 Hello everyone, welcome to Options with Doug, streaming live daily on Bookmap Discord and the Bookmap YouTube channel at 1.30pm Eastern Time. And before I go any further, 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, trading 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. And before I proceed, let me check on screen resolution. How does my screen look? I understand that there have been some comments about my stream being blurry and I believe that's on YouTube only. So if I could get a... Alright, so Bob says screen looks great on Discord. Moonwalker, Discord is good. How about you folks on YouTube? How does the screen look? So FortyDrover says okay here. So I suggest you on YouTube you can make your settings 720p max and that should work. And in Discord, SKM, AskHowToJoin, just go to the options with Doug live stream on Discord. It's just look under webinars, options with Doug and you'll see my name Doug P with a live icon next to it. And of course he can't hear since he's not watching my stream. Let me just type in a response real quick. Okay. Alright, so again as I go on, if there is an issue with blurry screens or audio, please let me know in chat. Okay, I'm going to go ahead and continue on. So the focus of my presentation as well as the options with Doug chat room in 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 help develop a thesis for the day regarding expected trading range and also a directional bias. And that may be a different approach for many of you, something new. Many traders use technical analysis or fundamental analysis. And again, I use positional analysis. This is a new way of looking at the market that I think provides a significant edge. And the second step of my process is execution. And I look at real time order flow and book map and real time market maker hedging flow with Spot Gamma Hero to confirm my thesis and for setups, entries and exits. And finally, questions and comments are welcome on topic questions and comments. And you can post your questions and comments in Discord and the options with Doug chat room and also in YouTube. Okay. And now, just briefly today, what I want to talk about, my agenda for the day is first of all, economic data. And, you know, there's a major event tomorrow. I'll talk about that briefly and then on Friday. And then we'll go over our positional analysis and then finally talk about some setups. And there were some good setups this morning. They might have been a little bit difficult to find, but they were there. All right. So, economic data. And I have covered this a couple times this week. The major event for the week is the CPI data coming out at 8.30 a.m. Eastern time tomorrow. And that has been a big market mover in the past few months as traders are very concerned about inflation and how it may impact the Fed and whether they continue to increase rates, hold or pivot or pause. So, again, the CPI data, and I think that is having an impact on the market today and it certainly will tomorrow. And then on Friday, there's the consumer sentiment at 10 a.m. All right. Let's go through positional analysis now. And the first thing that I want to talk about is the expected move for today. And then compare that with the expected move for the next two days. So, I apologize if this is pretty difficult to see. I can't think of any way to expand this, but this is think or swim. And this is the options chain for the SPX. And this is showing the expected move for the next, for today, tomorrow, and Friday. So, you can see the big difference in the expected move. And this is real time when I looked at it this morning, sometime before noon, the expected move for SPX for today was plus or minus 18.59 points. So, 18.6 points. And now as the day has progressed, as time has passed, that is now at 13.5. But the things to note for tomorrow, again, with the CPI report coming out, there's a huge difference in today and tomorrow, plus or minus 78 points for tomorrow, and then for Friday, which includes the information for tomorrow, plus or minus almost 86 points. So, this is called backwardation. As far as the volatility goes, or I'm sorry, this is actually contango. This is normal. Not this stark difference, but the volatility further out in time being higher. But again, this is unusual. And it's due to the economic data coming out. Okay, let's take a look now at book map. And the first thing we'll look at is support and resistance levels on the chart. And I'm showing... I've got a couple columns with levels here. And the first is the Spot Gamma Cloud Notes. And these are updated automatically from Spot Gamma, and they include SPX levels. And there is the 3950, SPX, 3950, and also combo levels, which combine SPX and SPI levels. So, two levels right here at 3975 and 3976. So, these levels are given in terms of SPX and converted to an equivalent ES number. And right now, Spot Gamma is adding 25 points to SPX to come up with an equivalent ES number. And the number is actually close... the number that I have that I calculated today was closer to about 22 points. Okay, so the next column, this is my Cloud Notes column. And I create these levels in a spreadsheet and use an