VIX Risk Scaling

Systematic framework for adjusting IC tier selection based on VIX level

📚 From the SPX Mastery Series by Russell Clark

Definition

The systematic framework for adjusting Iron Condor tier selection based on current VIX levels. VIX < 15: All IC tiers active (Aggressive/Balanced/Conservative), ideal time to open or refresh ALVH hedges. VIX 15–20: Conservative and Balanced tiers only, Aggressive blocked. VIX > 20: HOLD — no IC trades placed, ALVH hedge stays fully active. VIX Risk Scaling governs IC tier selection only — all three ALVH layers remain active regardless of VIX level once opened.

Formula / Rules

VIX < 15: All tiers active (High/Medium/Low IC) + open/refresh ALVH VIX 15–20: Conservative + Balanced only (High IC blocked) VIX > 20: HOLD all trades | ALVH fully active, earning its keep VIX > 25: No trades | ALVH cuts losses 40%

How It Works

VIX Risk Scaling is the gating mechanism that prevents Iron Condor trades from being placed into high-risk volatility regimes. When VIX crosses above 20, no new IC positions are opened — this is precisely when ALVH hedges are generating maximum returns to offset any existing position losses. The critical distinction is that VIX Risk Scaling does NOT affect ALVH — all three hedge layers remain active at all times once opened. This ensures the hedge is working hardest (generating gains) exactly when IC trading is paused. The gate reopens when VIX returns below 20, at which point new IC positions can be placed with the ALVH hedge still in place.

Source

Iron Condor Command; VIX Hedge Vanguard

Related Terms

Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss. Always paper trade first.