 Hello everyone. Welcome to Options with Doug, streaming live daily on Bookmap Discord and the Bookmap YouTube channel daily at 1.30 p.m. Eastern Time. Before I go any further, let me go through the disclosures. General disclosure, all Bookmap limited materials, information, and presentations are for educational purposes only and should not be considered specific investment advice nor recommendations. Risk disclosure, trading futures, equities, and options involve substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. As a reminder, my presentation and my focus, the focus of the channel in Bookmap 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. The first step is planning and I use positional analysis. Other traders use technical analysis or fundamental analysis and I use positional analysis. And what that means is I look at how traders and market makers are positioned in the options market and then how those positions change from day to day to develop a thesis regarding volatility and the expected trading range for a day as well as a directional bias. And the second part is execution and that happens after the open and I'm looking at real-time order flow in Bookmap and market maker hedging flow in SpotGamma Hero to confirm my thesis and for trade setups. And questions and comments are welcome. I tend to watch Bookmap Discord more than YouTube but I'll try to answer questions in both and please make sure your questions are on topic related to the topics that I discussed above. Let's get started. Let me do a quick check for questions. Okay, so let's get started. What I'm going to talk about today is first news and as we all know the CPI report came out yesterday. The S&P 500 and NASDAQ and Russell 2000 and the Dow all gapped up substantially as did most stocks. I think the S&P gapped up after the data reported at 8.30 am over 3% at the cash open and then traded out for the rest of the day and there are a lot of questions about that. There is a question in Bookmap Discord, the chat room about that and I will cover that today. I'll go over that and talk about how you could have expected that given the data shown by Spot Gamma. And of course the big event today is the FOMC announcement at 2.00 pm and then the press conference at 2.30 pm. So I will be on live during the announcement and at that time we can take a look at we'll take a look at the ES, S&P 500 futures and also the market maker hedging flow and Spot Gamma Hero and see if we can gain any insight. And then for the rest of the week there is a retail sales report tomorrow at 8.30 am and of course the big options expiration on Friday and that is the excuse me that is the monthly and quarterly options expiration and it's a big one as typical. Okay, so the first thing that I want to address is the reaction yesterday and how the market behaved like gapping up so strongly and then falling after that and then after that I'm going to talk about the position analysis for today and then we'll look at some setups and then after that again we're going to watch the hedging flow in ES. So today, yesterday I'm sorry I want to do a quick review and just show you how important it is to understand how market makers are positioned not only every day but also particularly in front of large events like the CPI report yesterday. So let's go over the information that we had yesterday and this is the Spot Gamma Founder's Note for yesterday. Note this is 1213 so this is the AEM report yesterday and I pointed out first of all this note that was very important kind of summarized what the data confirmed is that unlike the previous CPI report which in that case market makers were positioned far down in the negative area of the gamma curve so gamma notional for spy was something like minus 17 minus 1800 and that provided the advantage fuel for a rally after the CPI report so what that means is that traders were long puts market makers were short puts and they were short futures to hedge their delta exposure and as the market rallied after the CPI report implied volatility dropped and market makers could buy back their short hedges and that helped to drive that rally higher after the previous CPI report that situation did not really exist for the CPI report yesterday and we can see that gamma notional for SPX and spy was just mildly negative so again there's no van of fuel to fuel the rally further than what happened at the open or right after the report up to the open and also I pointed out yesterday there was pretty much an equal positioning in calls and puts and we can look at the S&P 500 charts for today the absolute gamma charts and this is for spy showing a pretty similar situation to yesterday within pretty much I'm going to actually let me zoom in on this so pretty much an equal weighting between puts shown down below the zero value and then this is the 400 level and calls above so that was a pretty neutral environment yesterday and the we can also look at the the van model and this is for for today let's look at yesterday and still fairly neutral and what this shows is that the van makers would not really have much hedging to do and this actually so this is for yesterday so this is what the van model looked like yesterday morning so that is based on the information at the close on Monday and keep in mind that the SPX gapped up to about yesterday and so let's go back and look at the founder's note again this is for yesterday so we saw that based on the information here in the founder's note that there was SPX and spy had mildly the market makers position was mildly negative gamma notional and with the gap up to 4100 for SPX and that is that's shown right here then that puts market makers position on the positive side of the gamma curve so at the open market makers had a positive gamma position let's go back to the vantage arts now so in the case at the open yesterday the van model most likely would have looked something like this meaning that market makers would need to their delta exposure would increase as price increases they would need to self futures to hedge their delta exposure and also keep