add-on and book map to display these. And I note the support and resistance levels that are included in the Spot Gamma AM Founders Note. And I mark them on my charts. And I also have SPI key numbers. And normally, I don't mark anything other than the five key daily levels, like the Poop Wall, the Call Wall, the Key Gamma Strike, Volatility Trigger, but in this case, this C5 level seemed pretty significant. So, I mark that as well. And the reason I did that is, you know, I saw these reversals this morning at this level with really no level shown on the ES chart to indicate why price would keep reversing that level. So, I went and looked at my SPI chart and saw in the morning that that was a significant resistance level. And C5 means that is a combo level, SPX and SPI. And five is, I guess, kind of a lower in the range that one to five marks the significance, one being the greatest and five being the least. But in this case today, the C5, this 393 level, was resistance in the morning. Okay, so that level has definitely been in play. And it looks like the ES 3950 that's shown here, this is also on my cloud notes, offered support. And then price has moved up to the SPX 3950 level. And that is expected to act as resistance. So those are the levels in play today. And again, keep in mind that the expected range for today was pretty small. All right, let's talk about shifts and levels. And there were really only a couple of minor shifts and levels. The put wall for SPX increased from 3700 to 3800. And then for SPI, the call wall shifted down from 410 to 392. So yesterday, the 410, I think, was more of a technical based on the definition, just kind of a, you know, again, based on the definition of the call wall, being the strike with the largest net, positive gamma. But 410 was really not in play yesterday. So 392 is more realistic. And Floyd's garage, so it's double the expected range for today. I'm not sure that I understand your question. So the expected range for today at the time that I looked at it was plus or minus 18.5 points. And that was sometime after the open, sometime between the open and noon that I looked at it. I don't recall exactly what I looked at it. So the last time we looked at it a few minutes ago, it was plus or minus 13.5 points. And the range for tomorrow is substantially higher. And we'll just, we'll jump to that real quick. So the range for tomorrow is plus or minus almost 79 points. And that's shown in this upper right corner here. So the market's in kind of a wait and see mode today. Waiting, everybody is doing their final positioning before the CPI data. And expect a lot of movement tomorrow. So again, everybody just seems to be in wait and see in positioning mode today. Okay, so I talked about shifts and levels. And let's go take a look at the S&P 500 absolute gamma levels. And this is for SPX. So this shows that there's the 3700 level. That was the put wall yesterday. And that's the strike with the largest net negative gamma. And it can be expected to act as support. But it was pretty much out of play. So now the put wall shifted up to the 3800 level. And that's more within a realistic range. And then the volatility trigger. That's the spot gamma proprietary gamma flip level. Where gamma shifts from negative below the level to positive above. And then this is the 4000 level. That's the key gamma strike. And that's the strike with the largest absolute gamma as well as the call wall. And that is the strike with the largest net positive gamma. So that's SPX. And those are the levels that are, I guess, within range. And here's SPI. And I forgot to mention, we're looking at, here's the zero level and positive gamma above, negative gamma below. So positive gamma above shown by the black lines. And that's called gamma. And the t-lines are showing negative gamma or put gamma below the zero line. So the put wall is at 380. And that's pretty obvious. And that's a large level of potential support. And then the key gamma strike as well as the, actually the call wall moved up a bit. So the key gamma strike is 390. And there's the 392 call wall. So that is the playing field for SPX and SPI. And let's take a look at data now. And the data that I point out every day is gamma notional. And this is market makers position on the gamma curve. And it's slightly negative, basically neutral for SPX. And that's shown in this left number here. And then gamma notional for SPI is quite a bit larger at minus 776. So what this means, and especially for SPI, is that traders are long puts, market makers are short puts, and they have to sell futures to hedge their delta exposure as price decreases. And as price increases, they can buy back their short futures. So what we can take away from this is SPX is basically neutral. So market makers in the, you know, the start position wouldn't have much hedging to do either way with price increasing or decreasing. And again, on the other hand, at the starting point today, market makers where negative gamma for SPI was minus 776. And again, they would have to sell futures as price decreases and buy back futures as price increases. So in a negative gamma environment, they're trading with price and