 Okay hello everyone welcome to options with Doug streaming live daily on bookmap discord and the bookmap YouTube channel at 1 30 p.m. Eastern time excuse me and for those of you for those of you on YouTube apparently I am streaming but I cannot see the stream updating and I may or may not be able to see chat so I will I'll watch chat I'll if I see anything I'll respond otherwise I'll be watching chat and discord so again welcomed options with Doug and before I go any further let me go through the disclosures general disclosure all bookmap limited materials information and presentations are for educational purposes only and should not be considered specific investment advice nor recommendations risk disclosure trading futures equities and options involve substantial risk of loss and is not suitable for all investors past performance is not necessarily indicative of future results and as a reminder the focus of my presentation and the focus of the option options with Doug chat room and discord is options order flow the impact of options markets on stocks and futures and the influence of market maker hedging flow on price action I have a two-step process for trading and the first is planning and that is based on positional analysis and I look at how traders and market makers are positioned in the options market and how those positions change from day to day to develop a thesis regarding the expected trading range and volatility for the day as well as a directional bias and other traders may use technical analysis or fundamental analysis I think positional analysis is a new way of looking at the market and I believe it provides a an edge and the second part of my process is execution and I look at real-time order flow in bookmap and real-time market maker hedging flow and spot gamma hero to confirm my thesis and for setups and on topic questions and comments are welcome both during my presentation as well as any time so again you know please review the the focus of this channel and make sure your questions and comments are on topic and I'll be happy to answer them okay so what I want to cover today is first of all talk about news some news data that they came out this morning and that then is coming out tomorrow and then I'll go over position analysis and then finally talk about setups and what I want to do today is focus more on setups I've actually got my data issue worked out so I have DX feed data for stocks now and there were some great setups both in the S&P 500 and stocks today so I'm going to go through the news and the positional analysis pretty quickly and get to setups so first of all news and this is I just want to see one other thing oh this is what what just came out so we'll look at this in just a minute that will explain that sharp bounce higher in the S&P 500 so today this morning first was the ADP employment change and it came in much higher than expected and hold on let me bump up my cursor size and so this is the ADP employment change forecast 150 came in at 235,000 so much much higher than expected so in this case good news was bad news and we'll look at the S&P 500 in just a minute and see the reaction to this news as well as the jobless claims this came in a little bit less than expected and then finally at 945 PMI data came out that was slightly better than expected but still less than 50 so that means it's in the contraction range okay so that was the data that came out this morning and then what what I was just looking at was this Fed commentary Fed Bullard looking at this right here oh well let's see actually that's I think this is the the comment well both of these really so inflation is likely to slow expectations are in line and I guess Fed policy will soon be restrictive with additional hikes right so let's go take a look now at the S&P 500 and this is that sharp jump higher with with Bullard's comments and notice where the notice where price reverse is higher this this is SPX 3800 and this level has definitely been in play today you can see it is acted as support multiple times today this is the again the SPX 3800 and that is the spot gamma put wall and noted as support and it has been acting as support for for a while now we'll get a a little bit longer term chart of SPX and see how that level has been in play so price has been testing that level but has not seriously broken lower with any any significance so here's the reaction I'm just gonna to the news this morning this is the 815 ADP report and then the 830 jobless claims and that kind of set the tone for the the open RTH open down to the first test of the 3800 put wall and let me just clarify what I'm looking at here I have two columns in my bookmap chart this is the spot gamma cloud notes and these are showing SPX levels and SPX and spy combo levels and then I have my own notes here the C levels and I put in the support and resistance levels noted in the spot gamma AM founders note and also significant spy levels there's the spy 380 put wall and then also big round numbers in ES the zeros in the 50s so you can see this is a very news driven market and the algos are listening closely for the news or you're watching closely for the news and react pretty quickly okay and then just one more thing about the news tomorrow is another big report the employment situation at 8 30 a.m. Eastern time and then there's more ISM PMI data out at 10 a.m. okay so I've already started on positional analysis a bit but I'm showing the the relevant levels support and resistance levels and spot gamma levels on the chart here and again 3800 is the significant level and that is again the spot gamma put wall and expected it is expected to act as support now regarding shifts in levels this is one thing that I look at to develop a directional bias the SPX put wall increase from 3700 to 3800 and I interpret that as bullish and for spy if you recall yesterday the spy data shown in the founders note was there was wrong there was there was some sort of data error so we did look at the data in equity hub and that data appeared to be correct and it looks like