Risk Disclosure Statement

Risk Disclosure Statement

Schedule A to the ScaleDCA User Agreement

Effective date: 2026-09-09 · Version 2026-09-09

This Statement does not disclose every risk. No document can. It describes the risks Provider considers material and specific to this Service. Capitalized terms have the meanings given in the User Agreement.

Part A — General trading risk

A.1 You can lose everything. Trading securities involves substantial risk of loss. You may lose some, all, or in a margin account more than the money you commit. Only trade capital you can afford to lose entirely.

A.2 No guarantee of profit. No strategy, however constructed or backtested, can guarantee a profit or protect against a loss. Markets can move against any position, for any length of time, without reverting.

A.3 Past performance. Past performance — actual, backtested, simulated or illustrated — is not indicative of and does not guarantee future results.

A.4 Volatility and gaps. Prices can move sharply and without warning. A security can open far below its previous close, so that no price between the two was ever available to trade. Circuit breakers, trading halts, limit up/down bands and exchange outages can prevent you from trading at all, precisely when you most want to.

A.5 Liquidity. Thin or illiquid securities can be difficult or impossible to sell at a reasonable price, or in size, or at all.

A.6 Execution risk. Orders are subject to slippage, partial fills, non-fills, rejections, delays, and prices materially different from those displayed when the Order was generated. Market and notional orders provide no price protection.

A.7 Concentration. A Strategy operates on a single security (or, for the pair type, a single family of related instruments). It does not diversify, and it does not consider your other holdings, your overall exposure, or your total risk.

A.8 Company- and fund-specific risk. A security can fall to zero and stay there. Issuers become insolvent, funds close and liquidate, and instruments are delisted. No Strategy detects, anticipates or responds to any of that.

A.9 Pattern day trading. United States rules restrict accounts under US$25,000 that execute four or more day trades in five business days.

A.10 Margin. If your Brokerage Account has margin, nothing in the equity Strategy Types clamps position sizing to your cash or equity. A Strategy can consume margin buying power, exposing you to margin interest, margin calls and forced liquidation by your Broker at times and prices you do not choose. Only the Mean Reversion Pair type sizes positions against account equity rather than margin-inflated buying power.

Part B — Risk of automated, unattended execution

B.1 No human review. The Engine places Orders on a recurring schedule, roughly every five minutes across pre-market, regular and post-market hours on trading days. No person reviews any Order before it is sent. There is no confirmation step, no daily approval, and no circuit breaker based on order size.

B.2 Software defects. The Service contains defects, including defects not yet discovered. Provider maintains an operational issues log and a backlog of known unresolved items. A defect can cause an Order that should not have been placed, prevent an Order that should have been placed, or size an Order wrongly. Part G discloses the known items.

B.3 Missed evaluations. If the scheduler, the Engine, the database or the underlying cloud platform fails, evaluations do not run. An evaluation that does not run is a trade that does not happen. Nothing is queued, replayed or backfilled. A position that a Strategy would have exited stays open; a purchase that would have been made is not made. Provider does not currently operate an alert for the absence of ticks during market hours.

B.4 Bad or stale data. Strategy decisions are computed from stored price data. If that data is wrong, missing, stale, or not adjusted for a split or other corporate action, the Strategy will act on it anyway.

B.5 Order lifecycle failures. Orders may be rejected by your Broker, cancelled, expire, fill partially, or fill at an unexpected price. Fills may be reported asynchronously and be recorded by the Service later than they occurred, which can cause the Service's view of your position to lag reality within a session.

B.6 Reconciliation and the Broker as source of truth. The Service reconciles its records against your Broker and treats your Broker as authoritative. On an unexplained mismatch, the Service may skip a Strategy for that cycle — meaning it will not trade — or block it entirely until reconciled. Manual trades you place yourself at your Broker, or transfers into or out of the account, can create such mismatches.

B.7 A halt does not close positions. Pausing a Strategy, dumping it, engaging a kill switch, deleting the Strategy or closing your account stops new Orders only. Every one of them leaves your existing position open and fully exposed. Only you can close a position. None of them closes a Written Call either. While a call you wrote is open, pausing, dumping, exiting and deleting the Strategy are refused outright, an exit sells only the shares that are not set aside, and the kill switch leaves the contract open at your Broker. Part J describes this in full.