in mind that implied volatility was dropping substantially during the day so hopefully that provides some explanation of what happened yesterday and if anybody has any questions about that please let me know okay so that was the review of yesterday now let's talk about today and let's go to the founder's note for today and actually I want to take a look at look at ES and book map and the support and resistance levels have not really changed that much there are some other changes but support and resistance levels still near the approximately same level same levels and they're shown on this chart so what this is showing is in this column labeled SG those are spot gamma cloud notes and then this C levels I own cloud notes and I'm marking the support and resistance levels and other levels like the big round number levels so the support and resistance levels are provided by spot gamma and they're in terms of SPX prices translated to ES and right now spot gamma is using a 25 point difference between ES and SPX and I actually I checked this morning it looked like there was an even greater difference so this morning it looked like ES reversed higher before the open at the zero gamma level and rallied from the open up to this resistance level that's actually the 3960 or I'm sorry the 4060 level in SPX translated to 4085 in ES now as far as shifts in the key levels there were quite a few shifts yesterday first of all the SPX, SPI, NDX and QQQ volatility triggers all shifted higher and again the volatility trigger is spot gamma's flip level when price trades above the gamma the volatility trigger that means that market makers are on the positive side of the gamma curve so that's the case right now both SPX and SPI are trading above their volatility triggers so they're in a, right now should be in a positive gamma regime or again a positive part of the gamma curve also the put wall for SPX and QQQ all shifted higher and the call wall for SPX, SPI and QQQ all shifted higher so a pretty substantial shift higher in all these key levels the volatility trigger put wall and call wall although the key gamma strikes the strikes with the largest absolute gamma remain the same so for SPX the key gamma strike remains 4,000 and for SPI it remains at 400 and let's go look the data again and the other thing to note is the gamma notional for today shifted even more towards positive so now the gamma notional for SPX is slightly positive and for SPI it's slightly negative so this is very neutral indicating that market makers should not necessarily have to hedge in either direction again this is based on data yesterday and now with the move higher prices probably shifted more towards positive gamma and that may mean that market makers may need to hedge against price action and let's go back to the S&P 500 charts go back to SPX and here's the 4,000 level and just this is has been the key level the absolute gamma strike or the key gamma strike for quite a while now things are a little bit more clear with SPI but again the key gamma strike is still at 400 and there are calls up above at 405 and 410 and puts below from 380 which is still the put wall for SPI up to 410 which is the call wall and let's look at the Vana models let's go to today so again what this is showing is how market makers delta notional their delta exposure changes with changes in price implied volatility and time and changes with price and implied volatility are shown by the green curve and the way to interpret this is just to draw a line through here that makes sense very neutral and if the line was shifted like this for example like it has been for most of this year that means that market makers delta exposure increases as price decreases and they have to sell futures to hedge their delta exposure as price drops and they have to buy futures to hedge their delta exposure as price increases so they can buy back their short futures and then it works just the other way around and so this top line here is typical of a negative gamma environment and this bottom line here the sloping from left to right is typical of a positive gamma environment and we can just see how it has shifted from day to day towards a more neutral environment for SPX so I think the easiest way to interpret all this information is just to look at this Vana chart and that gives you a good indication of what market makers may do and keep in mind this is based on data that was available at the end of the at the end of the session yesterday that closed yesterday and one last thing to point out let's take a look at this is an options chain this is thinkorswim looking at an options chain for SPX and this is let me actually I just want to isolate this week so this is showing today and remember SPX these are options that expire every day of the week so this is the rest of the week this is today, tomorrow and then there are two 16 December expressions one is the AM settlement and one is the PM settlement so what we're looking at here and this shows the implied volatility and the implied move for every day of the rest of this week and know how high it is today at 133 and expect that to drop substantially as soon after the announcement and also the press conference so that's how traders and market makers are positioned ahead of the announcement here and one other thing I want to point out before the announcement is this is a spreadsheet that I keep every day and what it's showing this is my watch list and I track the key gamma strike for every stock in my watch list and I take this from equity hub and what I do in the morning is I shift this column from the previous day over to the right so that is the previous key gamma strike and then I note the new key gamma strike and the green means that the key gamma strike increase from the previous day and we can see that with both Netflix and NVIDIA and we'll look at some stock setups I just want to go over this before the announcement so these two stocks have been in play recently both Netflix and NVIDIA to the upside so this is just pretty consistent with what they've been doing for the last at least