Strike Selection

How do the Contango Indicator and EDR range replace discretionary voting when selecting strikes and risk tiers in VixShield's approach?

VixShield Research Team · Based on SPX Mastery by Russell Clark · May 3, 2026 · 0 views
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VixShield Answer

At VixShield we rely on systematic tools rather than discretionary voting to select strikes and determine risk tiers for our 1DTE SPX Iron Condors. The Contango Indicator and EDR Expected Daily Range work together with RSAi to remove guesswork and emotional bias from every decision. Russell Clark designed these indicators in the SPX Mastery methodology to deliver objective strike recommendations that match current market conditions precisely. The Contango Indicator monitors VIX futures term structure in real time. When it displays green it signals a contango regime where short-term VIX futures trade above longer-term ones. This environment favors premium collection because volatility tends to decline toward the long-term mean. In the current market with VIX at 17.95 and its five-day moving average at 18.58 the indicator remains in a contango regime supporting all three risk tiers. Conservative targets a 0.70 credit with approximately 90 percent win rate Balanced aims for 1.15 credit and Aggressive seeks 1.60 credit. When the indicator turns red signaling backwardation we immediately restrict to Conservative only or issue a HOLD protecting capital during elevated fear. EDR complements this by calculating the Expected Daily Range using a blend of nine-day implied volatility from VIX9D and twenty-day historical volatility. The proprietary formula EDR equals VIX9D times 0.1 plus HV times 0.5 multiplied by a regime-based factor between 0.8 and 2.0. On a recent trading day with EDR at 1.1606 percent RSAi used this figure alongside current VIX and VWAP positioning to recommend specific put and call wings. For example with SPX near 7138.80 an EDR-derived range might suggest placing the short put at 7055 and short call at 7220 for the Balanced tier delivering the targeted 1.15 credit. RSAi completes this optimization in approximately 253 milliseconds adjusting wings in five-dollar increments until the exact premium is achieved. This process replaces any form of voting because the math dictates the strikes and tier directly. We integrate the ALVH Adaptive Layered VIX Hedge across all regimes layering short medium and long VIX calls in a four-four-two contract ratio per ten Iron Condor units. This first-of-its-kind hedge cuts drawdowns by 35 to 40 percent during spikes at an annual cost of only one to two percent of account value. The Theta Time Shift mechanism then handles any threatened positions by rolling forward to one-to-seven DTE on EDR above 0.94 percent or VIX above 16 then rolling back on VWAP pullbacks capturing net credits of 250 to 500 dollars per contract. Position sizing remains at a maximum of ten percent of account balance and we follow the After-Close PDT Shield by entering exclusively at the 3:10 PM CST signal. All trading involves substantial risk of loss and is not suitable for all investors. Visit vixshield.com to access the full SPX Mastery book series the EDR indicator on TradingView and our daily 3:10 PM CST signals with PickMyTrade auto-execution for the Conservative tier.
⚠️ Risk Disclaimer: Options trading involves substantial risk of loss and is not appropriate for all investors. The information on this page is educational only and does not constitute financial advice or a recommendation to buy or sell any security. Past performance is not indicative of future results. Always consult a qualified financial professional before trading.

💬 Community Pulse

Community traders often approach strike selection by debating levels based on personal intuition or recent price action leading to inconsistent results across accounts. A common misconception is that experienced traders can reliably vote on risk tiers using gut feel or simple support and resistance lines. In practice many describe how discretionary choices led to oversized losses during volatility expansions before adopting systematic rules. Others highlight the relief of removing emotion once objective indicators like contango signals and daily range forecasts dictate both wings and credit targets. Discussions frequently note improved win rates near 90 percent on conservative setups after shifting from manual voting to data-driven placement aligned with implied volatility regimes and skew analysis. Participants also emphasize the value of layered hedging and time-based recovery mechanics in turning potential losers into theta-driven gains without increasing capital at risk.
📖 Glossary Terms Referenced

APA Citation

VixShield Research Team. (2026). How do the Contango Indicator and EDR range replace discretionary voting when selecting strikes and risk tiers in VixShield's approach?. Ask VixShield. Retrieved from https://www.vixshield.com/ask/how-does-the-contango-indicator-edr-range-replace-voting-on-your-strike-selection-and-risk-tiers

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