 Hello everyone. Welcome to Options with Doug. Streaming live daily at 1.30 p.m. Eastern time on Bookmap Discord and the Bookmap YouTube channel. Before I get started I need to 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, creating futures equities and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. As a reminder the focus of my presentation and the focus of the options-doug chat channel 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 I use 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 and regarding the expected trading range and volatility for the day as well as a directional bias. And the second step of my process is execution and I look at real-time order flow on Bookmap and market maker hedging flow on spot gamma hero to confirm my thesis and for entries for short setups for setups entries and exits. Okay questions and comments are welcome and I will be watching for questions and comments and Discord in the options-doug channel in Discord and also the chat in YouTube so again please post your questions and comments and if you have any stocks that you want me to take a look at let me know and JC says there were a couple of really great setups today and yeah I saw a couple of great setups today I'll go over the ones that I saw but there were just a couple good ones and the main one was the S&P 500 and I'll talk about that. Alright let's get started what I want to go over today my agenda for the day is first of all go over the news economic data that's coming out this week and it's a fairly light week and any events and then we'll go through our positional analysis and then finally talk about the setups. So first of all the economic data this week starting tomorrow there is some PMI data coming out you know this is how data PMI data and then the this is showing this consumer confidence number at 10 a.m. tomorrow to be of a higher significance so a variety of data tomorrow again PMI consumer confidence and then on Wednesday March 1st more PMI data ISM this is indicating the 10 a.m. data of high significance and then on Thursday the jobless claims and then Friday more PMI data ISM PMI data and notably the employment situation report is not here and I checked a schedule online and for some reason it's coming out next week on March 10th so I don't know why normally it's the first Friday of the month for the employment situation report but anyway it's not not this week it'll be next week so that's that's what it is again a lot of PMI data 10 a.m. data nothing that earth shattering all right let's go through our positional analysis now and I'll start this is the S&P 500 futures ES and before I dig into this chart I'm going to take a look at a higher time frame and this is think or swim this is the SPX 20-day chart and think or swim and this is showing just price and the spot gamma levels for today and these are provided to spot gamma subscribers and they're showing the key gamma levels again for today and the things to note the put wall has moved down now to 3900 it was 3950 on Friday moved down to 3900 and the key gamma strike remains at 4,000 and that is also the volatility trigger and just quickly the put wall is the strike with the largest net negative gamma that can be expected to act as support the absolute gamma strike is the strike with the largest absolute gamma positive and negative and the volatility trigger spot gamma's proprietary gamma flip level where market makers position on the gamma curve would be negative below and positive above and I'll talk more about that in just a few minutes and the consequence of that and then way up here is the 4200 tall wall and that's the strike with the largest net positive gamma and that can be expected to act as resistance and their spot gamma noted other resistance levels before that and those will be we'll see those on my book map chart alright so those are the levels that are in play and then we can take a closer look again a think or swim chart this is just for today this is a one-minute chart and let me actually I had this set before I don't I'm not sure not sure what happened alright let's try this again okay this is today SPX just a zoomed-in view of the other think or swim chart that we looked at and then thing to note here is the resistance the reversal at the zero gamma level at 4017 so that again this is SPX then the move lower below the 4000 level and again that's the key gamma strike and the and also the volatility trigger and then the reversal lower there so it acted as resistance it acted as support before then resistance so those are the a zoomed-in view of the levels that are in play today and definitely this zero gamma level was was an important level and that has been an important level in the past alright let's go to book map now and I'm showing the levels on my chart in two columns this is the first column these are spot gamma cloud notes that are provided to subscribers in cloud notes that are updated automatically now there is a difference between SPX and ES and the price difference spot gamma is still using a 10 point difference and I just did a quick calculation today and I came up with about six points so I have moved let me just show you for example this zero gamma level I have moved my line down to this level right here so I've moved it down four points oh actually that's this line right here it without a label no label just this line so that is the closer