 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 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, 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. As a reminder, the focus of my presentation and the focus of the Options with 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. In 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 regarding the expected trading range and volatility for the day and a directional bias. And the second step in my process is execution. And I look at real-time order flow in Bookmap and real-time market maker hedging flow in SpotGamma Hero to confirm my thesis and for setups, looking for entries and axes. And I think this two-step process provides a significant edge over some more traditional approaches like technical analysis or fundamental analysis. And questions and comments are welcome and I will be watching the Options with Doug chat channel and Discord and chat and YouTube. So again, questions and comments are welcome. Okay, what I want to talk about today is, first of all, I'll start with some news items. Economic data, events, and earnings. And then I want to go over a couple of examples. First of all, Meta from last Friday. I posted this in Discord and on Twitter and just want to go over that briefly to make sure everybody understands and then there was a question over the weekend about some of the meme stocks and I want to talk about that briefly. And then we'll go through our positional analysis and then talk about more setups. Okay, so first of all, news items. This is the economic calendar for the week and it's very light. Nothing compared to last week. So there were just a couple of items that I noticed and one is important and that is drone pile speaking tomorrow. And this is showing that at 12.40 p.m. Eastern time. So keep that in mind and check to confirm this schedule. But this is showing it at 12.40 p.m. Eastern time. And then looks like there are a few more Fed speakers during the week. Williams, Barr, Waller. And then on Friday is the Michigan consumer sentiment. 10 a.m. Eastern time. So definitely absolutely nothing compared to last week. The drone pile speaking tomorrow and that's really about it. And then earnings this week, minor, I think for the stocks that I follow most have reported earnings except Nvidia and that's coming up. That's not this week. But this week just the stocks that I look at occasionally, Disney, Uber, Lyft and PayPal reporting this week. And then next week there are some more significant events on the 14th, February 14th, CPI report. And then on the 15th, that's the VIX expiration. And then finally on the 17th on Friday, that's the February monthly options expiration. So that's next week. Again, this week pretty light. Okay, I want to go over meta again. This is from last week. And this is a think or swim chart. And in this sub chart here, what I'm showing is this is comparing implied volatility shown in the red line decreasing all day. So that's the implied volatility, the red line. And the blue line is historical volatility. So that's implied volatility is looking forward. Historical volatility is looking backwards. So the gist of this setup was looking at, so we knew that traders were long calls. Market makers were short calls. They sell the calls. And so they have to buy stock to hedge their delta exposure. And these were calls that expired on Friday. We saw that 32.9% gamma was expiring on Friday. So that's anything over 30% is significant. So that's what we knew. We knew that traders were long calls. Market makers were short calls and long stock to hedge. And a lot of this gamma was set to expire at the end of the day. So what I was looking for was any hint that those calls were starting to, traders were starting to sell calls. Calls were losing value. So there were two main factors for actually more, but for calls actually losing value, there were two main factors. And the first is the drop in implied volatility. And that's where VANA comes into effect. And VANA is the change in delta with a change in implied volatility. So as implied volatility drops, market makers delta exposure decreases and they don't need all those long stock hedges anymore, so they can sell their long stock hedges. So that's the VANA effect that we saw in the previous chart that implied volatility was dropping. So that confirms that. And of course we know that time is passing and options that expire at the end of the day quickly lose value as time proceeds throughout the day. So we know time is passing and we know from the previous chart that implied volatility is dropping even as price was dropping. And so those calls are losing value and market makers can sell their long stock hedges. So here's the setup. And it took a while to play out. But here was the first, let me just zoom in once, first short entry, another short entry here with all the pink dots, all the aggressive sellers coming in there and then finally around this trend break. And the price target was this 185 liquidity and the 190 key gamma strike. So it made it down to 190 twice. There was the first setup and then made it down to 190 again and then never made it to the 185 liquidity. So that was the, I just wanted to make sure that everybody understood that and understand how this played out, how to expect something like this and again how it played out. Okay, the next thing that I want to talk about is there was another, there was a question in Discord over the weekend about chasing meme stocks. And