week and Netflix even longer and then note the drop in the key gamma strike for Tesla and Tesla has also been in play and it has been in play to the downside it's been falling so this is pretty typical for Tesla with a falling key gamma strike so let's I just want to set the stage for some setups that we may look at after we watch the announcement and let me ask you is that what you want me to do is watch ES and watch the hedging flow during the announcement again let me know what you want to see and let me check with YouTube here okay traders and YouTube want to see the ES and P500 and then we'll we'll go over here to spot gamma hero and watch ES as well so we can see so far that traders have been looks like mainly buying calls not doing much with puts but buying buying calls today and this is most likely and spy let's just do a quick check I'm going to just change the order to alphabetical order yeah so this is spy and SPX so we'll watch ES combines options trades in SPX and spy so we'll shift back between the two I wish I had a way of popping out this window but I don't as far as I know and one quick thing that we can look at while we're waiting let's go to the CME FedWatch tool so this shows now that traders have a pretty high expectation for a 50 basis point rate hike so this shows the current target rate and this is the expectation for 50 basis points and that has increased that increased from Monday to yesterday to today so I've got about a minute to the announcement here so again we know that positioning is fairly neutral at this point let's just check fix real quick fix is pretty much flat for the day okay so here's the announcement I know there's a delay on YouTube alright so as expected the Fed raises the Fed funds rate by 50 basis points so this is as expected and maybe some organizations were predicting a 25 basis point rate hike but I think the consensus shown by the FedWatch tool was for 50 basis points and it looks like the statement is also indicating that ongoing rate hikes are appropriate and that may be what's causing this reaction let's take a quick look at spot gamma hero here what I'm going to do is switch the look back period let's switch it to 5 minutes so we can see better what traders are doing that may be too noisy let's go back to book map let's come to the 400 this is a spy 400 key gamma strike and reversed higher at that point alright in the sub chart I'm looking at iceberg trades and these are large orders that larger traders use to hide their size and it looks like larger traders are buying with iceberg orders and it looks like this drop and shows stop orders and it looks like this move down triggered some sell stop orders and this blue line here is cumulative volume delta showing buys minus sells and that is pretty neutral and in book map discord Bernard asked what do I think about VIX falling ahead of the Fed meeting well it really wasn't falling much let's go and see what it's doing now oops one it's flat for the day let's go look at the chart and this shows that the change in VIX today is minus 0.02 so I would say the only response to the question is that traders were already positioned the way they wanted to be ahead of the announcement let's go check spot gamma hero again I'm going to change this look back period just a little bit see if I can smooth that out just a bit so from this point of view it looks like they're buying puts let's see if this helps buy puts then last 5 minutes showing they're starting to buy puts again so this is a little bit more clear it looks like traders are taking on negative delta positions here and spy and this is changing that rolling window to 10 minutes let's go back to book map so now it looks like price bounced up from the 400 key gamma strike chopped around the 0 gamma level and 4050 and then has now dropped down to the SPX 4000 level let's just take a look and see what's below here and take a look at all the aggressive sellers coming in there those pink dots show those are market orders each dot is market buy minus market sell and here the sellers were dominating down to the 4000 level and just above the volatility trigger so at least for right now that support level has held and that is also the spy volatility trigger so let's go back and check and see what options traders are doing so it looks like as you would expect that traders are starting to buy calls and sell puts as price has dropped down to that key level and it looks like this price is not quite right I have right now trading below 400 somewhere between 399 and 400 and this is showing that spy stopped it's a little bit delayed so that's at 207 and there we go so price appears to be a little bit delayed here and Drew in YouTube asked could you clarify taking on negative delta positions that would mean selling calls and or buying puts and there's no way of knowing whether they're buying or hedging that's just what traders are doing so hero is shown in terms of delta so again a negative delta position would be traders are buying puts and or selling calls and a positive delta position would be traders buying calls and selling puts and that appears to be what is happening now and that's potentially what's driving price higher and I have the rolling windows set to a fairly short time frame 10 minutes here so this is giving us pretty quick data to be short lived okay I'm going to go through a couple of setups from this morning and let's one thing I want to show is the the watch list that I that I posted this morning in bookmap discord and I ranked this is my watch list hero signal to the weakest and what this is showing is it ranks the hero signal in terms of the last five days and the last 30 days and the last five days is shown by this colored range of this this ellipse the slider and the gray shows the range for the last last 30 days so this shows that Amazon was at the top of the list with stocks with high or strong hero signals and the way I use this list is I look at stocks on either end of this list so remember that I noted that Nvidia had been that was one of the stocks with the rising key gamma strike and