B.8 The "real money" label is decorative. The real-money/paper designation shown in the interface is a label. It does not gate live trading. Whether Orders reach a real market is determined solely by the type of Brokerage Account and Credentials you linked. A position mislabeled "paper" will still trade real money if the linked account is live.

B.9 Immediate activation. A newly created Strategy is active by default and may place an Order on the next evaluation, potentially within minutes, before you have finished reviewing it.

B.10 Configuration errors trade real money. A misconfigured parameter does not produce an error; it produces different trades. Validation catches only a small set of contradictory combinations. In one recorded case, a profit-taking threshold left blank in combination with an unused amount field caused several live strategies to accumulate positions with profit-taking silently inactive for an entire session.

B.11 Notifications are not a control. Telegram and email notifications are best-effort, may be delayed, may fail to send, and must never be relied on to inform you that something has gone wrong. They are not an alerting system.

Part C — Disclosure for each Strategy Type

Six Strategy Types exist. Five trade a single equity or exchange-traded fund; one trades a pair of leveraged instruments. Writing a call against a holding is not a Strategy Type — it is an Order you request yourself, and Part J is its disclosure. None of them is a hedged, market-neutral or capital- preserving strategy. All of them are long-biased.

C.1 Value Averaging

What it does. Value Averaging accumulates a single security through three independent behaviors: an optional scheduled purchase on chosen days of the month; a stepped accumulation as the price falls, called the BID staircase; and profit-taking that sells only realized gain.

The BID staircase is the risk. The staircase advances one BID tier each time the price falls a further configured percentage below the reference. Tier k purchases k × bid_amount. The dollars committed therefore grow quadratically with the number of tiers, not linearly: crossing k tiers commits bid_amount × k(k+1)/2.

Worked example. With a step of 5 percent, no tiers yet spent, and a price 50 percent below the reference, the staircase fires ten tiers in a single Order — US$5,500 at a US$100 base amount. If a drawdown-ladder multiplier of three is also in effect, the same single Order becomes US$16,500.

There is no floor. A guard that previously refused further purchases beyond a 50 percent decline was deliberately removed on 2026-07-20 and has not been replaced. The maximum tier count is now the only limit on repeat buying — and it limits the number of tiers, not the number of dollars. There is no cap on the size of a single Order.

Other behaviors you should understand.

• Profit-taking sells only profit, never principal, and only when profit exceeds your configured threshold. It resets the staircase so accumulation can begin again.
• A double-down multiplier, if configured, multiplies the entire staircase total whenever the current price is below your broker-reported average entry price.
• Dump mode, if set, stops all buying and sells the whole position — but only once the position is at or above break-even. It will never sell at a loss, and a position that never recovers is never sold.
• One action per evaluation, in a fixed order of priority. A tick that takes one action does not take another.
• It only buys more of what it already holds. If the position is empty, the staircase does nothing.

The failure mode. A security that declines steadily and does not recover produces progressively larger purchases, a progressively larger position, and a progressively larger loss, with no mechanism that stops it other than exhausting the configured tier count. There is no exit.

C.2 VA+

VA+ is Value Averaging with the scalar double-down multiplier replaced by a drawdown ladder. Everything in C.1 applies unchanged, including the absence of any floor, stop-loss or exit. VA+ only changes how large the purchases are — upward.

The ladder. You define up to ten rungs, each a pair of a percentage below a baseline moving average and a multiplying factor. A rung is breached when the price is strictly below the baseline reduced by that percentage. The order amount is the staircase total multiplied by the factor of the deepest breached rung.

The baseline counts trading days, not calendar days. A baseline of 200 spans roughly ten calendar months, not about seven. Configuring it as though it were calendar days makes the ladder far less sensitive than you intended.

Fail-safe. If the baseline cannot be computed — typically because the Service holds fewer stored bars than the baseline requires — the entire ladder is disabled and the multiplier is one. Your Strategy will then buy in un-multiplied amounts without any error being shown to you.

The ladder adds no cap of its own. It multiplies an already-unbounded staircase. Provider's own guidance, recorded in its backlog, is to configure ladder strategies only with conservative tier counts and shallow factors, because configuration is the only thing holding the exposure down.

