Risk Management
The methodology states that the ALVH cuts drawdowns by 35-40 percent using a 4/4/2 VIX call ratio. How do you size those hedges relative to iron condor positions, and when do you roll them?
ALVH VIX hedge position sizing hedge rolling drawdown protection
VixShield Answer
At VixShield we rely on the ALVH Adaptive Layered VIX Hedge as the cornerstone of our risk management within the Unlimited Cash System. The ALVH is a proprietary three-layer structure using VIX calls sized in a 4/4/2 contract ratio per base unit. For every 10 Iron Condor Command contracts placed in the Conservative tier we allocate one full ALVH unit consisting of 4 short-term VIX calls at 30 DTE 0.50 delta 4 medium-term VIX calls at 110 DTE 0.50 delta and 2 long-term VIX calls at 220 DTE 0.50 delta. This ratio was engineered by Russell Clark to deliver 35-40 percent drawdown reduction during volatility spikes while costing only 1-2 percent of account value annually. Position sizing follows our strict 10 percent of account balance maximum per trade rule so a 100000 dollar account trading 10 condors would carry exactly one ALVH unit scaled accordingly. The hedge remains fully active regardless of VIX level once opened. We open or refresh the ALVH when VIX is below 15 in calm contango regimes as shown by the Contango Indicator. Rolling follows a scheduled cadence rather than discretionary triggers. The short 30 DTE layer is rolled every 25-28 days the medium 110 DTE layer every 90-100 days and the long 220 DTE layer every 180-200 days. During elevated volatility when VIX exceeds 16 or EDR surpasses 0.94 percent the Temporal Vega Martingale activates allowing us to sell gains from the short layer and cascade them into fresh longer-dated positions without adding capital. This creates self-funding recovery cycles that complement the Theta Time Shift used on the Iron Condor side. RSAi and EDR guide the precise strike selection for each layer ensuring the hedge aligns with current skew and expected daily range. In the current environment with VIX at 17.95 we maintain full ALVH coverage on all open positions while continuing daily 1DTE Iron Condor Command entries at the 3:10 PM CST signal when all gates are met. All trading involves substantial risk of loss and is not suitable for all investors. To master the exact mechanics of ALVH layering temporal rolls and integration with our Set and Forget Iron Condor Command visit the SPX Mastery Club for live Zoom sessions the EDR indicator and Russell Clark's complete book series.
⚠️ 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 ALVH sizing by first determining their core Iron Condor exposure and then scaling the 4/4/2 VIX call layers proportionally. A common perspective emphasizes starting with one full hedge unit per 10 condors and adjusting only when account size changes rather than on every trade. Many highlight the importance of the scheduled roll cadence to avoid emotional timing while others note that the Temporal Vega Martingale provides an elegant way to harvest volatility spikes without increasing overall risk. A frequent discussion point is how the hedge cost remains modest at 1-2 percent annually yet delivers meaningful 35-40 percent drawdown protection during turbulent periods. Some traders initially experiment with different ratios before settling on the fixed 4 short 4 medium and 2 long structure as the most balanced for daily 1DTE strategies. Overall the consensus stresses consistent application of the ALVH alongside EDR-guided strike selection and RSAi signals to maintain portfolio resilience without deviating from the Set and Forget methodology.
📖 Glossary Terms Referenced
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