to the zero gamma level and notice that price moved up just a little bit higher but that level debt definitely acted as resistance and then this line right here was a resistance level noted in the spot gamma AM founders note so those are the levels that are in play and then here's the volatility trigger at four this is what spot gamma is showing as the four thousand level and I have moved my line down here so you can see the resistance at the fourth at the zero gamma level the 40 17 support at four thousand and then the resistance at four thousand and order flow provides a pretty good clue as well and to price action order flow shown a book map notice the stop run shown by the yellow line there up to that zero gamma level and then the shift in order flow the yellow line the stop orders shifting down as well as this dark blue to pink line that's cumulative volume delta often also shifting bearish and then finally notice all the notice all the pink dots coming in and that is corresponding with the cumulative volume delta so after the reversal this kind of the consolidation than the reversal at the 1017 level a lot of sellers come in market sell orders all the pink dots and confirm this is all confirmed by order flow and then the key to this was the we'll look at hero in just a minute that traders were taking negative delta positions well before this reversal lower so this was a great setup in ES and I'll go through this in a little bit more detail so I'm just talking about the levels now and the order flow so that was the this is the price action in ES today the S&P 500 ES SPX and spy and the levels are shown on the charts I know it's a little bit confusing and just also want to point out so we have the spot gamma cloud notes here on the right and then the C levels these are my notes so I can adjust these wherever I want so I'm showing for example this resistance level down at a more accurate level than this is the spy 400 key gamma strike and then there's this SBX 4000 level and finally the ES 4000 level all right so those are the levels that are in play for today and now let's talk about shifts in levels so first of all the there were a few shifts in levels all lower first of all the spy volatility trigger dropped down from 401 on Friday to 396 today and then the since I normally don't talk about the zero gamma level but since it's in play today the zeros SPX zero gamma level dropped down from 40 59 on Friday to 40 17 today and then I've already mentioned the SPX put wall dropped down from 3950 on Friday to 3900 today and then finally for QQQ the key gamma strike dropped from 300 to 290 okay so all all shifts lower and so JEC JEC says his adjustment today was 5.45 yeah close enough I you know I just did a you know I I'm sure that's more accurate than than what I have I just did a quick quick glance at a watch list I did my quick and dirty method that I talked about on Friday last week okay now let's take a look at the S&P 500 absolute gamma levels and we'll see where those levels come from so here's SPX absolute gamma levels and this is showing this here's the zero line and above is positive gamma or call gamma and below is negative gamma or put gamma so the positive gamma call gamma is shown with the black bars and the negative gamma or put gamma is shown by the teal bars and this is market makers position so here is the SPX 4000 level and that is the again the key gamma strike or the absolute gamma strike and the 3900 that is the put wall the put walls the strike with the largest net negative gamma and there was a question in discord about this over the weekend about the call wall while it was a certain level these the put wall and call wall the way you calculate this is and it might be easier to look at the the call wall that's what the discussion was about and this is net positive gamma so the call walls the strike with the largest net positive gamma and that can be expected to act as resistance and the way you calculate this is take the positive gamma and subtract the negative gamma and you come up with the net number and that is the number with the highest the highest number highest positive number is the call wall so even though this number is white this level is way out play and does not have as much call gamma is the 4150 or 4100 level the absolute gamma level is still or the net positive gamma level is still higher than these other two strikes so that is how those wall levels work and here spy so for spy 400 is the key gamma strike 390 is the put wall the strike with a large net negative gamma and that's pretty obvious and then the call wall is up here at 420 matching the SPX and pretty much out of play today and the notable thing here there are a couple things actually first of all the put gamma below the 400 level that's probably the noticed most noticeable and significant item there is the put gamma down to 380 so from 380 to 400 and especially 390 to 400 the concentration of put gamma and then there is some call gamma between 395 and 400 okay so those are the gamma levels this is where those levels that I was just talking about on the chart come from and you know you can you can clearly see the for example spy the put wall the absolute gamma strike and the call wall it's not visually as obvious but when you do the calculation that would that would come out to be the call wall and then also note the significant gamma at the 395 level alright