C.3 Orbit

Orbit is Value Averaging plus a full-position exit and re-entry cycle. Everything in C.1 applies unchanged.

The exit. When the position's unrealized gain plus the profit booked during the current cycle reaches your configured percentage of the invested base, Orbit sells the entire position, resets its state and records the exit.

The re-entry. On a later day than the exit, Orbit buys the configured initial amount and starts a new position — regardless of price, market condition, or whether the security has continued to fall.

C.4 Orbit+

Orbit+ combines Orbit's exit-and-re-entry cycle with VA+'s drawdown-ladder sizing. Everything in C.1, C.2 and C.3 applies. Both sets of risks are present at once: ladder- multiplied accumulation with no floor, and an exit that only fires on profit.

C.5 Long Pole

What it does. Long Pole buys on technically defined dips below a baseline moving average, and holds. It has no stop-loss, no maximum tier count, no automatic exit, and no deep-loss floor.

The ladder is the trigger, and it works differently from VA+. Long Pole shares the ladder's field name and editor with VA+ but not its arithmetic. Here a rung is a one-shot trigger with real armed state: the Service records which rungs have already been charged during the current descent, and fires only on newly breached rungs.

The purchase amount is the count of all currently breached rungs — including those already bought — multiplied by the factor of the deepest newly breached rung, multiplied by your base amount.

Converting a strategy changes what its ladder costs. The same ladder means different arithmetic in different families. A ladder of ×1.5, ×3.0 and ×5.0 with all three rungs breached applies a ×5.0 multiplier under VA+, but commits fifteen base amounts under Long Pole in a single tick, and 22.5 base amounts if it descends one rung at a time. Converting a Strategy between the two families keeps the ladder identical and changes what it spends.

Release is all-or-nothing. The record of charged rungs clears only when the price recovers to at or above every rung — in practice, at or above the baseline moving average itself. There is no per-rung re-arming and no partial release.

Two exposure bounds, and the larger one is the descent. Per descent, the ladder is a genuine bound. Across repeated decline-and-recovery cycles it is not — each new descent re-arms the whole ladder and can spend it again.

Selling is entirely on you. You may either queue a sell request in the Service, which the Engine executes on a later evaluation at whatever price then prevails, or sell directly at your Broker. Queued requests are one-shot and are consumed whatever the outcome. Sell requests are expressed in shares and are capped at the quantity held. A full manual liquidation pauses the Strategy, so that it does not immediately re-open a position.

Additional disclosed risks, recorded in Provider's own risk register.

• It will buy near an all-time high. The ladder measures distance below a moving average, not against what you paid. Long Pole will buy a security it is up 300 percent on. "Buy the dip" here can mean "buy near an all-time high."
• Nothing stops accumulation into a terminal decline. No floor, no tier cap, no automatic exit, and manual sells only.
• The other side of that: it can go inert. A security that stays below its baseline for years leaves the Strategy having spent its whole ladder and unable to buy again until a recovery that may never come.
• Reported profit on a seeded position may be approximate. Where the Service cannot reconstruct your purchase lots exactly, it falls back to a single synthetic lot at average cost, flagged as estimated. The first sale after that reports approximate profit.
• No independent verification corpus exists. Unlike the Value Averaging family, Long Pole has no legacy counterpart to check its arithmetic against. The usual safety net is absent.

C.6 Mean Reversion Pair

What it does. This Strategy Type computes a signal from an unleveraged index fund and trades leveraged and inverse exchange-traded products based on it — for example, a signal derived from a Nasdaq-100 fund trading a three-times leveraged fund and its inverse. It is the only Strategy Type with a stop-loss, and the only one with pattern-day-trading protection.

Two sleeves share one position. A core sleeve rotates between holding the leveraged long instrument and holding cash, based on whether recent closes are consistently above or below a long moving average. A tactical sleeve adds to the position in tiers as the signal stretches further from its mean, and unwinds as it reverts.

Leverage is the dominant risk. See Part D. Provider's own recorded evaluation of comparable leveraged rotation strategies shows a maximum drawdown of approximately negative 78.7 percent at two-times leverage and approximately negative 92.2 percent at three-times leverage. A related three-times strategy was retired by Provider specifically because of what it described as a "negative-90-percent-class worst case". The Nasdaq three-times configuration was deliberately retained at that leverage.

