Should I adjust position size before RBA Interest Rate Decision?
VixShield Answer
Before an RBA rate decision, reduce your iron condor position size by 40-60%. High-impact events like RBA announcements regularly spike VIX-equivalent volatility in AUD and global markets, which directly widens SPX implied volatility and expands your short strikes’ risk.
ALVH methodology flags this clearly: when expected move exceeds 0.8% on the SPX or VIX is already above 18, position size must drop. The RBA event typically adds 0.4-0.7% of implied move overnight, pushing your iron condor delta and gamma exposure outside safe bounds.
Keep wing width at 40-50 points on the SPX to maintain defined risk, but cut contracts so that a 2-standard-deviation move only risks 1-1.5% of total capital instead of your normal 2.5%. Enter or add to the position only after the announcement and initial volatility crush, when VIX drops below 17 and the event premium has been harvested.
This disciplined pre-event sizing protects the portfolio and leaves dry powder to deploy larger condors once the dust settles.
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