On Wednesday, April 7, one of the writers on the live portion of the site, the Market Monitor, experienced connectivity problems. Another of the writers for that part of the site took the opportunity to remind subscribers that we all need to have a back-up plan for our trading. What happens if we lose our primary internet connection while we have live trades?

It's a topic I addressed several years ago and touched on a few weeks ago, as I believe those back-up plans to be important. Technology has changed by leaps and bounds, offering us more choices than we had in the past. Since I'm in the midst of altering my own backup plan, I thought it time to update that article from long ago.

That article needed updating. Only a few years ago, one of my backup plans included using dial-up on my home phone line if my cable connection went down. Although I haven't tested a dial-up connection in many years, I'm not sure it could handle the charting capacities that I need now, but I am certain that I'd pull out my hair waiting for it to load the sites I need.

The first back-up plan that you must have is the name and telephone number of your broker or the trading desk at the online brokerage you use. I don't know about you, but I never seem to have connectivity problems unless I've also woken to a market that has leaped or fallen heavily overnight. I don't think I've ever had connectivity problems at a time when my trades were in calm, safe waters and didn't need attending.

It goes without saying that you don't want to scramble for those important numbers when you most need them. Write them down. Keep them somewhere easily accessible, preferably saved in your contact list on the cell or other contact lists that are not tied to your computer.

Back-up plans could also include "just in case of catastrophe" contingent orders on your trades, particularly if they're approaching an adjustment point. Think-or-swim's platform offers some of the most versatile contingent or conditional orders I've seen, including setting the timing so that the orders aren't placed during the first thirty minutes of trading, for example. They let traders set the limit order at the mid-price level plus or minus a certain amount. Other platforms are busy developing flexible alerts, too, although I'm not familiar with all of them.

My primary brokerage, the one on which all my iron condor trades are placed, doesn't offer such flexible contingent or conditional orders, but it does offer a broker who knows me and can be reached at all times. Setting contingent or conditional orders can be problematic for spreads at any brokerage and should be approached with some wariness anyway because of the tendency of spread prices to jump around a lot. A conditional or contingent order meant to stop a loss on a spread can be triggered as the spread prices widen and contract, so use this tactic with some care and only after consulting your trading platform.

That's particularly true because most of my trades are on the big indices, and SPX bid and ask orders can be particularly wide in fast-moving markets. What works against the trader trying to protect against the possibility that a loss may grow too large can work for a trader who wants to close a spread for a profit. All that movement in the spread price just might get you that profitable trade when you didn't expect it to fill.

However, for others who are trying to protect against a loss by setting a contingent or conditional order--whether based on the delta of the option, the price of the spread (dangerous) or of the underlying--it may even be difficult to get a spread order filled in a fast-moving market. For others who face those conditions, one stop-gap measure might be to set "in case of catastrophe" contingency orders that trigger the buying of long calls or puts at some key price level, with the long calls or puts hedging the deltas on the position in trouble. Even while markets are closed, you can look your positions and gauge the number of deltas you might need to fully or partially hedge the position if the underlying's price should move to a certain level, and set the order appropriately.

For example, at the close of trading on April 7, my SPX iron condor was at -55.44 deltas, modest for the 50 contracts that I held. What would happen if there was a big movement either direction, however, especially toward my call spread? Does the market move any direction other than up?

I could check a profit/loss chart's theoretical predictions or run a theoretical option pricer. That pricer also provides me with the theoretical deltas of a position once the underlying's price hits a certain level. Hang on if you don't know how to do all this, as I'll explain later.

Making such a check told me that, if the SPX continued to climb toward my sold calls, the position delta would likely be around -200 deltas at the point at which my own personal guidelines for hedging would be triggered. For my first delta hedge, I wanted to jump in a bit early, when the trade was about halfway to the maximum loss I had set, but I would hedge only half the position deltas. I could have used the same theoretical option pricer to find a call that would have about 100 deltas at that time. I could then set a contingent order for the purchase of that option.

That sounds more difficult than it is. Let me show you what I mean. We'll start with a Strategy Analysis Chart from freeware OptionsOracle, showing when my loss on my position would approach about 6 percent on the day after this article was first roughed out, so on April 8.

Strategy Analysis for My May SPX Iron Condor, Projected to April 8:

This shows that my loss on the whole position would approach 6 percent, the level at which I might want to hedge half my delta risk, at about 1212.

On the evening I was doing this just-in-case pre-planning, the evening of April 7, I ran a few JUN calls through the same analysis. I found out that, if the SPX soared to 1212 the next day, the SPX JUN 1100 call would have a theoretical delta of 90.67, somewhere in the range of the delta that I might need. I could then set up a just-in-case contingent order to buy the SPX JUN 1100 call if the SPX trades above 1212. I'd have to either set a market order or use a pricer to guess at the possible price of the option if those conditions were met and set a limit order.

Or, I can do what I often do when I have to be away from the markets. I set an alert that provides me with all the information for the next step, including my broker's or trading desk's number. That alert is sent to a Blackberry with mobile platforms available for both my brokerages. While neither OptionsXpress nor BrokersXpress currently allow one to place spread trades via their mobile platform, I can place that trade for the single option to hedge the deltas. As an alternative, I can call the broker or trading desk and ask them to place the trade.

I've also bought a netbook that can be tethered to the Blackberry for mobile access, providing mobile access to my regular charting and brokerage platforms. The same can be done with my laptop, but the netbook would prove more portable for running errands. I'll trade portability for a bigger screen with higher resolution, but there are always tradeoffs. Although I don't anticipate jogging with my netbook tucked under my arm, I've heard from people who have carried their netbooks around on walks.

Not all netbook versions have built-in wifi access. Some have screens so bright as to prove useless outside or in the car. Some research must be done with a trader's particular needs in mind. A trading friend's experience and YouTube videos proved invaluable for this non-tech-savvy buyer. Those videos showed various netbooks side by side, being powered up, running certain types of programs, and in various types of lighting, so that easy comparisons were possible.

Other possibilities for access are through a plan allowing mobile access or a prepaid card allowing such access. For those of us living out in the country, not all such access is created equal, however. A serious look at access maps is necessary. While our cell phone provider has access good enough to provide a cell phone connection where we live--not easy to find--and most places we travel, the signal is not good enough to provide an Internet connection for a good portion of the way to one of my daughter's houses. Do not assume that if you have cell phone coverage, you'll be able to access the Internet. If the signal isn't strong enough, you might be able to connect via the cell phone but not find an Internet connection.

It's just too expensive to risk letting a trade run away from you. If you haven't done so already, start investigating backup plans. The minimum is alerts that can be sent to your cell phone.