The signal is daily; the Orders are intraday. Indicators are computed from daily bars. The Strategy cannot react to an intraday crash until the next daily bar exists, except through its stop.

The stops, and their limits.

• A daily hard stop liquidates both sleeves when the sleeve's own loss for the day reaches a configured percentage of account equity, and pauses the Strategy. Legs your Broker refuses are retried every evaluation until they clear.
• A broker-resident stop order on the core position, intended to survive an outage of the Engine itself, is not yet in production. Until it is, an Engine or scheduler failure leaves a leveraged position entirely unprotected. It also covers whole shares only, so a fractional remainder is uncovered.
• The pause following a hard stop is time-bounded and resumes automatically after a configured number of days, on probation at half size. It does not require your intervention to resume trading.

Further disclosed risks.

• The two sleeves share one commingled position at your Broker. The split exists only in the Service's own state. A manual trade, a missed fill or a reconciliation gap skews it. Reconciliation of the split against the Broker is deferred and not implemented.
• The signal is statistically unstable. Its scale expands in a volatility event, making a large move look ordinary, and collapses in a quiet market, making a small move look extreme.
• A single corrupted price produces a large false signal and can deploy the entire tactical budget into noise. A value sanity check is deferred and not implemented.
• Configuration invariants are not validated at save time. Mis-ordered tier thresholds silently miscount tiers, and tier sizes summing above one oversubscribe the budget.
• In a bear regime the Strategy may hold only cash, participating in none of a subsequent recovery until the regime condition flips.
• Volatility-based sizing fails open. Where the data needed to compute it is missing, the Strategy trades at full size.

Part D — Leveraged and inverse exchange-traded products

The Mean Reversion Pair type trades these by design. Other Strategy Types can be pointed at them by you, and in live use routinely are — including funds tracking semiconductors, the Nasdaq-100, technology, emerging markets and individual stocks at two- and three-times leverage, both direct and inverse.

D.1 Daily reset. These funds seek their stated multiple of an index's return for a single day. They reset daily. They do not seek that multiple over any longer period.

D.2 Compounding decay. Over any period longer than one day, returns depend on the path the index takes, not only its start and end points. In a volatile but flat market, a leveraged fund can lose substantial value while the index it tracks is unchanged. The effect worsens with higher leverage and higher volatility.

D.3 Not for holding. These products are generally not suitable for buy-and-hold and are intended for short holding periods with daily monitoring. Every equity Strategy Type in this Service is an accumulation strategy that holds, and in most cases buys more as prices fall. Combining a decaying instrument with an averaging-down strategy that has no stop-loss is a specific and severe risk you are accepting.

D.4 Magnified loss. A three-times fund can lose approximately thirty percent of its value on a ten-percent single-day move in its index, and can approach total loss in a severe move. Drawdowns exceeding ninety percent have occurred in the evidence Provider has recorded.

D.5 Inverse products. Inverse funds lose value when the index rises. In a sustained advance they can decline relentlessly toward zero.

D.6 Single-stock leveraged funds. Leveraged products tracking a single company combine leverage decay with undiversified company-specific risk.

D.7 Fund-level risk. These funds carry higher expenses, use derivatives, bear counterparty risk, may fail to track their index, and may be closed and liquidated by their sponsor at any time.

Part E — Averaging down and progressive position sizing

E.1 Every equity Strategy Type buys more as the price falls. This is the core design of the Value Averaging family and of Long Pole. It is not incidental.

E.2 Position size increases with loss. Each further decline triggers a larger purchase than the last. Your position, your cost basis and your dollar loss all grow together. The approach improves outcomes when a decline reverses, and magnifies them severely when it does not.

E.3 No strategy reduces exposure into a decline. None of the equity types sells, hedges or trims on the way down. There is no mechanism by which a falling price causes the Service to reduce your risk.

E.4 The capital requirement is larger than it appears. The configured base amount is not what you need to fund. The relevant figure is the worst-case total the ladder or staircase can commit across a full decline, which is many multiples of it. Compute that figure and fund it before activating a Strategy.

E.5 Nothing bounds a single order today. The limit on single-evaluation exposure is a known open item in Provider's backlog and has not been implemented. Provider's own description of the present control is "operator discipline" — that is, your own care in choosing parameters.

