Summer vacations are in full swing. As everyone rushes to their favorite social distancing hot spot, traders are often left wondering what to do with their positions and trades while away. Since we cannot build automated and trigger-based strategies yet, we wanted to help with a simple but effective checklist you can use to square up your account before going off the grid. Make no mistake, though. This checklist isn’t just for when you go on vacation. It’s also a great workflow to help you before an extended business trip or busy week at home when you have limited time to manage your account.

• This checklist works for any situation where you will have limited time to manage your account.
• A note on automated and trigger-based trading: Subscribe to our YouTube channel and check out our videos showcasing some of the new features (trigger-based trading strategies that auto-respond to different scenarios) of the auto trading platform we are close to releasing.

The Vacation Checklist

• Major market events always seem to happen right when you go on vacation. This checklist does not have to be completed in order. It can be used in any situation where you have limited time to manage your account.

Forecast

• Check if there are any upcoming earnings announcements for trades that you’re currently in.
• Check for Fed announcements, payroll numbers, and other economic data releases.
• Check for upcoming dividend payments. People often forget to check when their positions go ex-dividend and focus on the contract’s expiration date. Then, they go through a dividend cycle and get assigned shares, or have a margin call and are caught off guard.
• So, forecast what’s coming when you’re gone, starting at the individual company or ETF level, all the way up to the macro view (What is the Fed doing? Are there any major announcements that might impact the market? Etc.).
• If you can’t withstand these events, maybe start removing or hedging your positions.

Remove trades

• What can you take off right now and not leave your portfolio unbalanced?
• Maybe you have some positions that have been on for a while and are running up towards expiration, or you have positions trading at a small profit or loss, and you don’t want to roll the dice and leave the positions on while you are away.
• If you trade iron condors and iron butterflies, maybe you can take off the inside strikes of positions and leave the outside wings on to expire and act as a natural hedge.

Check for protection

• This gets down to looking not just at your individual positions but also the whole portfolio and asking yourself questions like, “Do I need to hedge or adjust my portfolio right now? Am I neutral to the market? Am I too bearish? Am I too bullish? Where do I have a lot of exposure? Is it in a particular expiration cycle?”
• For example, if you trade five weekly contracts out, you might want to remove near-term positions or roll your contracts out to a further expiration date to give you more time.
• If you have a single stock position, the easiest thing you can do to protect it from a catastrophic loss is to simply buy a collar. You don’t have to hold collar strategies all the way to expiration. You could execute a costless collar for just the week that you’re gone. For more information on costless collars, check out Show 30: The Zero Cost Way to Protect Stock Gains with Options.
• You could also buy some VIX options, or some laddered VIX options, just for the period that you’re gone.
• If you have a lot of defined-risk positions, like credit spreads, iron condors, and iron butterflies, maybe you don’t need to do anything because you’re comfortable holding those positions and knowing that they are defined-risk from the start.
• These are tough questions everybody should be asking, even when they aren’t about to go on vacation. Most people don’t ask these questions, even though it takes 15 minutes to go through your portfolio and make these rational decisions about what to do.

Use advanced orders

• If you’re midway through the expiration cycle, you can do things like place GTC (‘Good ‘Til Canceled’) orders at your profit targets that take profits while you’re gone. This doesn’t remove the position if you get closer to expiration but allows you to close the trade if the security moves through a profit window as you get closer to expiration.
• It’s not the best idea to use stop-loss orders because they have been shown to create more losing trades. Instead, create a defined-risk trade where you know exactly how much you could lose if you go all the way to expiration.

Make notes

• Group trades together, make notes, journal, and game plan in advance of going on vacation. Start to think about what you would do if certain scenarios played out. If you don’t do this, you can be caught off guard when something happens.
• This means that if you get a small window of time to check your positions while you’re away, you can quickly move in the way you had planned based on whatever scenario is in front of you.
• You can use grouping features inside of most broker platforms to organize your trades so that you know which ones you have to really pay attention to.

Go mobile

• You need to learn how to make trades on your mobile phone. Trading apps allow for mobile trading, and this is a direction things are moving in.
• To learn this skill, you can practice by doing mobile trading on your phone while in front of the computer.
• Your phone is a great tool because if you’re in a remote location or situation where opening your laptop to make trades is inappropriate, it provides a great way to double-check your positions, make adjustments, close positions if you need to, exit, roll, etc.

Option Trader Q&A w/ Daniel

Trader Q&A is our favorite segment of the show because we get to hear from one of our community members and help answer their questions live on the air. Today’s question comes from Daniel:

Hi, Kirk. This is Daniel from Melbourne. I’ve been trading futures and stocks for about 10 years and I started trading options this year after discovering your awesome website and podcast. My question is about how to trade in the current low-volatility environment. Should I be placing trades regularly, even though there’s really no stocks that are over the 70 IV rank? I think at the moment – not even any over 50. I’m just wondering how I should be going about selecting trades, whether I should be sitting on my hands, or whether I should still be mechanically entering trades every day or week? Thanks, Kirk and keep up the great work.

Remember, if you’d like to get your question answered here on the podcast or LIVE on Facebook & Periscope, head over to OptionAlpha.com/ASK and click the big red record button in the middle of the screen and leave me a private voicemail. There’s no software to download or install and it’s incredibly easy.