that does tend to increase volatility. Now these levels became more positive today or less negative. So yesterday, gamma notional for SPX was minus 182. And today it's minus 16. And then for SPI it was minus 1060 yesterday and minus 776. So based on these numbers now, we know that, we know how market makers were positioned at the beginning of the day. And it will be very important to see how this, how their position tomorrow morning before the data and what has occurred in the last several large economic events that like the FOMC announcement, CPI data, that the gamma notional has been pretty large negative and that has contributed to a VANA rally. If the data comes out, not as bad as expected or better than expected, markets rally, implied volatility drops and these puts as price increases and implied volatility drops quickly lose value. Market makers' delta exposure decreases and they can buy back their short futures and that can help fuel a rally, especially when there's a big spark like the CPI data. So going into the event tomorrow, again based on right now, SPI is in a negative gamma position but not quite as negative as it was for the last few economic events. And quickly let's just look at the VANA charts and this is showing how market makers' delta exposure changes with changes in price, implied volatility and that's shown by the green line and then as time passes and that's shown for the next expiration in the black line and this is SPX and it's just slightly negative, pretty neutral here and then we'll look at SPI and see that it is slightly more negative just like we saw with the gamma notional number that was more negative. So again, that's just showing that market makers will need to hedge their delta exposure by selling futures as price decreases and then finally just to wrap this up, we'll take a look at SPX and this is showing call gamma versus put gamma, put gamma blue and call gamma orange and not much difference here and SPI shows a more pronounced domination of put gamma again going along with a steeper VANA chart as well as the more negative gamma notional number. Okay, so let's take a look at some setups and first of all, let's take a look at the S&P 500. So go back to ES and I've got to look at SpotGammaHero. I'm going to zoom in on this this morning and what I want to point out is the divergence this morning. Notice how traders, well first of all, let's just focus on the total hero line. So this is ES, S&P 500 futures and this is showing options trades for SPX and SPI combined into one signal and the purple line is the total line so that's showing SPX and SPI call and put transactions and that again combining that into one signal and notice overall it was negative. All traders were taking negative delta positions and let's just see what they were doing and they were buying puts. So positioning for tomorrow probably and this led to several short setups in the morning right there, right there. So let's go look at the S&P 500 chart and BookMam, I'm going to zoom in. So remember that 393 level, SPI 393 level so that's where that comes into play and for me I just like to see that level. I like to see the added confluence of some level that I can lean against and so based on traders buying puts and we'll take a look at the SPI and SPX signals and see exactly what traders were doing in each of those but they were buying overall net, buying SPX and SPI puts leading to several short setups and notice the shift to pink dots reversal at that level then price didn't quite make it up to that level look like a slight stop run up to that level pink dots coming in and then here is the, this was the easy setup I thought so you can see the first reversal just around 945, 950 at that level and then another slight stop run up to that level that's shown here with this green dot the 389 and then the reversal at that level and all the pink dots coming in so I thought that was a good setup short divergence, short setup and you could take that in ES futures, SPI shares, SPI options, SPX options although I would be hesitant to buy an option today based on the small expected range okay let's take a look at, let's go back to hero now go back and zoom out go back to hero let's zoom all the way out so what we can see here is that traders are continuing to buy puts and not doing a lot with calls and you can tell by this number over here on the right and I believe this is in dollar terms so 1.8 billion in terms of dollars, delta versus 329 million so significantly the puts are having a greater impact or even though price is rising but traders are more involved in puts than calls and again that appears to me to be just preparing for tomorrow or positioning for tomorrow so again I think that led to some good short setups this morning and let's take a look at SPX and same thing they continue to buy SPX puts shown by the following blue line not doing much with calls and we'll take a look at SPI and again the same thing and you can also compare these numbers and see that the dollar volume on SPI is much greater than SPX okay I'm watching my screen on YouTube it looks okay to me if anybody on YouTube has any comments about blurry screen