beyond, I want to take a look at that beyond meat is one of the examples. So this is today. And let's take a look. I'm going to go back. So this is today. I'm going to go back. Hero lets you go back and look. Look at the past five days. So this is the past five days for beyond meat. And so this orange rising orange line is showing that traders are buying calls and price moves higher. So again, as traders buy calls, market makers sell the calls and they have to buy stock to hedge their delta exposure. But I think market makers learned, learned their lesson a couple years ago with the, I guess early in 2021 with all the meme stocks, AMC and Game Stock, and they quickly increase implied volatility and it makes it prohibitive for traders to buy calls. I posted in Discord that for Carvada, for example, had implied volatility for Friday of 334%. I certainly would not buy an option and I would just step away and selling an option could be pretty risky as well. So let's take a look at today. So remember that they were buying calls and now today they're selling calls and price is moving lower. And let me see if I can respond to... If somebody would just respond to systematic in the chat that the webinar is live now. Okay, so here's beyond meat. Traders are selling calls today and it looks like they're buying puts as well. And price is moving lower. And let's take a look at... Here we go. All right, so here is... This is beyond meat in... Thanks, Moon Walker. So this is beyond meat and this is showing the... It's a day chart just showing the last... I guess pretty much it's the beginning of the year. And notice as price is generally increasing market makers start to increase volatility. That's shown by this... The same thing that I showed in... For Meta. Volatility increasing until it just becomes prohibitive. At least for me it would be to buy a call. So traders start selling calls as implied volatility increases. And now prices move lower. So that's why I kind of urge caution with these stocks. There's a limit to how far or how high they're going to go. Anyway, I found that interesting that you just have to watch all these factors. Okay, so that's... Those are two examples that I wanted to talk about. Again, Meta from last week and then just as an example of one of the meme stocks beyond meat for today. And here you can see that now traders are selling beyond meat, Carvana. There's a couple of stocks from last week. And today they have shifted into like Bed Bath and Beyond Game Stock. Lucid, let's see what they're doing with calls. So they were buying calls in the morning. Coinbase, that's on my watch list. We'll talk about that if I have time. So anyway, that is... That's what's going on today that traders have shifted their attention to some other stocks. Okay, let's get to our positional analysis now. This is a short-term chart. So there's book map. And I'm going to start with a longer-term chart. So this is SPX and a 20-day chart. And these are showing the spot gamma levels. And this is just a simple chart. Again, SPX showing the key spot gamma level. So there's the put wall at 3,900 and the 4,000 level. That is the key gamma strike or the absolute gamma strike. And then the call wall remains up here at 4,200. So far it just looks like a potential pullback in an uptrend. So that is the 20-day one-hour chart. Let's take a look at a shorter time frame. So this is today. And this is pretty much what I was expecting. And I posted this in Discord over the weekend and I'll show my key gamma strike list in a minute. And just looking at that, that was bearish. And I think that may be just more of a consolidation. And this is certainly what I was looking for today in the S&P 500. I'll talk more about why. So this is what's going on today. Looks like the zero gamma level so far has been support. And again, just consolidation, trading in a pretty narrow range. All right, so let's take a look at book map now. And we'll look at Hero in a minute and see how that played into these setups. But long in the morning, divergence short after that and then a divergence long again. And one thing to notice is the concentration of volume here at the SPI 410 key gamma strike. So this is the session volume profile. Again showing that concentration of volume around the SPI 410 key gamma strike. So what I'm showing on this chart, I have two columns of levels. These are the spot gamma cloud notes. These are updated automatically showing SPX levels. So that's SPX 4100. And the numbers are off. The levels are off by a couple of points. Spot gamma is still using a 15 point difference. And then there's the zero gamma level. And then this is my column of notes, cloud notes. Again, there's the SPI 410 key gamma strike. And these are support levels noted by spot gamma and the AM founders note. The shifts in levels really for the indices very few. The SPX put wall shifted down from 4,000 on Friday to 3,900 today. And then the SPI key gamma strike dropped from 420 to 410. And I think that maybe just traders got a little bit ahead of themselves last week taking that key gamma strike up to 420. So now it's back to 410. And then for QQQ, the put wall actually shifted up from 285 to 300. And then the key gamma strike shifted down from 310 to 300. All right, let's take a look at the absolute gamma charts. So here's SPX. And what this is showing is the absolute gamma. This is the zero line, this horizontal line. And above is positive gamma shown by the black lines. And below is negative