Calculate Leverage Sizing Quantity
Leverage position sizing works from notional exposure: how much of the underlying's value the position controls. A Leverage Multiple of 1.0 means "control notional value equal to my account value," and the bot works out how many contracts that takes each time it opens a trade.
That is what separates Leverage from Percent sizing. Percent sizing starts from the position's margin requirement; Leverage sizing ignores margin and instead asks how much of the underlying's value each contract controls. This page walks through the math, which strike the bot uses, and what happens when the result rounds down to zero, with a calculator you can use to try your own numbers.
The formula
At entry time the bot computes:
The top of the division is the dollar amount of exposure you are targeting. The bottom is the dollar amount of the underlying one contract controls. Dividing one by the other gives the number of contracts, and the bot always rounds down to a whole number, dropping any fraction.
The four inputs
- Account Value: your account's net liquidation value, read live from your broker at the moment the trade opens. If the broker reports a value of zero, the bot cannot open the trade.
- Account % for Leverage Calculations: a per-account setting on the Broker Connections page. It scales down the slice of the account the leverage math is allowed to use, from 0% to 100% in 10% steps, and defaults to 100%. Set it to 50% and a 2x Leverage Multiple targets notional equal to your full account value, not double it.
- Leverage Multiple: the Leverage field on the bot form's Trade Entry card. It must be greater than 0 and less than 100, and it can carry decimals, such as 1.5.
- Strike × 100: the strike the bot uses (covered next) times the standard option contract multiplier of 100. The multiplier is fixed; it does not vary by symbol.
Which strike the bot uses
On a multi-leg position, the bot picks one strike to plug into the formula. The rule has two steps:
- If the position has any short legs, the bot looks only at those and ignores the long legs. If the position has no short legs at all, it uses the long legs instead.
- Out of those legs, it uses the lowest strike.
On a put credit spread, that is simply the short strike. Here is a worked example for an iron condor with strikes 7400/7500/7600/7700 on a $100,000 account at 100% Account % and a 1x Leverage Multiple:
| Leg | Strike | Exact quantity | Outcome |
|---|---|---|---|
| Short put | 7500 | 0.133333 | Used: lowest short strike |
| Short call | 7600 | 0.131579 | Not used: higher short strike |
| Long put | 7400 | 0.135135 | Not used: long leg |
| Long call | 7700 | 0.129870 | Not used: long leg |
The bot uses the short put's 0.133333, which rounds down to 0 contracts. The long put's exact quantity of 0.135135 is a hair larger, but long legs are never considered when the position has a short leg.
Try it Out: Leverage Sizing Calculator
Enter your own numbers and watch every step of the calculation update. The starting values show a common surprise: 1x leverage on a $100,000 account cannot buy a single SPX contract.
| Target notional exposure | - |
|---|---|
| Notional per contract (Strike × 100) | - |
| Exact quantity (before rounding) | - |
| Final quantity (rounded down) | - |
| Effective leverage you actually get | - |
Rounding down and the minimum quantity of one
The rounding is the practical headline of Leverage sizing: the result always rounds down, and on an index like SPX one contract is a lot of notional. At a strike of 7500, a single contract controls about $750,000 of the underlying, so 1x leverage on a $100,000 account works out to 0.13 contracts and opens nothing. To get that first contract at 1x you need roughly a $750,000 account, or a 7.5x Leverage Multiple on $100,000. Leverage sizing needs far more account than most people expect on index underlyings.
What happens with a result of zero is up to the Leverage Sizing Uses Minimum Quantity of 1 checkbox in Bot Preferences on the Account Settings page:
- Enabled: a computed zero becomes 1 contract. Be deliberate about this on a small account: that single contract can carry several times the leverage you asked for. The calculator above shows exactly how much whenever a scenario rounds to zero.
- Disabled: the bot logs that the calculated size fell below one contract and opens nothing.
Buying power checks after the formula
Leverage sizing is based on notional value and ignores margin, so the quantity it produces still has to pass the buying power checks that follow:
- Auto Size-Down: after sizing, the bot projects the margin requirement for the calculated quantity. With Auto Size-Down enabled, a quantity your available buying power cannot cover is cut down to the largest quantity that fits, possibly all the way to zero. With it disabled, the bot sends the full calculated size and leaves an oversized order for your broker to reject.
- Account-level Max BP: the buying power limit on your linked account is checked before sizing runs at all, and a trade that would breach it is rejected outright. See Account Protection: Buying Power and Leverage Settings.