What is the difference between PML and TML?

The Trough Money Line signifies a moment when exposure turns positive, and conversely, market
makers seek to minimize their risk, effectively managing their positions within the market's
fluctuations. Check the example below:

Figure 1: A diagram of market exposure

Options contracts often exhibit an imbalance. In an ideal scenario, you'd have an equal number of
calls and puts sold in the chain, resulting in a balanced volume. However, this equilibrium is very rare
in practice; usually, there's a discrepancy with either more puts or more calls being traded.

Market makers (MM) aim to steer price action in the most favorable direction for their financial gain.
Their goal is to maximize their profits, given that approximately 80% of options contracts tend to lose
value at expiration, leaving only 20% with potential gains where buyers of options contracts can
make money.

These market makers are typically large financial institutions with substantial resources and
significant positions in the market. This puts them in a favorable position to easily influence market
direction according to their preferences and financial interests.
Figure 2: Explanation of the MM tool in the fractal system

Now, let's shift our focus to the MM tool as we explore these regions. Our maximum exposure, which
we've labeled as PML (Peak Money Line), corresponds to the point where negative exposure reaches
its peak. Beyond this point, we enter what we call the "wings," where we strive to balance our
exposure to zero.

In practical terms, this balancing act occurs between specific exposure levels, such as 9,205,887.00
and -1,792,482.00, where our aim is to bring the exposure back to zero. Similarly, we aim for an
equilibrium between -13,875,030.00 and 1,066,240.007, ensuring that our exposure remains at zero
within these ranges.

When it comes to trading the QQQ, we've observed that around the -7 million exposure level is
where it tends to gravitate towards. However, real explosions start when we surpass these 7 million
marks and move into positive exposure territory. At this juncture, QQQ experiences rapid price
surges, typically adding about +1 or +2 points to its price almost immediately. When that happens,
we can see a drastic contract premium increase.

To make an informed estimate of where we believe QQQ will close at 4:15 PM EST, we execute the
command: “!mm qqq". We can also calculate these values in the MM tool inside the fractal system.
Figure 3: MM graph for QQQ

When we utilize the "!mm qqq" command, we locate our -7 million exposure line positioned above
the PML. We can see that because the green line is above the red line.

At this moment, the green line indicates a value of approximately 372.5x, which is a rounded
representation, as it doesn't display the precise -7 million figure. To pinpoint the exact position of -7
million within this range, we need to figure out where that number could be at.

Currently, QQQ is showing a desire to close around 372.5x, but its current price stands at 372.11. This
information could provide us with valuable insights into where the market may be heading as the
closing bell approaches.

Figure 4: Russell's QQQ chart with annotations

To clarify what the lines in the MM interface mean:

• The red line represents PML (Peak Money Line).

• IF the system detects TML (Trough Money Line), the red line is automatically renamed to
TML.

The green line signifies the current price at the time the graph or chart was calculated. It provides
the current market price. Additionally, around the green line, you can observe the puts and calls
positions above and below it, helping you gauge the options market sentiment.

When the green line is above the red line, it means the market is long. When the green line falls
below the red line, the market is short.

The put and call volume displayed above and below the green line is the key to understanding
market direction. The net put and call volume is a useful indicator for traders to stay ahead of market
changes because it offers significant signals for predicting the market's next move.

Figure 5: Revised QQQ chart with additional annotations