Glossary
Every term used across the system, explained in plain language. Search the page (⌘F) for any abbreviation.
Options basics
CSP (Cash-Secured Put)
Sell a put option, set aside cash to cover potential assignment.
You sell someone the right to make you buy a stock at strike X by expiry date. You collect premium upfront. If price stays above X, the put expires worthless and you keep the premium. If price drops below X, you're assigned — you buy 100 shares per contract at the effective cost of (X − premium). It's a way to either generate income OR enter a position at a discount.
CC (Covered Call)
Sell a call option against shares you already own.
You sell someone the right to buy your stock at strike X by expiry. You collect premium upfront. If price stays below X, the call expires worthless and you keep both the premium AND your shares. If price goes above X, your shares get called away at X (you've capped the upside but kept all gains up to X plus the premium).
Long Call / Long Put
Buy the right to buy (call) or sell (put) at a strike. Capped downside (premium paid), uncapped upside.
Pay premium to control 100 shares of leverage. Long calls profit if stock goes up; long puts profit if stock goes down. Max loss = premium paid. Max gain = unlimited for calls, (strike − 0) for puts. Decays over time (theta). We use long calls on GEX_FLIP setups when dealers are about to flip from headwind to tailwind.
STO / BTC
Sell-to-Open / Buy-to-Close. The order verbs for short premium plays.
STO opens a position by selling (e.g. selling a CSP or CC). BTC closes it by buying back. Standard practice for short-premium plays: STO at full premium, BTC at 50% of entry premium to lock half the profit before expiration.
DTE (Days To Expiration)
How many calendar days until the option expires.
Drives risk profile. Sub-30 DTE = short-dated, theta decays fast both ways. 30-60 DTE = the sweet spot for most our plays. >90 DTE = LEAPS, long-term hold. Our scout typically suggests 22-35 DTE for CSPs and 28-45 DTE for long calls.
Theta
Time decay. How much premium an option loses per day, all else equal.
Options lose value as expiration approaches. Theta is highest in the last 30 days of an option's life, especially the last 7. Why we force-close shadow trades at DTE ≤ 7 — beyond that, theta crushes any remaining time value.
IV / IV Rank
Implied Volatility = market's bet on future move size. IV Rank = where current IV sits in its 52-week range.
IV is the market's pricing of volatility. High IV = options are expensive (sellers' market — collect more premium). Low IV = options are cheap (buyers' market — pay less for directional bets). IV Rank normalizes: 0 = lowest IV of last 52w, 100 = highest. We sell premium when IV Rank > 70, buy directional options when IV Rank < 30.
Strike / ATM / ITM / OTM
The price at which the option's contract activates. At-the-Money / In-the-Money / Out-of-the-Money.
ATM = strike near current spot. ITM = strike inside the option's profit zone (call: strike < spot; put: strike > spot). OTM = strike outside profit zone. Per Eric 2026-05-28 we bias DEEP ITM for long calls (~8% below spot = delta 0.7-0.8) — more immediate-profit responsiveness, less time-decay sensitivity. CSPs go to the dealer put wall.
Delta
How much the option moves per $1 move in the underlying. ATM ≈ 0.50; deep ITM ≈ 1.00; OTM ≈ 0.10-0.30.
Our long-call default targets delta 0.7-0.8 (8% ITM). At 0.75 delta, every $1 move in the stock = ~$0.75 move in the option premium — high responsiveness without going fully intrinsic. Why this matters: deep-ITM trades let you participate in the upside without paying as much time premium that decays against you.
Dealer positioning
GEX (Gamma Exposure)
Aggregate dealer gamma — measures how dealers must hedge their option books.
Market makers sell options to retail/institutions, then hedge with the underlying stock. As price moves, they must rebalance — and the direction of that rebalancing depends on GEX. Positive GEX = dealers buy dips, sell rallies (volatility suppression). Negative GEX = dealers sell dips, buy rallies (volatility amplification, breakout fuel).
GEX Flip Level (Zero Gamma)
The price level where dealer gamma flips sign — and their hedging behavior reverses.
Below the flip: dealers are short gamma → they amplify moves (sell on dips, buy on rallies). Above the flip: dealers are long gamma → they dampen moves. When spot crosses the flip going up, dealers go from headwind to tailwind. That's the GEX_FLIP setup — buy a slightly-OTM call right before the cross, ride the mechanical breakout.
Call Wall / Put Wall
Strikes with heavy dealer call/put positioning — act as resistance / support.
Call wall = strike where dealers have huge short-call exposure. Dealers must sell stock to stay hedged as price approaches → caps upside. Put wall = strike with huge short-put exposure. Dealers must buy stock as price approaches from above → cushions downside. CSPs at the put wall benefit from this defended-level dynamic.
Dark Pool
Off-exchange institutional trades. Big money positioning before retail sees it.
Dark pools are private exchanges where institutions trade large blocks without moving the public price. UW reports the aggregate dollar volume + largest prints. Heavy 5-day dark pool concentration (≥$50M) often precedes a directional move once the position is built. We use it as a confirmation signal alongside GEX flip or insider activity.
Signal sources
GEX_FLIP
Stock just below dealer gamma-flip level — about to switch from dealer headwind to tailwind.
Our strongest signal. 66% win rate over 56 closed shadow trades, +$51K paper P&L. Currently in SMALL lifecycle stage (promoted from PAPER). Triggers when: spot < flip_level × 1.02, regime is negative gamma, dealer flip distance ≤3%. Highest weight in the conviction-aggregation formula.
