 25% of my total capital at risk in options at any given time. This is because if the whole market moves against you at one time you can blow up your account in a heart beat if you have too much on the table.
Getting out of a BLPS on SPY is a matter of personal risk tolerance but generally it depends on how much time is left before expiration, how much it has moved against you or how much it’s profitable, and where the market direction is going. If the trade has gone through your long strike and there is a few weeks left you can do nothing – just wait. If there is nothing driving the market down fast, you can be patient and it will likely move back up for you. If, however, there iare only a few days to a week left, and there is some money left to be had, you can get out all together.
If you think you were right in the direction but your timing was off you can roll the trade out to the next month. For example, you had a credit of .25 and the spread will now cost you .50 cents to buy it back you might be able to sell the same spread for the next month for very close to the .50 cents you paid to buy the spread back. This means your credit is still about .25 cents but you now have more time to be right. You just have to weigh the cost to buy it back against how much you can get for the same spread in the next month.
Hope this helps and good trading to you.
Hi,
Thanks a lot. That’s really detail, and of course helpful reply.
I’ll be very sure to read your blog often.
Hope we will have more of this kinda discussion in the future 🙂
thanks again.