based on what I see today it was so the spy hedgewall increase from 380 to 385 let's just go to spy and the call wall increase from 383 to 390 and the put wall increase from 370 to 380 and so the the put wall has definitely been in place and it looks like the volume is really concentrated between the 379 and and 380 level today and spy alright let's take a look at the S&P 500 charts and we can confirm those levels so this is SPX absolute gamma levels the teal lines below zero show negative gamma or put gamma and the black lines above zero shall call gamma or positive gamma and there's the 3800 level that is acted as as support and then 4,000 is the call wall and the absolute gamma strike so the put wall is the strike with the largest net negative gamma it's expected to act as support and the call wall is the strike with the largest net positive gamma and it's expected to act as resistance and then finally the absolute or key gamma strike is a strike with the highest absolute gamma so that is SPX here spy and 380 is the biggest strike on the board here and that is the call wall as well as the key gamma strike the put wall I'm sorry the put wall and the key gamma strike and let's take a quick look at data and I'm going to look at gamma notional and the reason I look at that is to understand how market makers are positioned in the options market and how they might react so what I'm looking at is gamma notional and it's negative for both SPX and spy and this indicates that market makers well first of all traders are long puts market makers are short puts and they're on the their position is on the negative portion of the gamma curve and this means that they have to sell futures as price drops to hedge their delta exposure since they're short puts and as price increases they can buy back those short futures so this is just to get a sense of again how market makers are positioned how they might react so in this case I'm expecting market makers to trade in the direction or price and one last thing that I want to point out oh the changes so yesterday SPX gamma notional was minus 496 and today it became less negative at minus 312 and yesterday there was an anomaly or a data error for spy and it didn't make sense so I didn't you know I just ignored that so today spy is the gamma notional is minus 1271 all right one other thing I want to take a look at this is SPX this is on thinkorswim just a just a candlestick chart here actually I may be looking at hiking ashy candles that doesn't make any difference for what I want to look at so I'm looking at a 20-day one-hour period here and the thing to point out is this narrow range for SPX so SPX has been trading in this range since looking at hug burying over this date that is 1216 so the middle of December until today SPX has been in this range with multiple tests of the 3,800 level and spot gamma has talked about this in their in their daily reports a.m. and p.m. about this range now they're talking about 3,800 to 3,900 and if you look back here that 3,900 that was the the top of the range and it looks like the bottom of the range is a little bit lower at around 3,775 so you know more or less in the 3,800 to 3,900 range so you know eventually this will break so contraction leads to expansion and expansion leads to contraction so you know eventually our catalyst will come along that will that will move SPX out of this range okay let's take a look at some setups let me check YouTube and see if I can see any questions yes check YouTube and let me just let me test all right anyone on YouTube if you can hear me or see my screen or see my screen please type something in chat okay no response in YouTube okay I'm not sure what the what the problem is I thought that I thought I had that resolved so I will apparently it is being recorded there were recordings for the last two days but I can't see the stream so all right let's let's go to setups now and the first was ES and spy and I posted the first reversal higher setup this morning let me zoom in on that and that was this setup right here I'm gonna zoom back a bit so the setup the first reversal at 3,800 and again I posted this in discord and let's take a look at hero now go to ES I'm gonna zoom in a bit just check all right so I've got a one-day look back period I'm gonna zoom in a little bit more and so what I was looking at now this is hero for the ES S&P 500 futures and this is combining SPX and spy options trades to show this hero line so again it's a combination of SPX and spy and this is what I saw this morning so traders were taking bullish or positive Delta trades with options as price was falling and as when price reached that 3,800 level expected to act as support that's when price reversed higher so this was a leading indicator nice divergent setup and let's separate out puts and calls so really both driving so traders were buying calls and that may be a little bit more clear with the orange line here showing traders buying calls and initially selling puts and notice here in this behavior is very typical in the S&P 500 and this is what makes heroes such a great indicator for the S&P 500 is the lead effect is what traders are doing is as price reaches low levels or moves towards lower levels like the 3,800 put wall traders start taking positive Delta positions again buying calls and selling puts and price reverses at a level again the 3,800 that is expected and then increases so that was the first reversal higher setup so the first bullish setup and then at a certain point as price increases they either sell those positions or take new negative Delta positions and price gets to a reversal point and then moves lower so that pattern often repeats over and over again during the day and as you you can change the look back period to a shorter time frame and you can see that more that's more evident especially in the afternoon or as time passes you know that without after a few hours of the market has been open all right so let's go take a look at book map now and again there was the reversal lower at the 3,800 level I'm going to