Part F — Extended-hours trading

Where you enable it, Strategies trade in pre-market and post-market sessions.

• Liquidity is thinner and spreads are materially wider, so you pay more to trade.
• Prices can differ substantially from the regular-session open or close, and a favorable extended-hours price can vanish at the open.
• Orders are limit orders priced with a buffer you configure. Too tight and they do not fill; too wide and you pay away the difference.
• Whole-share sizing applies in extended hours, so amounts are rounded and small sells may be skipped entirely.
• News is concentrated outside regular hours, so extended-hours sessions carry more event risk, not less.

Part G — Known limitations and unresolved defects

Provider discloses the following known items. They are open at the effective date of this Statement and you accept the Service with them present.

G.1 No bound on single-evaluation exposure. Accepted by Provider as a requirement, not built. Nothing limits the dollar value of one Order produced by the staircase and its multiplier. Parts C.1, C.2 and E.5 describe the consequence.

G.2 Strategies are created active. Accepted by Provider as a requirement, not built. A new Strategy can place a real Order on the next evaluation, minutes after creation, before you have finished reviewing it.

G.3 The broker-resident stop for the leveraged core position is not in production. Until it ships, an Engine or scheduler outage leaves a leveraged position with no protection at the Broker.

G.4 Several Mean Reversion Pair safeguards are deferred and not implemented, including engine-liveness alerting, reconciliation of the sleeve split against the Broker, price sanity checking, signal-scale flooring, and write-time validation of configuration invariants.

G.5 Recently shipped behavior is not yet verified against real data. Provider tracks a status meaning "deployed but not yet observed working on real data", and several Strategy behaviors — including Long Pole's ladder arithmetic, backtesting and the post-stop auto-resume — are in that state.

G.6 The real-money designation does not gate trading. See B.8.

G.7 Pre-production security gates are incomplete. Provider's own security review records outstanding items, including penetration testing and load testing of the authentication system, and alerting on authentication anomalies and reconciliation drift.

G.8 No self-service data deletion or export exists. See the Privacy Policy.

G.9 Displayed profit figures may use a different basis than your Broker. An unresolved ambiguity in how booked profit is defined is recorded in Provider's own product documentation. Reconcile against your Broker, not against the Service.

Part H — Tax

H.1 Not tax advice. Nothing in the Service is tax advice. Consult your own tax adviser.

H.2 Your Broker's reporting governs. Your Broker's Form 1099 and cost-basis reporting are authoritative for your tax filings. Figures shown in the Service are informational, may use a different accounting basis, may be estimated, and may disagree with your Broker's.

H.3 Frequent trading has tax consequences. Automated strategies generate many transactions. These can produce substantial short-term capital gains taxed at ordinary income rates, and can trigger wash-sale rules that disallow losses. No Strategy Type in this Service performs any wash-sale, tax-lot or tax-efficiency analysis.

H.4 Repeated buying into a declining position — the central behavior of every equity Strategy Type — is a pattern likely to create wash sales if you also realize losses in the same security. You are responsible for identifying and reporting them.

H.5 Writing a call changes when and how the shares' results are taxed. The Premium on a call you write is not taxed when you receive it; its treatment is determined when the contract ends, and it is generally treated as short-term whatever the shares' holding period. Writing a call against shares may, under the tax rules for straddles and for covered positions, suspend or restart the holding period of those shares, so that a gain you expected to be long-term is not. An Assignment sells the shares and realizes their gain or loss on that day, whether or not you wanted a sale then. The Service computes none of this, and characterizes none of it. Consult your own tax adviser before writing a call.

H.6 The realized figure on an Assignment is bookkeeping, not your tax figure. When shares are called away, the Service records a sale and a realized amount computed on its own average basis so that the Strategy's own accounting stays consistent. That figure is informational, is not your Broker's cost-basis figure, and is not your taxable gain or loss. Your Broker's Form 1099 governs.

Part I — Suitability

I.1 No suitability assessment is performed. Provider does not collect, review or assess your financial situation, investment objectives, experience, time horizon or risk tolerance, and makes no determination that any Strategy Type or configuration is suitable for you. No such determination is possible, and none should be inferred from the availability of a Strategy Type, from its default parameter values, or from any example.