that is the S&P 500 and one other thing that I noticed that was interesting this morning is this combo strikes so this is combining gamma for SPX and spy and then shown in terms of shown in terms of SPX levels and note all the put gamma down below here 3950 3960 and 3950 down to 3800 so again those are combo levels SPX and spy and JC says he started started paying attention to the combo a lot more and yeah that's a good idea because the spy gamma is typically much larger much more negative than the SPX gamma but the ES and the SP 500 certainly responds to SPX levels so you definitely have to pay attention to the to the gamma levels and for both SPX and spy when you're trading any one of those instruments ES SPX or spy and thanks for pointing that out okay so now let's take a look at the NASDAQ and for the NASDAQ I just look at QQQ and DX is is not significant so for the QQQ 290 is the key gamma strike and again I noted that that dropped from 300 on Friday and then QQQ let's see where's the put wall at that oh the put wall is also at 290 so that is the key gamma strike and the put wall and then 310 is the call wall so again I think notable is all of the put gamma down below the 300 level okay so this those are the gamma levels and you can you can see where the you know especially the key gamma strike the put wall the call wall you can see where those come from and and why those levels are what they are all right let's take a look at data now the thing that I always like to look at is the gamma notional and this is market makers position on the gamma curve and SPX is shown to the left column spy gamma notional in the middle column so that shows you that and this is fairly typical that the gamma notional for spy is three or four times greater than gamma notional for SPX and then finally QQQ gamma notional on the right and these levels have all shifted more negative from last week from Friday and have spy especially has remained in in the negative gamma regime for quite a while and again this is market makers position on the gamma curve and what this means in a negative gamma environment traders along puts market makers are short puts and they have to sell futures as price drops to hedge their delta exposure and then if price increases they can buy back their short futures as price rises implied volatility drops and their delta exposure decreases and they no longer need those short hedges so these levels again all shifted more negative from last week so last week SPX gamma notional was minus 381 and today it's minus 530 and on Friday spy gamma notional was minus 1752 and today it has shifted more negative to minus 1901 and QQQ has shifted more negative as well from minus 7538 to minus 735 so all maintaining a barely significant position negative position on the gamma curve and again what that means is market makers are trading with price to hedge their delta exposure and that can tend to increase volatility in a negative gamma environment let's take a look at the Vanna charts and we'll see a visual representation of that concept this is SPX what this chart is showing is market makers delta notional on the vertical axis and price on the horizontal axis and this shows how their delta notional changes with changes in price and the green line shows how it changes with changes in implied volatility and that is the Vanna effect the change in delta with a change in implied volatility and so this is just showing again market makers delta notional will increase as price decreases and they have to sell futures to hedge their delta exposure since they want to remain delta neutral and then the black line is showing how their delta notional changes as time passes and that's the charm effect the change in delta as time passes and we can see how that has changed the last few days so more negative a little bit less negative on Friday and then more negative again today but all still negative I'm just stepping back a couple of days so still very negative for SPX here spy again remember gamma notional is quite a bit larger for spy than SPX and notice the curve is a lot steeper and then here's QQQ okay so the last thing that I want to take a look at is my key gamma strike list and notice I have paired this down quite a bit this is these are these are the stocks that I trade on a regular basis and it was just too time consuming did to track more stocks that I typically look at but really don't trade on a regular basis so I've trimmed this down and this is my and also this watch list will fit on the screen for the hero dashboard I don't have to scroll up and down I can see all these stocks in one screen so I've simplified a bit here and just tracking these stocks and this is showing the key gamma strike for the previous day for Friday that's shown on the right column and then the D column this is the current key gamma strike and this is for today and then I color code these and red indicates that the key gamma strike dropped from the previous day and green indicates that the key gamma strike increased from the previous day so notice for both Nvidia and Microsoft that the key gamma strike increased last Friday and then drop back down today and a pretty significant drop for Nvidia there from 240 to 220 but it is a volatile stock and that those levels can move around quite a bit for Nvidia and then also there's the drop in the key gamma strike for QQQ okay so I've gone through my