gamma or put gamma. So call gamma above, put gamma below shown by the teal lines. And prime profits ask, how do you find that ES chart under your add-ons? I can only find the crypto exchanges. Well, first of all, you have to subscribe to the correct data feed. So for futures, I subscribe to rhythmic data. And for stocks, I subscribe to DX feed data. So that's how I get those charts. There's also a question, how do you find the SPX chart on book map? And you won't. SPX is just an index. So there are no transactions in SPX. So if you have rhythmic data or any futures data, you can find ES. And then if you have stocks data, again, I use DX feed. You can find SPI. But you won't find SPX on book map. And that it's just an index. You can trade options on SPX. But you can't buy or sell SPX. So this is the absolute gamma for SPX. And the 4,000 level remains the absolute gamma strike or the key gamma strike. And that's the strike with the largest absolute gamma. And then here's the put wall down below at 3,900 and the call wall up at 4,200. And notice above the 4,000 level, there's still a significant amount of call gamma. And we'll see when we look at the data in a minute that market maker gamma is additional for SPX is still positive, indicating that it is, again, above this 4,000 level is a positive gamma region called dominated. Let's take a look at SPI. And for SPI, 400 is the put wall. And that's a strike with the largest net negative gamma that can be expected to act as support. And there's the 4,000 key gamma strike or absolute gamma strike and the strike with the largest absolute gamma. And then the call wall remains at 4,200. That's the strike with the largest net positive gamma. And that can be expected to act as resistance. So there's SPI. And notice it's a little bit more distinct with SPX. And call gamma above the 4,000 level and put gamma below. Let's take a look at the NASDAQ absolute gamma charts. And we'll just look at QQQ. So for QQQ, 300 is the put wall and the key gamma strike. And the call wall is at 3,000. All right, let's take a look at the data. So I'm going to look at gamma notional. And the left column here is gamma notional for SPX at 371. And gamma notional has shifted down a little bit for all these instruments for SPX, SPI, and QQQ. So gamma notional shifted down. It's still positive, but shifted down from 545 to 371 for SPX and became more negative for SPI. On Friday, it was minus 174. And today, minus 561. And for QQQ, on Friday, it was positive 236 and shifted down to minus nine today. So that's pretty neutral for QQQ, negative for SPI, and positive for SPX. So still, the overall picture is pretty neutral. So what this means, this is market makers position on the gamma curve. And in a negative gamma situation like SPI, this means that traders are long puts, market makers are short puts, and as price decreases, they have to sell futures to hedge their delta exposure. So they're trading with price to hedge their delta exposure. And as price increases, they can buy back those short futures. And then it's just the opposite in a positive gamma environment. That means that traders are short calls, market makers are long calls, and as price increases, they have to sell futures to hedge their delta exposure. And then as price drops, they can buy them back. So always important to know how market makers are positioned on the gamma curve. And then right now, it's pretty neutral. And there's a question in YouTube. May I ask a question? What is the meaning S-U-P in the C-level column? So again, the C-level column is my column of cloud notes, and that S-U-P stands for support. And that is a leveled noted as support in the Spot Gamma AM Founders Note. And I just marked that in my spreadsheet. And then it's drawn, shown on that column on my book map chart. Let's take a look at the banner models. And this shows graphically what I was just talking about. So this shows the market makers, how market makers' delta exposure changes with changes in price. That's shown on the horizontal axis, and delta notion of their delta exposure is shown on the vertical axis. And then the green line shows how that delta notional changes with changes in implied volatility. And that's the current expiration, and that is the VANA effect. Again, a change in delta with a change in implied volatility. And then the black line shows how market makers' delta notional changes as time passes. That's the next expiration. And that's the charm effect. The change in delta as time passes. So we can see the positive gamma environment for SPX. Again, shown graphically here with a VANA chart. And the negative gamma environment for SPI, showing that market makers' delta notional increases as price drops. And they have to sell futures to hedge their delta exposure because of their short puts. And then here's QQQ and neutral. So overall, a fairly neutral environment as far as market makers get a position on the gamma curve. And then let's take a look at... Last thing that I want to take a look at, and there was some discussion about this in Discord over the weekend about all of these shifts lower for the key gamma strike. So what this is is a spreadsheet that I track, and there are others that are doing this as well in Discord. And I'm showing the current key gamma strike for every stock in my watch list. And I'm comparing that with the key gamma strike from the previous day. So that's shown on the far right column. And then the current key gamma strike shows the key