Should I adjust position size before BoJ Interest Rate Decision?
VixShield Answer
Before the BoJ rate decision, reduce your SPX iron condor position size by 40-60%. Heightened VIX from potential yen volatility and USDJPY swings makes the ALVH setup less reliable and widens expected move dramatically.
Current VIX above 18 already signals caution. The BoJ event often triggers 1.5-2x normal daily SPX range, eroding your short strikes quickly even with wide wings. Keep position size small enough that a 2-sigma gap still leaves you under 1% portfolio risk.
Focus on wing-width management instead: use at least 80-100 point wings on both sides to absorb the volatility spike. Enter only after the announcement when VIX stabilizes and ALVH shows clear mean-reversion signals. Pre-event, the probability skew favors quick adverse moves that your condor cannot hedge effectively.
Tight risk parameters win here. Smaller size, wider wings, and waiting for post-event confirmation keeps your edge intact. Trade the reaction, not the anticipation.
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