planning process looking at my this is my positional analysis my planning process for the day and based on this I was bearish not strongly bearish but but definitely bearish neutral bearish or I would say bearish to neutral really more more bearish so that was based on primarily the drops in levels the build in in put gamma negative gamma below the current levels okay so that was my that was my thesis for the day and now let's take a look at set up so we went and looked at the ES chart and let's go take a look at a hero so we've looked at the levels we know that price reverse consolidated or reversed at the at the zero gamma level the SPX 4017 zero gamma level and that is just about right there and then the big clue to this was the was the bearish hero signal and this is a combined signal SPX and spy and spot gamma used to call this ES this is what if you're trading the ES futures this is what you want to take a look at and you can clearly see the the divergence there in hero there's a small small increase in hero here but the the trend is definitely down making making lower highs and that comes into play as prices consolidating just below that 4017 zero gamma level and that set up a great short and we looked at order flow let's go take a look at that again order flow confirming that so the way I trade this and this is the kind of setup that I like to trade is a divergent setup it gives you plenty of time to watch hedging flow order flow watch for levels potential reversal levels in book map so that is the this is the first step when you see this divergence especially starting I'm gonna zoom in on this so just looking here seeing this divergence start as prices consolidating here and then just looking for a reversal so you see this divergence step one then go to book map we'll go back to ES zoom in on this level and then you're just watching order flow so you see the stop run up to the 4017 level then a shift in order flow more pink dots coming in aggressive sellers consolidation of that level and then the then the drop there all those pink dots coming in and the shift now starting the stops start to drive that lower that's shown by the following yellow line there those are sell stops helping to fuel that move lower and then CVD continue cumulative volume Delta is confirming that move lower so step one again you see the divergence in hero step to you go to book map you see potential reversal level up here with this resistance level and the zero gamma level and then it's confirmed with order flow and let's take a look at spy now and here's the setup in spy now these are my levels so there are no spot gamma levels for for stocks or ETFs just just ES and Q and and RT why I believe okay so here is the again C levels I can change these levels I calculated the the correct level for the SPX level on the spy chart today I just calculated the the ratio of SPX to spy and I talked about how I do that on Friday just compare charts minute minute charts for each check a couple two or three four levels and so I know that this is correct levels and then I have the so those are the SPX levels and then I'm also marking the some of the key spot gamma levels there's the 400 key gamma strike all right so we can see the reversal here in spy as well and here we can see again a breakdown consolidation at this level the cell sweep coming in or actually that's a buy sweep and sellers absorbing that then the pink dots price moves lower so you could have traded this any number of ways with the ES you could have traded futures spy shares SPX or spy options any any number of ways to trade that all right so that was the S&P 500 setup and let's take a look at some other setups now all right so there's a question in YouTube hey man what what map chart is this if you're talking about the chart with the green and pink dots and the heat map that is book map and it's showing order flow the heat map is showing the history of the resting liquidity in the order book and the pink and green dots are showing market orders market buy orders green dots and that's his delta so green dot means that my minus cell is greater is positive so that's shown by a green dot and just the opposite for a pink dot right here is the Amazon setup not a lot of range pretty similar setup to the S&P 500 and here's what I saw in hero up again a similar setup for Amazon and by the way for the S&P 500 I'm starting to look at the the combined chart to give the I think the most accurate signal and we'll take a look at this and actually let's go on Amazon then we'll take a look at the S&P X and spy charts separately so here's Amazon I'm going to zoom in on this this vertical line here is a large block trade and it kind of obscures the the hero line so I'm going to zoom in so that that level is not not in view and this is one I saw this morning another divergent setup not quite as clear as the setup for the S&P 500 so there's the divergence and again once I see that going to book map and let's go back to book map look at Amazon and there's the trend break of a sharp jump up trend break a by sweep and then a reversal there at the point of control and VWAP and a quick drop lower and notice the shift in cumulative volume Delta from bullish to bearish not a lot of range you know good for about one point or so where you depending on where you got in and that's fairly typical today of most of the stocks that I that I follow not a