zoom in on that and notice the liquidity target was 3,855 here and the round number target was 3,850 and that's where that's where price reversed lower and notice in the sub chart here that there were some buy stops firing and that's shown by the yellow line the rising yellow line and then also aggressive buyers and that's shown by the pink to dark blue line and you could also see all the green dots in there heading up to the final sweep at the sweeps at 3,850 and then you know again remember from a hero that hero started dropping and you know that point you're just looking for a reversal point and these two sweeps were your points to start looking for shorts and again in both instances you can see the shift from green dots to pink dots especially right here right let's go back and let's just take a look at hero right now I'm to zoom all the way out and I look I have a right now a one day full-day look back period on hero and I'll talk about when to when to zoom in and when you can look at a shorter look back period I'll show some examples of that so there's a another kind of a long-term divergent setup as price drops lower traders start taking positive delta positions and then price chopped around and tested the 3,800 level for some time and then finally it looks like it really paid off with the the Fed comments from Bullard okay and let's just leave it at that let's take a look at spy and spy should be just about the same thing so the spy options trades have been I guess really driving ES for a for a while now okay so that spy looks looks just like ES the setups higher lower and then higher and then finally pay off alright any any questions yeah I don't see any in discord okay let me let me just check YouTube one last time and so nothing in YouTube I'll try and work on that again okay so additional setups I'm gonna look at some setups nice setups that I saw this morning let me point out first I'm gonna go back to my daily notes here and this is a spreadsheet that I keep every day these are the stocks and symbols on my watch list and I tracked the key gamma strike every day and watching how that moves up or down can provide a very good starting point for a directional bias and the things that I want to point out that we'll look at today first of all meta notice the increase the green indicates that the current key gamma strike the key gamma strike for today increase from yesterday and that indicates bullish sentiment traders are taking positions higher up and this is you know these are longer term positions you know most likely most most in the expiration tomorrow but anyway they're you know this is based on open interest and traders are you know expressing their view that they expect price to move higher and just the opposite with Microsoft and I think Microsoft got a downgrade yesterday from an analyst and then snowflake as well and this is kind of a double whammy here yesterday the key gamma strike dropped and today it dropped again another five points and note the the larger drop in Microsoft and we'll take a look at equity hub and Microsoft and see that was not the only key daily level that dropped so what what I do with this information is you know if I see these numbers then I go into equity hub and do further research and I'll show how that worked for Microsoft all right so let's go want to take a look at go back to equity hub here equity hub I'm sorry hero all right so meta to zoom in a bit so this is what I saw saw in the morning leading to both bearish and bullish setups just hero continued to drop you know until about 1045 1040 and that led to some good short setups not a lot of range but every time meta jumped up it was a good time to short with hero dropping all right let's go take a look at book map now and one of these days I'll remember to change my pointer now recall that meta was the key gamma strike increased 10 points for meta so the initial outlook would have been would have been bullish there were some short setups early in the morning let's go back to hero now so that was the first setup but really the best setup was this reversal higher here around 1045 and more of a confirmation setup not much of a there's really no lead there just confirmation setup and again if you were if you had a bullish bias you would just wait for this reversal higher okay the next one is Microsoft and I'm going to separate this out to show in the put and call transactions and this is this is what I saw this morning so unlike meta with a rising key gamma strike the key gamma strike dropped on Microsoft so my expectation was bullish for meta and bearish for Microsoft and actually I'm getting a little bit ahead of myself let me let's go to equity hub and look at Microsoft so knowing that there was negative or bearish news about Microsoft I see the key gamma strike drop 20 points which is pretty significant so I can go in and do some more research and equity hub here and what I'm going to look at is the shift in shifts in levels from yesterday the fourth today to today the fifth and I see that yes indeed the key gamma strike did drop from 250 to 230 and in addition the hedge wall dropped from 235 to 230 and the call wall dropped from 250 to 230 and then the put wall dropped as well okay so that is definitely bearish for for Microsoft so let's go back now so that would be the the first step with the first step in my process was the first step in my process was the key gamma strike list and then that led me to further research here on Microsoft and saw all the not only did the key gamma strike drop but the hedge wall call wall and pull wall also dropped so now let's go take a look at hero again and if you recall also I posted my with the new hero dashboard I can't post my entire watch list anymore so I post I ranked it from weakest signal to the strongest signal and just showed the top portion of the weakest stocks and both snowflake and Microsoft were on that list so taking a look at that list that is the next clue and then you know again seeing this call line dropping straight down that's the next clue then finally