gamma strike for today. And I color-code these. So red means that the key gamma strike decreased from the previous day. And so we can see that most of the stocks here are shown in red, meaning the key gamma strike dropped from Friday. That is the only one that bucked the trend in showing an increase in the key gamma strike. Okay, so given all this, my thesis for the S&P 500 was I was looking for consolidation. The shifts in the levels were not significant enough in the S&P 500 to make me shift my directional bias to totally bearish. As well, I was... It just makes sense that after such a big week, last week there would be some consolidation. And so given the... really the lack of change in levels, I guess the normal behavior of looking for some consolidation, plus really the big tone shifts in the indices typically occur around monthly expirations. So it's possible there could be a consolidation or a grind into next week. So we'll just wait and see on that. But again, for today, my expectation was for consolidation. And again, this is what is going on. To me, this makes sense. And now for stocks, it's a different story, but when you look at... So just looking at this, you would think bearish. But when you go in and dig in and look at all these stocks, it looks like there were just some shifts in levels. For example, QQQ, we know that the key gamma strike dropped down to 300, but the put wall increased to 300. Really just kind of reinforcing the importance of that 300 level. So on the surface, this is bearish, but not when you dig in and look at all the levels, not necessarily that bearish. Okay, so let's take a look at some setups now. And the first thing that I want to take a look at is the S&P 500. So this is the... Let me just go back out. So this is ES, the S&P 500 futures. And this is showing the combined signal, hero signal of SPX and SPI. So this is showing options, trades, and market maker hedging flow for SPX and SPI combined into one signal for the S&P 500 futures. Let's zoom in. Interesting, this is showing time a little bit before 9.30. So here's the open. Zoom in on this a little bit. So what I was looking at is, first of all, rising hero here. So this is kind of a choppy area, hard to find a long entry that amounted to much, but here is rising. Price drops, and we saw that big drop in the book map ES chart. And then there's the long setup. Hero continues to rise, starts rising again, and price moves higher. And then here's the short setup, divergent setup, and that takes some time to play out. So let's go back and take a look at book map now. And I'm going to zoom in. So I know this is hard to look at one chart and then another. And again, I emphasize that I have, actually I have two computers, I have two screens on one and one screen on the other. So I'm always looking at hero on one screen on my main computer and book map on the other screen. So I could see, in the morning here, looking at hero increasing, not a lot in order flow to confirm a long or short other than the higher lows. And then this was pretty obvious here. This break at the 410 key gamma strike, break of this trend line, look at all the pink dots coming in there, aggressive sellers. And that's confirmed by the falling cumulative volume delta that's shown by the dark blue line that changes to pink. And that's where it shifts from positive to negative and shown by the falling yellow line. And those are cell stops fueling that move lower. So there was then recall again that hero was falling before this drop lower. And it's confirmed by order flow here. So hero short divergent setup, confirmed by order flow. And I'm not showing it now, but I've been trying that new market pulse indicator that Bruce was talking about. And that thing started clicking pretty loudly right around here as all these pink dots came in volume increased and price started dropping lower. So if you could catch a short right at the 410 key gamma strike, that was a good short. And then recall that let's go back and look at go back and look at hero again. So price falls. Let's see what and actually I'm mistaken. Let's not write what I just said. So that drop was confirmed by order flow, but not really hero. There's just a small drop in hero. So scratch that again just confirmed by order flow but really setting up this long. So sorry about that. That was not clear. But again that short, it was a good short set up by order flow but not not hedging flow hedging flow set up the first long here and then the second long. Set up this short here. So again trying to look at one chart at a time makes a little bit confusing. So let's go back and look at book map again. Okay, so order flow sets up this short if you took it and then couple things to notice again. Hero never really drop down. This rising light blue line is showing icebergs we're buying and some pretty large large buy orders here. This is showing 2127 iceberg orders 17 different transactions and then there's 1500 contracts. It looks like one one trade. Let's zoom out. Okay, so really this long was the best set up this long. And again sorry I made that confusing but it was confirmed by hero and order flow. Look at all the again the buy icebergs green dots coming in buy stops feel the move higher traders continue to buy with icebergs large traders buy stops and green dots aggressive buyers alright and youtube RTRT says so frustrating that hero isn't as reliable for ES and it does the opposite of hero frequently and yes you have to be aware of