let me know on my end it looks okay alright so that was the S&P 500 again what I saw was short setups in the morning and then no read on this afternoon if you're looking at the options market as a signal let's just go back to YouTube book map so I'm looking at this yellow line is really the only rising line and that is stop orders so it appears to me that that stops may be driving this this little bit of a rally up to the resistance at $39.50 so again that indicates indicates buy stop orders as price increases helping to drive price higher and in YouTube big eye studio asked do you prefer the one day rolling window and yes especially for trading in the morning I just leave it at one day and if I want to take a closer look especially in the afternoon I'll may shift down to 30 minutes but I do prefer the one day rolling window for trading in the morning alright the next setup that I wanted to take a look at and 4DDrover asked what is the SPI equivalent to $39.50 and do you mean SPX $39.50 or ES $39.50 okay so the numbers that I calculate I just used the number that Spot Gamma provides for the SPX to ES conversion since those are shown automatically excuse me on my book map chart and for SPI I do calculate the ratio for ES to SPI every couple of days and it has been around 10.09 and today I got 10.0887 so it tends to continually drop after the rollover from around 10.09, 10.10 down closer to 10 so that ratio will get a little bit smaller every day so I change my and that just affects the numbers that I put in my spreadsheet by a little bit alright so the first setup that I want to take a look at is Amazon and let's go take a look at Hero let's go to Amazon and compared to the S&P 500 this is a lot more clear there's a strong correlation between options trades, hedging activity and price action and it looks like calls for driving price action especially in the morning let's zoom in on this just look at the orange line here that gives me strong conviction to take a long, long position let's go back to book map I'm going to zoom in so a lot of times and you can certainly see it here that stocks are a lot easier to read there's less stuff to look at and often a very strong correlation between hedging flow and price action like we see in Amazon today and then just reading question so again strong correlation between hedging flow and price action and stocks the targets are very clear liquidity that comes into the order book typically at the open and stays there until it gets filled so looking at the 93, 94, 95 level all those orders typically come in at the open or a minute a few moments later and stay in the order book until they get filled so we can see that here these sell orders at 94 stayed in the order book until they were filled at just after 12, 15 so those liquidity levels make great targets that are often very obvious in stocks and so the entry points if you were fast this was a fast move at the open catch a breakout move after the open or here was the first pullback open entry just around 10 a.m. a little bit before 10 a.m. with a trend break then the move higher again liquidity targets at 93, 94, 95 and then the next here are a couple of long setups so much easier read than the S&P 500 today Trader H.E. asked on anything that potentially connects to tomorrow's CPI data like knowing how Key Gamma Strikes have been impacted for SPX and ES and Key Gamma Strikes remain the same and there were very little shifts in levels the only significant shifts were the put wall for SPX that increased from 3700 to 3800 and then the spy call wall dropped from 410 to 392 and the most significant thing that I talked about was the expected trading range for SPX and how low it was or is today compared with tomorrow and Friday so today when we look the expected trading range for SPX for the remainder of the day was around plus or minus 13 points and the expected trading range for SPX for tomorrow was around 79 points so huge difference in the expected trading range from today and tomorrow so I'd commented today seems like more of a kind of a wait and see market and traders are buying spy puts and SPX puts positioning themselves for the data tomorrow and that could potentially help set up a banner rally if the market makers position shifts more negative especially in spy and the data comes in a little better than expected or not as bad as expected then that could contribute to a rally so definitely yes we expect a significant range expansion tomorrow put buying today could contribute to a put banner rally tomorrow alright so that was the setup in Amazon and if it keeps going higher it looks like the ultimate target would be the liquidity at 95 and let's go take a look at Hero again and for price to continue to rise I would want to see traders continue to buy calls and it looks like looking in the one day rolling window this time so in this time period this has been pretty flat when you see that it's often a good idea to change the rolling window period to something shorter so there's a question about this before so I'm going to shift down to 30 minutes now and so I don't see any significant reason as far as the options market goes to take along at