Method · how every number is made

The method behind the letter

Every number in the letter has a formula and a named source behind it. This page lists them, so you can check our work.

1 · Levels

From Nasdaq-100 and gold options open interest and volume, we compute dealer gamma exposure by strike. Four levels come out of it:

Call wall / put wall: the strikes with the most call and put gamma, where dealer hedging tends to slow price.
Flip: where net gamma changes sign. Above it, moves tend to calm; below it, they tend to run.
Magnet: the strike with the largest gamma, which price often drifts toward.

CFD level = options level + offset

offset = your broker's quote − the options' underlying (IG NAS100 vs NDX, OANDA XAUUSD vs gold futures), measured live each morning.

Same-day Nasdaq options expire at 16:00 ET, so on days when they are gone we use the weekly levels and say so.

2 · The 1-day move

move = price \cdot \frac{IV}{\sqrt{252}}

IV = the options' implied volatility, nearest expiry. About two days in three stay inside this range.

3 · Your size today

Size follows two things: how far you are from the account's floor, and how wild today is compared with normal.

risk = \frac{k \cdot (equity - floor)}{v}

v = today's implied volatility ÷ its median over the last 20 sessions, kept between 0.5 and 3. The stop widens with v, so lots shrink twice on a wild day. The example account is $50K with a $45K floor and k = 3.33%.

Scale it to your account: a $100K account doubles every number, a $25K account halves it. The full simulation is in the challenge calculator.

4 · News and events

Red folders: high-impact USD events from the Forex Factory calendar, in New York time.
Headlines: one or two from public financial news feeds that could move the day. The colour is a judgement of the first effect on Nasdaq and gold: green if both rise, red if both fall, yellow if it's unclear.

What this ignores