IA: Indicated altitude TA: True altitude
I have seen this picture before: 
Concept 1 and I understand this. On cold days, the pressure gradient is shorter which means the indicated altitude at a particular pressure setting will be lower. And on a warm day, the pressure gradient is steeper i.e. there are larger steps between pressure levels. Thus, the plane will indicate an altitude higher than true altitude. We know that altimeters measure pressure rather than density altitude.
Concept 2 But, we also know that pressure levels are raised on warm days and the indicated altitude is lower than true altitude. This also makes sense. On a warm day, temperature is higher cause a column of air to expand. Thus, at a particular true altitude there'll be more air above me than below me. This will exert more pressure on the top of the plane causing IA to be lower than TA.
But these two concepts seem to be contradicting. How do I reconcile these two bits of information??
- Concept 3 If I'm flying from a region of cold air to warm air and if I'm keeping a constant indicated altitude, the plane will actually climb. This concept assumes that concept 2 is correct because once its in the warm air region the indicated altitude is lower than true altitude. And we've all heard the phrase "hot to cold, high to low, look out below." So this is all congruent. But if I chose to accept concept #1, then when I fly to a warmer region, my indicated altitude would be higher than true altitude and the phrase would be cold to hot, look out below.
Essentially, if I'm going to be flying on a particular day and the temperature is going to be significantly hotter than normal then am I going to plan with the notion :
A. that air density is lower which means the plane is going to think it's higher than it actually is?
B. Or pressure levels have raised causing the plane to think it's lower than it actually is?
mnemonic: I was told that when asked the question what will the IA be, I can ask myself what would I think. For example, if I'm at sea level and the temperature suddenly dropped would I think I'm up in the mountains? Likewise, if I'm at sea level and the pressure level suddenly dropped making it harder to breathe would I think I'm up in the mountains.
By this metric, I'd think that on a warm day, I'm NOT up in the mountains and hence I'd assume option B.
EDIT: I was actually the one who also asked this why are pressure levels raised on warm days but this question is a slightly different question and is not a duplicate.