this point okay let's change that back actually let's just go to the total signal okay so JEC asked could you please explain a batter rally and some users might not know what that term means okay so Vanna is a second order Greek and it is the change in delta with the change in implied volatility and a Vanna rally occurs when market makers are in a negative gamma environment market again traders are long puts market makers are short puts and if again if the data comes out better than expected tomorrow or not as bad as expected and price starts to rally implied volatility will drop so that is one item contributing to the puts decreasing in value implied volatility drops delta decreases market makers delta exposure decreases and they don't need all those short futures anymore so they can buy back short futures so that is one thing just the Vanna alone the change in implied volatility and the drop in delta can drive the rally again with market makers buying back short futures and then the second thing is price increasing also causes those puts to lose value to lose delta with price increasing and implied volatility dropping puts are losing value market makers delta exposure decreases and they can buy back their short futures they always want to remain delta neutral okay I hope that was useful and we talked about ES, SPY and SPX nice short divergence setup this morning and the next one I want to take a look at is Moderna and what I saw this morning was a slight divergence here with calls traders Moderna's price seemed to make a equal high as traders were selling calls and let's just look at the total signal total signal also not rising not supporting price falling slightly so it looks like the short setup there was at $10.50 cleared that let's go take a look at book map Moderna so there's that short setup reading this in order flow you can see that it acted as resistance this 188 level with this buy sweep all these small green dots showing a buy sweep up into that level and then rejection and then the second test of that level again with the now the pink dots coming in aggressive sellers and the target at the 184 liquidity so that's a short setup in Moderna and I'm going to go through these rather quickly I've just got a few minutes left next one is Microsoft we're waiting on that let's go take a look at hero so I thought there was more of a bullish setup here let's go take a look at book map Microsoft so here was the setup this trend break reversal higher just below the 232 call wall this case it acted as support and price reversed higher with the target at the 235 liquidity let's go back and look at hero and let's just see so in this case traders were selling puts that seemed to be driving price action more this morning the rising blue line zoom in a little bit on this morning and here traders started selling puts as price was dropping down to that 232 level then traders started buying calls and price reversed higher at that level next is Netflix and what I noticed here was a slight divergence with hero and I'm looking at the purple line the total hero signal making slightly lower highs and then dropping off more sharply leading to a short setup really anywhere in here and well actually I think I have this marked up on the Netflix chart in book map let's go take a look at that yeah I marked that this morning so you see the falling hero line then a break out of this consolidation range slightly lower highs and then a break out of this range and good for about three points or so which is not a lot for Netflix and the target I I would have targeted the 320 key gamma strike the next one QQQ let's go take a look at hero so traders are they're buying puts and buying calls so they were in them this morning let's zoom in just a bit so this morning they were buying calls and selling puts looks like calls were driving in the morning and let's zoom all the way out again so traders continued to buy calls slightly looks like there was more activity in the morning and they're buying puts but overall it looks like calls are driving which is again in direct opposition to the S&P 500 spy and SPX and this has led to a couple of good long entries right at this 274 C1 level that's a combo one indicating that it is a significant level C1 is the highest in the ranking of 1 to 5 so here was the first setup looking at the zoom in looking at this little trend break and reversal at the 274 C1 level and again the same thing trend break and reversal higher at the 274 C1 level as traders were buying calls and let's take a look at Tesla and then I'll look for questions there's Tesla and let's go take a look at Hero for Tesla so very strong correlation between hedging flow and price action in the morning let's zoom in on that traders were buying calls so from the open until about 1030 that was a good long setup as traders were buying calls market makers are selling the calls and they have to buy stock to hedge their delta exposure let's go take a look at book map zoom in so there's that quick sharp rally in the morning somewhat of a trend break consolidation and then the move higher up to the 125 call wall and that was a target and notice the high liquidity at