let's go back to book map go to Microsoft so here's the here's the setup in Microsoft and I'm kind of squeezed in a little bit because I want to show this 220 put wall and all the liquidity at that level and if price had continued lower maybe if the if Bullard had not made that comment then price might have headed back headed down towards this kind of obvious target here but anyway here's the setup remember that the call line was dropping and this this is the you know from what I look at in the way I trade this would be my setup the you know the sloping line down here I guess of the break of this wedge a retest of the 224 50 level and a couple short points again with the 220 the 220 put wall liquidity as a target and let me take a look at some questions you know Zen 550 I have discussed put walls and call walls extensively I've tried to answer your questions I you're just I would not put so much significance on on those levels if you know I I put a link to the article that spot gamma posted with their stats for the put walls and call walls and I can't add any more than that you know they have the stats they show talk about what happens with you with very detailed statistics and you know I expect those levels the and by the way the 3800 SPX 3800 is the put wall and SPX 4000 is the call wall there's only one put wall and only one call wall and they can change from day to day so I look at that how they change from day to day and panamats I you know my preparation in the morning takes a while I have requested a couple of features for spot gamma that would that would speed that up like showing the key gamma levels and cloud notes just like spot gamma does for ES NQ and RTY and also I've requested that they color code the five daily key daily levels and the equity hub dashboard green or red depending on whether the price increased or decreased from the previous day to kind of replace my spreadsheet so I could just look at the look at the dashboard instead of recording that in the dashboard and that would save me quite a bit of time okay so you know again I at least I have my I'm using an add-on here that's available in the bookmap marketplace called price lines and I it uses cloud notes I fill out the light so the yellow levels are just the round numbers and the red numbers are the like the fives and the zeros and then I change the spot gamma daily levels and my spreadsheet and I mark those white with red numbers and the line is white also and then price lines draws the lines so it takes some time to do you know for all these stocks that I'm looking at as well as ES NQ to fill that out but I like to see those levels it helps me okay that was Microsoft that was I thought a great setup and now let's take a look at QQQ and now the board make looks like you made another comment okay so let's take a look at QQQ so this is what I was looking at it this morning and let's go yeah Paul I will get to Tesla all right so let's take a look at hero now change this back let's go to QQQ and one thing that I want to point out when you see the hero line kind of flat line like this it's showing a it's showing a cumulative effect for hero since the beginning of the day and that is not really providing much information and that is when you can change your this rolling window the look back period to a shorter time frame to provide more significance so see how changing from the entire day to 30 minutes to 10 minutes adds more clarity about what is happening right now so let's change this to 30 minutes normally all right so what I want to look at first is this divergence setup both higher and lower well actually it was more of a divergence higher let's let's change to 10 minutes and now we can see the divergence lower so in certain cases changing the look back period the rolling window helps so here's what I'm looking at hero is increasing prices falling and that is the first long set up and thanks Paul all right let's take a look now at book map good QQQ let's zoom in so here's that first first setup first long setup somewhat of a break of trend notice the shift from pink dots market sells to green dots market buys aggressive buyers and then the final sweep into 264 and remember again that we'll go back to hero and one thing to keep in mind I'm jumping from I only have one screen to present but on my computer I have I have two screens and I can see those simultaneously so I don't have to jump back and forth on on my computer again I have two screens and I can look at both screens at the same time so this is you know having only one screen to present is makes us a little bit more awkward but you know this is how I have to present so going back to hero again I have a 10-minute rolling window here and so now as price moves up to that 264 C3 and C3 is a combo level QQQ and NDX and three indicates it's in the middle of range of importance one being the highest and five being the lowest so the setup lower was noticed that hero starts making lower highs as price continues up and then reverses lower so divergent setups in QQQ both lower and higher all right the next one that I want to look at is snowflake make sure let's go back to one day on this this case that one day is a little bit more clear all right I have snowflake on my other computer and give me just a moment to share my screen and and we'll take a look at that all right there's snowflake nice short setup right here at this trend break and notice all the green dots here and trend break pink dots come in aggressive sellers and price target at 120 liquidity and I don't have this spot gamma levels marked on on these charts on my other computer and let's just go back to hero and see if that is a and it's showing the looks like all the key levels put wall key gamma strike and hedge wall all at 130 so price is trading below those I'm gonna change this I have in my notes this from this morning to take a look at a look back a 10 minute look back period and that's not really helping now 30 minute maybe let's go back to 10 minute 10 minutes and then scroll in a bit and also have my notes puts so