I.2 Your responsibility. You alone — or an adviser you engage and pay — must determine whether a Strategy is appropriate for you.

I.3 If in doubt, do not use it. If any part of this Statement is unclear, or if you are not certain you understand what a Strategy Type will do with your money in a sustained decline, do not activate it.

I.4 The Options Acknowledgement is not an assessment. Before you first write a call the Service records your separate Options Acknowledgement. It is an attestation by you that you have read Part J. It is not a test, is not scored, and approves nothing; whether you may trade options at all is your Broker's determination, and I.1 applies to it unchanged.

Part J — Writing a call against a holding

Where the Service offers it, you may sell (write) a call option against shares one of your Strategies already holds. This Part is the disclosure for that. It is written for the position you will actually be in when the Service offers it, which is described first, because it changes the meaning of everything after it.

J.1 What you are selling. A call option gives its buyer the right to buy a fixed number of your shares — 100 on a standard contract — at a fixed price (the strike) on or before a fixed date (the expiry). You are paid a Premium for granting that right. The Premium is credited by your Broker to your account when your Order fills; it is not held by Provider. The Service states the Premium in dollars per contract, from the current bid and before your Broker's fees, and never as a yield, an annualized figure or a percentage of anything. A high Premium is the market's price for the risk it is taking on from you, and it is highest exactly where that risk is highest.

J.2 It is your Order, placed later, and it may be refused or never fill. You choose the strike, the expiry and the number of contracts from the choices the Service offers. The Service offers only choices that satisfy the bounds set on your account (J.9), sorted by strike; it does not rank, prefer or select any of them. The Order is queued and submitted by the Engine on a later evaluation as a limit Order good for that trading day, after re-checking the price, your position, the option quote, your account bounds and your Options Acknowledgement. If any check fails, nothing is placed and you are told why. If the Order is placed and nobody buys it, it expires unfilled at the end of the session.

J.3 Your shares are set aside from the moment the Order reaches your Broker. Not from the fill — from the Order. Your Broker holds the shares against the Order as soon as it accepts it, before anyone has bought the contract, and even if nobody ever does. An Order that is never filled still holds those shares for the rest of that session and pays you nothing for it. While shares are set aside:

• the Strategy cannot sell them for any reason — not to take profit, not to exit, not to cut a loss, and not on your instruction;
• a sell order that the Strategy would otherwise have placed is cut down to the shares that are free, and skipped if none are;
• an order you placed yourself at your Broker on those shares — a stop, for example — may be rejected by your Broker, and the Service cannot see it, does not ask about it and will not warn you; and
• the Strategy continues to buy the security under its configuration. Its ladder, staircase and scheduled purchases are unaffected.

J.4 Once it fills, nothing in the Service can undo it. You can stop a Call Write only while it is unfilled; the shares then come back and you are paid nothing. Once someone has bought the contract, it is a Written Call, and no function of the Service closes it, buys it back, rolls it or moves it. It ends only when it expires or when it is assigned. That is a deliberate limit, not an omission: the Service is built to never hold a short call that its shares do not cover, and buying a contract back is a way to get that wrong.

J.5 Assignment is a sale you did not place. If the buyer exercises the contract, your Broker sells the Set-Aside Shares at the strike, on that day, at that price, whatever the market price then is. No Order is submitted by you or by the Service, there is nothing to approve and nothing to cancel, and you will see a sale in your history that you did not place. Assignment can happen before expiry, and it is most likely just before the security pays a dividend. Above the strike, the Set-Aside Shares stop gaining: if the security is far above the strike on the day, the difference is what you gave up for the Premium.

J.6 The strike may be below what you paid — and usually will be. The Service requires the strike to be a set distance above today's price. It does not require the strike to be above your average cost. On a holding that has fallen, therefore, the Service will offer strikes that are above today's price and below what you paid, and on such a strike an Assignment realizes a loss on the shares that the Premium does not offset. Before you confirm, the Service shows you this in the position's own dollar figures. Read them.