that level so a significant gamma level as well as a high liquidity level shown in book map so great long setup in Tesla's morning and kind of a slow grind after this quick drop notice all the pink dots coming in with the final sweep up to about 126 all the pink dots the aggressive sellers coming in and moving price down back down to 122 liquidity alright let me check for questions and big eye studio what you're looking at in terms of taking a position on the Amazon chart Amazon traders were buying calls so I know that market makers are selling calls and they're buying stock to hedge their delta exposure so that I want to trade on the side of market makers so that was the hedging flow that I was looking at Amazon there's no way of knowing there's no indicator that shows stops and icebergs for stocks that information is only available for CME futures so what I have to look at in book map for stocks is order flow and I'm looking at liquidity levels as well so order flow is the I'm looking at the size and color the dots and I see these big green dots market buy orders coming in at all these turning points liquidity targets above especially the 95 and price seeks that liquidity alright so this is a stock where I had a reason to take along so I talked about Amazon what else Microsoft QQQ and Tesla so if you didn't catch that go back and watch the recording I talked about long entries in all those stocks and big eye studios ask can I zoom into the first thing in the AEM first 30 minutes and which stock do you want to look at the stocks that I have here in book map let me know which one and there's a question about AEMC I don't have that open in book map we can take a look at hero so right now I'm just looking at my watch list and I have switched from my watch list to the entire list of stocks with hero so this is AEMC and I normally don't I'm not interested in trading stocks that are such low price and plus I think my broker probably would indicate that AEMC is hard to borrow so I would either have to try to find shares short or it's just not worth fooling with I prefer to trade big cap stocks mainly that are extremely liquid and often have a strong almost always have a strong correlation between hedging flow and price action so anyway here's AEMC and if that's something that you like to trade this certainly gives you a good indication for a long showing that traders are buying calls market makers are selling calls and they have to buy stock AEMC stock to hedge their delta exposure so certainly hero here indicates that a long was the way to go and then if I had it open in book map we could look at the liquidity levels for targets and potential entry points okay and final question back to Tesla and again I urge you to big eye studios take a look at the recording I talked about Tesla before we'll take a quick look again and I zoomed in on the first hour so the way that I would trade this first of all I see that we'll just stick with the total signal here well first take a look at the total signal bullish traders are taking positive delta positions and I can see exactly what they're doing and I see they're buying calls in my mind that's an even stronger signal traders are buying calls market makers again are selling the calls and they have to buy Tesla stock to hedge their delta exposure so as price increases they keep having to buy stock to hedge their delta exposure so that is hero let's go to look back to book map go back to Tesla and look at the order flow so pretty choppy in the first really choppy in the first half hour but just looking at price action here you can see somewhat of a trend break this really kind of a downward let me clean that up a bit fine tune that a little bit more so a few higher lows then a break out of that range and somewhat of a consolidation here change that to a rectangle consolidation here and then price breaks out of that range doesn't just clear all that out price consolidates makes a series of higher highs and higher lows and this final test at VWAP here green dots there's a buy sweep then price takes off so I guess really anywhere in here would have been your long entry and a clear price target clear price target at 125 and kind of a bonus target here at 126 both high liquidity especially 125 and notice all the green dots coming in here so there were multiple pullback entries with definitely bullish order flow see all the green dots buy sweeps the small green dots buy sweeps and the large green dots market buy orders taking it up to the 125 call wall liquidity and above buy sweep is indicated by a series of green dodge yes okay I am going to gonna wrap it up at this point that's all I had for today and I think that's got all the questions so thank you everyone thanks for watching thanks for your questions and comments and regarding the blurry screen it looked okay to me if you know if anybody has any comments about the about the screen resolution please let me know and remember tomorrow 8 30 am CPI data should be a big market mover and I will see you tomorrow we'll talk about how the market reacted after the data so again take care thanks for your questions and comments and I will see you tomorrow bye