lot of range today so that's the Amazon setup okay so the comment Jerry says thank you Doug after your explanation I understand the logic to calculate the wall values you're welcome yes pretty simple just for call wall call gamma minus put gamma and just the opposite for the put wall and JC says he traded spy options today and yeah he's looking at the combined chart as well the SPX and spy and that's the easiest way to look at look at both of them combined you see the total influence of all the SPX and spy options trades both the zero DT zero DTE as well as the longer term charts so there's a question in and YouTube and hero you use the 60 minute period and prefer all over next expiry so I use the all day so let's go next stock that I want to look at is meta so let's go back to hero and look at meta and then we'll I'll show my settings so this is meta now I do look at first of all I do look at zero DTE primarily for for spy and especially for SPX just to get a clue of what traders are doing but just for general purposes I'm looking at the the total line and for those of you who might not be familiar I can change what I'm looking at here and just as for meta for example that's next expiry would be Friday for many for all these stocks in my watch list they all have Friday weekly expirations and then SPX spy and QQQ have daily expirations as well that's where most of the zero DTE trades come in so I tend to first just focus on all trades so this is the next expiry as well as all significant expirations and then this is the rolling window period this is the look back it's like a moving average so with the one day I'm looking at this cumulative sum of all of the all of the options trades calls and puts for the entire day and I typically leave it at one day what Brent Brent Kachuba the founder of spot gamma has has talked about this bit recently and it seems like to me that he is tending to rather than change the rolling window just zoom in on the chart like I'm doing here so I'm just rolling my mouse will and scrolling moving back and forth so I'm scrolling my mouse will and panning to zoom in and out so that's typically what I do so I'm using total signal all expiry and the full one day look back period now toward the end of the day I may shift to a shorter rolling window period but I typically do most of my trading in the morning and I leave it at at the one day the full day rollback rolling period another thing that you can do is separate outputs and calls and I find that provides a lot of insight as well so here we can see for meta for example that traders are selling calls and they're buying puts but they looks like the call trades are primarily driving price action you can look at this number as well this notional value and see this is over five times greater for calls the orange line than puts both they're negative but the call line that this notional value is much larger than the than the put value all right so let's go take a look at book map now take a look at meta and remember that hero line was dropping dropping all the time and there are a couple of setups here this quick reversal by sweep up into the 173 level and if you weren't fast enough to catch that then this was a little bit easier this reversal around 10 at the 172 level and VWAP just below that and again remember hero is negative and then this is confirmed by order flow the all the pink dots there you can just see that on the chart and then the bearish the following cumulative volume Delta so there's meta meta setup let's take a look at Microsoft so there's the setup in Microsoft and notice the gamma levels that are in play here and we'll take a look at a hero in a minute there was a confirmation for a long and a short I think this you know obviously this reversal at the 252 hedgewall was the better setup so making lower highs lower lows and then the break with the cell sweep there at VWAP and let's go take a look at hero so now I'm back to the total signal all trades one day rollback period or I'm looking at the data for the entire day so far there's Microsoft I'm gonna zoom in on the morning so there's the confirmation long and then confirmation of reversal although it came in a little bit late let's just see if there's any insight by separating outputs and calls and not really so that was Microsoft and now let's take a look at Nvidia so here's Nvidia and this price action has been pretty typical for Nvidia recently is this morning chop for the first at least half an hour just chopping in a range and let's clean that up zoom in a little bit more and that doesn't provide any clarity so not really the most clear signal hero makes lower highs price makes lower highs than this jump up kind of this fake out hero drops and then price responds a few minutes later so not not as easy a setup as some of the other stocks that we have looked at and certainly not as easy as the S&P 500 so let's go take a look at bookmap down so there's all that chop in the morning then the breakdown and one clue in order an order flow here that is helpful is the bearish cumulative volume delta and you can see all the pink dots coming in especially on the last 15 to 20 minutes of this chop and then this this is not much range at all for Nvidia 235 to 238 is is pretty insignificant in significant range for Nvidia let's take a look at QQQ yeah I got a short small scalpin in video but it was it was difficult today again