that had been in play to the upside for bullish trades and then Tesla here at the bottom of the list again with the weakest hero signal and that's been typical for a while now so let's just run run through those quickly close this actually let's go back to the full day rolling window here I'm going to rank this by hero signal again and take a look at now take a look at Amazon and I'm just talking about the morning setup here and this is just to give you an idea of how you could have used this information and let's separate put some call transactions here and we'll go through this for a couple of minutes and then go back and check on the S&P 500 again and zoom in on a bit and what I saw was this call divergence setting up a bullish trade in Amazon it didn't go very far there wasn't much range in Amazon but notice this block trade comes in traders buying calls and then they continue to buy calls and that sets up this long right here so let's go take a look at that in book map now so here's the morning setup not a lot but it was a pretty clear setup the reversal at the point of control there and just good for about a one point move so that was Amazon and the next one on the list were block and snow they're on my other computer and so let's go to spy it was a good setup in spy this morning and since then Amazon has reversed sharply lower spy so let's go back to spot game a hero here look at spy it was also on the list let's just check we're still have now back to the one day rolling window and traders were buying calls this morning and actually it looks like this is showing that they continue to buy calls now this is taking a cumulative sum of all the transactions for the entire day let's zoom in on the on the morning and see the traders were aggressively buying calls this morning and that that really set up a nice long and spy this morning so let's go back to book map now spy let's go back right sorry about all the screen maneuvering but this was this was a good setup this morning seeing the traders buying calls and the first entry first good entry after the open was this looking at this trend break in the breakout above that trend break as all the aggressive buyers came in shown by the green dots there and then another trend break aggressive buyers coming in and then this 405 level was noted as a resistance level spy gamma AM founders note so that was the target and spy reverse lower at that point so very nice setup and spy this morning let's go back to the list and there's one other setup that I want to point out and there were actually two we'll take a look at Tesla and there was a good set up good correlation between options trades and hero and price action and qqq in the morning session and let's look at that and then we'll get back to the to the live market so there was the setup this morning one thing to point out what I do so when I ranked my list from strongest signal to weakest I'm looking for call buyers and that's why I have the hero signal separated into puts and calls and again when I'm looking for longs I'm looking for call buyers and the reason is that when traders buy calls market makers are selling the calls and they have to buy stock or buy the underlying to hedge their delta exposure and that's a strong force that can continue to drive a dry price higher so that's what I'm looking at looking for for a bullish entry zoom in a bit here and we'll see the same thing are pretty similar to spy this morning is that traders were traders were buying calls shown by the orange line here and they started buying puts and then they changed and started selling puts let's go back to book map now and there's the setup this morning and qqq pullback entries looks like this was the best one and the price target would have been this 2.90 key gamma strike and it looks like qqq continued on up to the 2.91 strike okay back to the live market here we'll take a look at spy and looks like spy has found value at least for the short time right at the 400 key gamma strike and I have this shown incorrectly this 3.99 level is actually the volatility trigger so that's a very important level let me just change that on my spreadsheet here just to avoid any confusion so again this 3.99 level is what I'm looking at is actually the volatility trigger and that's where price initially reversed higher at the 400 key gamma strike and then went down to the 3.99 volatility trigger and let's go back to ES and again here I'm showing the same levels on the ES chart the 400 key gamma strike and the 3.99 volatility trigger just above the SPX 4000 level and let's do one last quick check of spotgamma hero let's go back we'll go back to spy change our rolling window back to 10 minutes and now traders have been selling calls and buying puts and I'm gonna sign off here my time is up it looks like the press conference will start in just a moment and that should get price moving again let's go back to this 3.99 to 400 range and spy, back to book map okay let me take a look for any final questions and then I will and Drew asked would that reverse if it were negative gamma and no buying a put is always a negative delta position and selling a call is always a negative delta position and the key gamma strike is the strike with the highest the highest net or positive gamma and I showed that in the S&P 500 charts and if you didn't see that go back and watch the recording so right now the the key gamma strike for spy or the absolute gamma strike is 400 and the key gamma strike for SPX is 4,000 the gamma flip level, Drew is asking about where gamma gets neutral for market makers and that is really for indices that is the volatility trigger and that is spot gamma's proprietary gamma flip level and that's where they shift from positive above the volatility trigger positive gamma above to negative gamma below Noah you're welcome okay it looks like Powell has started speaking now and let me just check discord quickly for questions I don't see anything so I'm going to stop now thank you very much for attending thanks for your questions and comments and I'll see you tomorrow, thanks again, bye