that but I think that is a huge advantage because it sets up a lot of divergence set up so it gives you a notice in advance that there's a potential reversal so let's look at let's look at this long set up here so we know in hero that hero never really drops traders continue to take positive delta bullish positions as price was dropping so we know that and we know that large traders are in here buying with iceberg orders we see that by this rising light blue line as well as this blue 36 27 icebergs are buying then we see the shift from pink dots to green dots cumulative volume delta shifts from negative to positive same for the stop orders and it fuels the move higher so I think that's an advantage there are plenty of other stocks if you're looking for a one to one correlation between price action and price action and hedging flow like Tesla and we'll look at that in a minute okay so that is the S&P 500 and again this is why I find this to be an advantage okay so there are a couple of other setups let's take a look at AMD look at the full screen and I took this falling call line so traders are selling calls and I took that as a divergent short or I interpreted that as a divergent short so let's go back and take a look at book map now so this notice that traders start selling calls or around 945 even a few minutes earlier and then price drops just after 10 so let's take a look at book map now so here's that shop and then price drops below this rising trend line setting up a short and it does the same here so two short setups let's go back and take a look at hero again and the first setup was more clear more of a divergent setup alright so that's AMD and the next one is Coinbase and we'll see that call buyers shown by the orange line came in around 1030 moving price higher so they really confirm both the short here and the long that's on my other computer if I have time at the end I'll go take a look at that the next one meta still in play traders continue to buy calls and the setup work better first thing in the morning let's go take a look at book map so there's the setup in the morning just straight up there were better setups like Nvidia let's go take a look at hero and it looks like calls driving so up until about 1130 two good long setups as traders were buying calls as it slows down a bit price drops and then sets up another long let's go take a look at book map so first long in the morning couple of pull back entries to this trend line to VWAP reversal higher at 210 up to the 215 liquidity target so this is probably the best of the stocks on my watch list probably the best best setup let's take a look at Tesla let's go take a look at hero and so RT, RT here's your if you're looking for this kind of setup a very strong correlation between hero options trades and price action Tesla is usually worth a look I think market makers hedge options trades in Tesla immediately and that's why there's such a strong correlation between options trades hedging flow and price action so here's that divergence long setup traders start buying calls and price reverses higher a few minutes later so it looks like they started buying calls around 10-20 something like that let's go take a look at book map again so there's the long setup so there's the sharp drop lower ends with a sell sweep into the 190 liquidity buyers absorb that sell sweep some aggressive buyers start to come in shown by the green dots here again remember traders are buying calls and price moves higher towards the first liquidity target at 195 and then notice the all the other liquidity above so price made it almost up to the 197 liquidity chopped around for a couple of hours and then it looks like it's moving higher again and let's see what traders are doing in Tesla right now I'm going to change to a shorter look back period so this continues to look bullish for Tesla with the rising orange line traders continue to buy calls let's go take a look at book map again I'm just going to scroll down so 200 is a very important level up above and a potential price target made me not today but maybe the next day or two 200 that's the call wall and the key gamma strike and that is the highest liquidity above and they're also liquidity targets 197, 198 and 199 okay so the best stock setup in my watch list were Nvidia and Tesla and Tesla there was that call divergence setup for long down at the 190 level and Nvidia long setup as well with call buyers and then the S&P 500 again this long setup confirmed by both hedging flow and order flow order flow iceberg buys then the aggressive traders come in with buy orders shown by all the green dots buy stop orders fuel to move higher and let's just go back and take one last look at hero for the S&P 500 is this back to one day and we can take a look at spy we didn't take a look at that before but this will be very similar to to ES since spy options trades are mostly driving the ES there's that divergence setup long traders continue to buy calls when they start selling puts price increases again confirmed by order flow iceberg orders aggressive buyers any final questions that is all that I had for today so again remember not a lot going on this week as far as news and economic events with the exception of Jerome Powell speaking tomorrow and then next week some big events CPI VIX expiration and then the monthly options expiration okay again that's all I had thanks for watching thanks for your questions and comments and I will see you tomorrow thanks again bye