Worked example, from the position you will actually be in. You hold 300 shares of a three-times leveraged fund at an average cost of $40.19; the price is now $30.35. With a 7 percent minimum-strike-distance setting — which on a three-times fund the Service scales to a 21 percent distance (J.9), a floor of about $36.72 — the Service offers a $37 strike six weeks out, and the bid is $0.25, so the Premium is about $25 per contract before fees. If you write two contracts and the fund recovers past $37, your Broker sells 200 shares at $37 — $7,400 — against the $8,038 they cost you, a realized loss of about $638, against the $50 you were paid. If instead the fund keeps falling, the contracts expire worthless, you keep the $50, and the Strategy has meanwhile been buying more of a fund that is now lower still.

J.7 The Strategy keeps buying the same security after an Assignment. An Assignment does not stop, pause or reset the Strategy. Its configuration continues to buy that security on the same schedule and at the same ladder depth as before, including on the days immediately after an Assignment that realized a loss. The Service states those two facts before you confirm — that the sale realizes a loss, and that the Strategy will keep buying the same security — and does not characterize how that affects your taxes. Part H applies, and Part H.4 describes this exact pattern.

J.8 Exiting while a call is open sells only the free shares. If you exit or dump a Strategy while a Written Call is open, the Service sells the shares that are not set aside and leaves the Set-Aside Shares, with the contract against them, at your Broker until the contract ends. The Strategy is marked as exiting and is not closed until then, which can be up to two months. Pausing, dumping, exiting or deleting the Strategy outright is refused while a Written Call is open, because a contract the Service has stopped watching is a position nobody is protecting. The kill switch is never refused; it stops new Orders and leaves the contract open.

J.9 The account bounds are limits, not advice. Your account carries bounds on writing calls: the minimum distance of the strike above the price, the minimum Premium per contract below which the Service will not place the Order, the number of shares it always keeps free, the largest share of a holding it will commit, and the number of contracts one request may write. Each is a limit below which the Service will not act. None is a judgement that a write within them is worthwhile, and lowering one lets the Service do more, not less.

• The strike distance scales with leverage. You set one percentage; on a two-times fund the Service requires twice that distance and on a three-times fund three times it, because those funds move that much further. With a 10 percent setting, a three-times fund at $30.35 is offered strikes from $39.46 upward, not from $33.39. The Service does not know how volatile a fund actually is; the multiple is a rule about the fund's stated leverage, not a measurement of its risk.
• The minimum Premium is a floor against writing for almost nothing. Far above the price on a leveraged fund, the bid is often five cents — $5 per contract for locking up $3,000 or more of shares for up to two months with no way out. With a $10 minimum the Service refuses that Order. The floor is tested on the bid times the contract's cash multiplier, normally 100, and is re-tested at placement.

J.10 The profit-taking price moves up. While shares are set aside, the Strategy's profit-taking can only sell the free shares, so the price at which its next profit-take can fire is higher than it was, and with several contracts open it can sit above the strike — in which case the shares will be called away before the Strategy ever books the gain. The Service shows that price on the confirmation, as a price.

J.11 Corporate actions. A split, reverse split or other adjustment changes what one contract delivers. The Service then freezes its view of the Set-Aside Shares, refuses further writes on that holding, and — because it cannot close the contract — leaves the position as it is until expiry. Leveraged funds reverse-split routinely, and an adjusted contract is often not practically tradeable at all; on such a holding, "wait for expiry" may be the only exit, for as long as two months, including on a Strategy you have asked to exit.

J.12 What the Service cannot see. The Service reconciles the option positions it knows about against your Broker on each evaluation. A call you write directly at your Broker against the same shares is recognized and its shares are treated as set aside; a call you buy back directly at your Broker releases them. Until either is recognized, the Service's count of free shares is wrong in the unsafe direction, and a sell it places may be rejected. If it cannot read your option positions at all, it stops selling that holding rather than guess.

J.13 Option market data. Chains and quotes come from your Broker and may be indicative, delayed, stale, one-sided or absent. A zero bid, a missing quote or a missing chain is a refusal, not a guess. The Premium you were shown is the bid at the time of the preview; the amount you receive is set only when the Order fills, and may be less.

J.14 No suitability assessment. Part I applies without change. Whether you may trade options at all is determined by your Broker under its own rules. The Options Acknowledgement you make before your first Call Write is an attestation that you have read this Part; it is not a test, is not scored, and is not a determination by Provider that writing calls is appropriate for you.

This Statement forms part of the User Agreement. By accepting that Agreement you confirm you have read this Statement in full. See the User Agreement.