really you know breaking it down like this and what I'm looking at is short so remember in the key gamma strike list snowflake had that double whammy so I'm definitely bearish with the key gamma strike continuing to drop indicating that traders sentiment continues to be bearish they're looking for lower prices let's go back to hero now so I'm looking for any opportunity to enter short change that rolling window so here I see a little bit of a divergence set up and remember that that trend break lower at 125 is what I was looking at for the entry point so watching this care carefully on a shorter look back period I see that traders start selling calls so they had been buying calls and they start selling calls before price reverses lower and then it looks like it takes this block trade inputs the blue line traders buying puts and then finally price starts to drop lower let's just change this total back to the one day and overall you know for the entire day there is a you know strong correlation between options trades market maker hedging activity and price action and here is that that block trade inputs so trader traders buying puts so that's another example of how how this process can work so again looking at just looking at the key gamma strike as some kind of initial clue for your directional bias and then doing further investigation and let's just take a look at equity hub for snowflake so for the last three days key gamma strike has dropped and then today the hedge wall dropped and actually there was an increase in the put wall so overall my my directional bias was bearish based on this key gamma strike let me just show the this is what I this is what I posted this morning in chat I think around 945 is when I posted it and notice snowflake at the top of this list so there's the second indication after the market opens that you're going to be looking for a bearish entry the weak hero signal and this is what I'm looking at for snowflake and that is showing the hero signal is the weakest that it has been in the last 30 days and that is this entire range and also in the last five days and that's the colored portion and maybe that's a little bit easier to see here and Nvidia this faint gray that is the entire range and then the colored portion is the last last five days so snowflake near the top of the list only behind Shopify and I prefer to trade snowflake I'd like to trade stocks with a little bit higher price so there was another clue so again the key gamma strike list to further ingest investigation and equity hub and then after the open you see the weak signal here and at that point then you're just looking at looking at the hero line on one chart and book map on the other waiting for a short entry and oops snowflake was it again on the other computer so it's over here short entry trend break shift from green dots to pink dots and the 120 liquidity target and if you were fast you could have caught this this drop right at the open and then finally let's take a look at Tesla so I'm going to go look at and actually I do want to look at a couple of others really quickly let's go to the dashboard now that take a look at Tesla and what I want to show here is another example of when to change the look back period and notice how hero seems to have basically flatlined here and that is because the yet again is showing the cumulative effect of transactions for the for hero for the entire day and when you see something like this it's just not giving much information you can change the rolling window to a shorter look back period to provide more information and let's let's shift it down and this is pretty typical of Tesla showing a almost a one-to-one correlation between price action and options trades now I found a 10-minute look back period on Tesla is is pretty choppy all right let's go take a look at book map go to Tesla so here was the short setup in this morning worth a couple of points almost down to the 107 liquidity and then the reversal higher so there were better setups than Tesla today and I have a couple of quick guest appearance guest appearances today from a couple of stocks that I don't normally look at but I want to look at Boeing and Nike really quick so I'm shifting now this stock screener to show the entire list of stocks that supported by hero first the one I want to look at is Boeing and it has been pretty strong the last couple days and notice the weak hero signal and I guess that's compared to recent days where it's been been stronger but so Boeing's in play and traders have been in the morning they were buying calls and that was driving price higher they were selling puts to but it looks like mainly calls driving here and now let's take a look and this is on my other computer and there's Boeing so a move higher from 201 to initially about 203 50 and then prices jumped higher after the Fed comments up to the liquidity at 204 and then finally Nike and a nice move higher in Nike this morning let's go back and take a look at hero go back start off with the one-day look back period scroll down here to Nike and I'm just looking for stocks that are in the price range that I like to trade that are in play and Nike is another one in this case it looks like puts were driving so traders not doing much with with calls that's the orange line but they were selling puts this morning and prices moving higher and there's Nike nice nice move higher in the morning from around 120 50 all the way up to over 122 okay that is all I had so this morning a couple of great setups in the S&P 500 long and short and in a very news driven market and then good setups I thought in Microsoft and snowflake again in line with the thesis that that you could have developed by looking at the key gamma strike equity hub and the signal and hero and then finally hero itself and also that of course the order flow and book map so that's again that's all I have today thanks for your questions and comments and I will see you tomorrow again remember employment situation at 8 30 a.m. Eastern time so again I'll see you tomorrow thanks again bye