the by far the best trade was I thought of the stocks that I look at the end the indices stocks that instruments that I look at SPX spy ES S&P 500 alright here's QQQ and nice short set up here let's go take a look at hero and somewhat of a divergent short here not as clear as the S&P 500 but heroes definitely making lower highs price makes lower highs and then drops as hero continues to drop alright let's go back and take a look at book map again so there's the reversal at the 296 volatility trigger and again remember we just looked at hero it was starting to move lower and then the quick drop the last test of 296 quick drop lower and then you know if you were fast you and didn't catch that it didn't anticipate the short there you could have caught that for maybe a point and a half alright so that's QQQ now let's take a look at we'll go back to the S&P 500 and let's take a look at the difference in the hero charts for let's go back to SPX and spy so this is the total signal and I think this provides where it has in the recent you know the last few days recent recent few days that kind of the cleanest setup that the clear signal so it's combining this SPX and this you really don't see this divergent setup here in SPX so let's go take a look at spy and that divergent setup is a little bit more clear so when you look at the combined signal you're always getting again the combined signal this is what is driving price action in the futures market makers are hedging their SPX and spy options trades with ES futures and so there's a question have you found QQQ follows hedging flow strongly with convergence divergence and there I think I would look well first of all the divergent signals that I see are most apparent and occur most often with with the S&P 500 if you those are the best the longest divergent signals the best levels for reversal for the S&P 500 I have more information levels hero than any other instrument so that yeah now but QQQ and my also my trading record is a lot better with the S&P 500 than QQQ QQQ often will have a stronger convergence or confirmation with with hero then then the S&P 500 so if you'd like to trade indices and you find that heroes going one way and for ES it continues S&P 500 continues to go another way then look at QQQ there's often a stronger convergence or confirmation but in this case there was a divergent setup let's go back to book map so there was that divergent setup confirmed by order flow and just one more note about the S&P 500 you really have to look at all the signals look at you know start with the SPX plus spy look at SPX I mean there could be days where SPX is primarily driving and then other days were spy is primarily driving so you just have to do your you know do your homework do your detective work figure out what is driving price action today and then then follow that signal but the starting point would be the combined signal and then finally let's look at Tesla so here's Tesla in book map and this is a very good stock to trade and it shows a strong confirmation between options trades hedging flow and price action almost every day you can see the strong correlation between hedging flow and price action and here Tesla was pretty choppy today for the for the most part and with Tesla it often helps to separate outputs and calls and you can see that traders are buying calls today and that was definitely price traders buying calls that's shown by the rising orange line and price action corresponding very closely and I think this is because market makers hedge options trades in price in in Tesla almost immediately so what what's happening here is traders are buying calls market makers are selling calls and they buy have to buy Tesla stock to hedge their delta exposure and they're doing that right away so that I think that leads to the strong strong correlation strong confirmation alright let's go back and take a look at book map Tesla you can see in the morning all the all the green dots in this first jump higher confirmed by cumulative volume Delta then that levels off and now notice all the pink dots come in from around 11 to 12 30 and then the call buyers come in and start to dry price up interesting that Tesla is on Monday here almost up at the upper edge of the expected move this UEM and that is from the options market and I I mark those on my charts as well that I I get that from thinkorswim and let's just take a look in equity hub I want to take a quick look at Tesla and equity hub check the level so Tesla call gamma dominated above 220 and the shift higher and the call wall I was I just wanted to check that to 10 level and it was the call wall on Friday and notice now it shifted up to 220 so that is bullish and then this is somewhat bullish here that a bearish put wall shifted lower okay so that is that's all I have for today and let me check for any final questions yeah Tesla traders have been really you know been bullish on Tesla recently it has risen from 100 all the way up to now close to 210 and yeah I do think the the high IV the high beta does lead to market maker hedging activity responding very quickly at least that's what I'm thinking based on how I see day after day the strong correlation between options trades and hedging activity and price action okay that's all I have I want to thank everybody thanks for watching thanks for your questions comments and I will see you tomorrow thanks again bye