DARK_POOL_LOADING (new 2026-05-27)
Heavy off-exchange institutional accumulation + bullish UW flow confirming direction.
Triggers when 5d dark pool aggregate ≥ $50M AND flow net_bias ≥ -25%. Institutional accumulation before retail notices = front-running the smart money. PAPER stage until 20+ shadow trades. Today fired on 11 of 20 tickers — threshold may tighten as sample size grows.
INSIDER_CLUSTER (new 2026-05-27)
≥3 insiders buying within 90 days, buy_value ≥ 1.5× sell_value.
Academic literature (Cohen, Malloy & Pomorski 2012) shows cluster insider buying generates ~6% alpha over 6 months. Strict trigger — most names won't qualify even when individual insiders buy. PAPER stage. Today fired on 0 names (UW endpoint may be returning empty insider data — investigating).
CALL_WALL_BREAK (new 2026-05-27)
Spot crossed above call wall (≥1% break) with bullish flow confirming — ride the break.
When spot breaks above the call wall, dealers chase to re-hedge, fueling continuation — so we ride the break rather than fade it. Triggers when spot ≥ 1.01 × call_wall AND net flow bias ≥ -15%. PAPER stage.
UW_FLOW
Unusual institutional options volume — sweeps, blocks, premium-weighted bets.
Tracks aggregate 5-day premium dollars bullish vs bearish. >$100K premium with directional bias = real positioning. 50% win rate over 4 trades — very small sample.
Conviction Score
Aggregated 0-100 score combining all active signals on a ticker.
Borrowed from QuantConnect Lean's insight aggregation. Each signal source has a weight (GEX_FLIP=1.0, UW_FLOW=0.6, IV_RANK=0.5, etc.). When multiple signals fire on the same ticker, we apply a 1.3× multi-signal boost. >70 = strong conviction; 55-70 = moderate; <30 = bearish weight.
System concepts
Shadow Book
Every play the engine emits gets paper-tracked even if Eric doesn't take it.
Each suggestion enters with target_premium (+50%) and stop_premium (-50%). We track current price daily until it hits target, stop, or expires. The cumulative P&L is our forward-only backtest. 150+ closed trades to date. Aggregate signals are the truth-teller of which signals actually win.
Council (3-Specialist Vote)
Macro + Fundamentals + Technicals specialists must vote PASS for a play to surface.
Borrowed from Lean's RiskManagementModel. Before scout shows a play, three deterministic checks run: MACRO (regime + VIX), FUNDAMENTALS (earnings window, IV rank, insider activity), TECHNICALS (GEX regime, flow bias, wall alignment). Quorum = 2/3 PASS → play surfaces. STRONG = 3/3 PASS → highlighted as top conviction. Any FAIL = play dropped.
Risk Veto (6 Rules)
Hard-block rules that drop plays before they ever reach Telegram.
R1: single-ticker ≤15% port (50% for SPY/VOO/QQQ). R2: per-leg ≤2% port without TAKE-grade. R3: aggregate sub-30-DTE options ≤$10K. R4: no premature layering (no CSP if existing CC/CSP on same ticker). R5: no legs <7 DTE. R6: no directional longs in DEFENSIVE/CRISIS regime.
Lifecycle Stages
Every signal moves through IDEA → PAPER → SMALL → FULL → RETIRED based on shadow outcomes.
Borrowed from Jin-Ce (金策智算). PAPER → SMALL: ≥20 trades, ≥60% win rate, net positive. SMALL → FULL: ≥30 trades, ≥55% win rate, expectancy ≥$200/trade. Auto-retired: <45% win rate over rolling 20-trade window OR 3 consecutive ≥50% losses. GEX_FLIP just auto-promoted to SMALL (66% win rate, 56 trades).
Alpha Decay (TTL)
Every signal has an expiration timestamp; stale signals never reach scout.
Lean concept. GEX_FLIP TTL = 24h (intraday signal). UW_FLOW TTL = 48h. INSIDER_CLUSTER TTL = 14d. Once expired, the signal is purged from the active insights set. Means /scout never shows stale plays from days ago.
Strategy Evolution Board
Auto-tunes signal parameters based on shadow-book outcomes (Jin-Ce concept).
Runs weekly. For each signal with ≥20 closes, computes median days-to-win vs days-to-loss + entry-DTE distribution. Proposes parameter changes (e.g. add time-stop, narrow DTE band) when data diverges from current config by ≥10%. Today's analysis flagged: GEX_FLIP losers fail in median 8d while winners pay off in 3d — 5-day time stop would catch losers earlier.
Strategy frameworks
Thesis Hold
A position you hold for the multi-year thesis, not the short-term price action.
Your core AI infra positions (AAOI, ALAB, BE, MSFT, SPY, etc.) are thesis holds. Engine never recommends selling them on percentage moves — only on thesis-violation events (downgrade, missed earnings, breaks key level). Trim 25% at +100% from entry on COMPOUND-tier names; full thesis-violation-only on CORE-tier.
Position Sizing Tiers
Core 50% / Compound 25% / Lotto 15% / Cash 10% of portfolio.
CORE (50%, $137K) = structural-moat compounders (LITE, AAOI, ALAB). 3+ year holds, thesis-violation exits only. COMPOUND (25%, $69K) = high-conviction 1-2yr bets (NBIS, MU, AXTI). Trim 25% at +100%, hold rest. LOTTO (15%, $41K) = high-beta speculative (OUST, SIVE, HUMN). Trim 50% at +100% to take house money. CASH (10%, $28K) = dry powder for pullback adds.