 Hello everyone, welcome to Options with Doug, streaming live daily on Bookmap Discord and the Bookmap YouTube channel at 1.30pm Eastern Time. 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 involve substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. Here's my contact information. The best way to get in touch with me is through Discord. My name on Discord is Doug P. Also on Bookmap Discord, there's an options-doug chat channel. That's a great place to post questions, comments, and content related to the topics of this channel and the topics of the channel and topics of my presentation that I'll go through in just a moment. Note that Bookmap Discord is free and available to everyone whether you subscribe to Bookmap or not. There's a lot of great content there. I'm also on X, formerly known as Twitter. My name there is at Doug Pless. The focus of my presentation today and the focus of the options-doug chat channel 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 for planning, I use positional analysis. I look at how traders and market makers position at the options market and how those positions change from day to day to develop a thesis regarding the expected trading range and volatility for the day as well as a directional bias. And the second step in my process is execution. I look at real-time order flow in Bookmap and real-time market maker hedging flow in SpotGammaHero to confirm my thesis and for setups for entries and exits. And when I talk about setups today, I will be talking about an underlying asset. And the setups can be taken any number of ways. For example, the S&E 500 setups can be taken with ES futures, SPY shares, SPX options, SPY options, or even ES options. Questions and comments are welcome. And I will be watching both the options-doug chat channel and Discord as well as the chat and YouTube for your questions and comments. Please feel free to post and I'll do my best to answer your questions. All right, here's my agenda for today, Friday, December 8th. The theme of the day, call walls. I'll talk more about that later. First of all, I want to cover news items for today. Economy data and events to wrap up the week. That's jobs report, Michigan consumer sentiment. And we'll take a look at the reactions to those data releases. Then I'll go through my positional analysis. And then I'll review some setups from earlier today. And then I'll talk about the live market. And when I get to the live market, if anyone has any stocks they want me to take a look at, please let me know and I'll be glad to do that. All right, let's start with economic data and events for today. And I forgot to bring that over, give me just a moment. All right, here we go. So this is the data release at 8.30 a.m. Eastern time. The jobs report and it came in better than expected. That was 199,000 versus the forecast and previous both lower. So good news there for the economy. Also the employment rate less than forecast and less than previous. And then finally earnings year over year in line. And we'll take a look at the reaction again in just a moment. All right, so that was at 8.30 a.m. Eastern time. This is the monthly jobs report. And it was pushed back from a, it's normally on the first Friday of the month, and pushed back to today instead of last Friday. All right, so that's the jobs report better than expected. The Michigan consumer sentiment was also greater than expected and the greater than previous. So good news there as well. So according to this data, the economy is still looking strong. All right, let's take a look at the reactions to that data. Let's go to book map. This is the ES futures, SMB 500 futures and book map. And give me... All right, here we go. So this is the reaction at 8.30 a.m. Eastern time. Initial reaction, knee jerk reaction to the jobs report was bearish. Sharp drop down and the SB 500 found support at the SPY 456 large Gamma 3 level. And then price reversed pretty sharply higher. Then here's the reaction to the Michigan consumer sentiment at 10 a.m. and a bullish reaction with a reversal at 458. A node in between at the cash open. The SPY 457 volatility trigger zero Gamma level was support. I'll talk more about that in a few minutes. So overall today, net bullish reactions to both the jobs report and the Michigan consumer sentiment. All right, just to point out, this is the... Right now, this is the Z contract, the December contract for futures. A rollover will happen on Monday. That's when I'll rollover. So I'll be on the March contract on Monday. So this is the last day for the Z contract. All right, then there are some significant news events next week. CPI data, FOMC meeting and announcement, the last one of the year. And then the big December options expiration on Friday. I'll talk more about that on Monday. All right, so that's the data. Let's start with the positional analysis now. So this is the ES futures and book map. And before I take a closer look at this chart, I want to take a look at a larger timeframe. So I'm going to go to SPX. This is the SB500 index. And first I want to point out key turning points on this chart. First of all, this is October 30th. This is when the current rally began on the Friday before. That was on a Monday, the Friday before. Traders were buying puts concerned about weekend risk. Then on Monday, price increased, implied volatility dropped. Market makers, when traders buy puts, market makers sell the puts. And they have to sell futures to hedge their delta exposure. As price increased, implied volatility dropped. Market makers could buy back their short futures. And that led to a huge IV collapse. Put that a rally. And during that time, market makers position on the gamma curve was gradually shifting from negative gamma to positive gamma. I'll talk more about that in a few minutes. And then on November 14th, that was the November CPI report. Came in much better than expected. And the rally continued, grinding higher in a positive gamma environment. All right, let's take a look at some levels on this chart. I'm going to zoom in just a bit. So first of all, the dash purple lines are showing the lower and upper weekly expected move. This is updated. I update this once a week. This is based on the options market. And the dash blue lines are showing the lower and upper daily expected move. Also, based on the options market, I update that once a day. And note that SPX is trading pretty much right in the middle of both of those ranges. And note for today, the upper daily expected move, which substantially larger than yesterday due to the jobs report today. Yesterday, the expected move was right around 22 today, right around 32, plus or minus 32 points. All right, that is the daily and weekly expected move. The dark red lines are showing spot gamma proprietary levels. These are available to spot gamma subscribers at a variety of platforms. This is thinkorswim. And I'm going to point out the key data levels. And these are based on gamma weighted open interest that is updated once a day. All right, so first of all, the poop wall, that's a strike with largest net negative gamma that can be expected to act as support. The next level up, excuse me, the next level up is the volatility trigger at 45, 45. And above that is the 4,600 call wall. That's also the absolute gamma strike. So the volatility trigger is spot gamma's proprietary volatility flip level. Below that level, market makers position on the gamma curve is negative. In a negative gamma environment, they have to trade with price to hedge their delta exposure and that tends to enhance or increase volatility. On the other hand, like SBX is trading now, market makers position on the gamma curve is positive. In a positive gamma environment, market makers have to trade against price to hedge their delta exposure and that tends to subdue or decrease volatility. And then again, the call wall at 4,600, that's a strike with the largest net positive gamma that can be expected to act as resistance and it did more or less today. And also that is now the absolute gamma strike. That's a strike with largest absolute positive and negative gamma. That's where most of the gamma weighted open interest is concentrated. All right, so those are the key levels. And note the absolute gamma strike did shift higher as I mentioned before. So up at 4,600 now from 4,550 yesterday and the volatility trigger shifted slightly lower. It oscillates up and down almost every day right now at 4,545. So those are the key daily levels. And note also the very narrow range for the last couple of weeks in between around 45, 40 and 4,600 and there's a pretty good chance that the SPX will break out of that range next week with the data and also the CPI data, FOMC meeting and then the December options expiration releasing some of that positive gamma. I'll talk more about that on Monday again. All right, so that's SPX. Let's take a quick look at a one day chart just to get a closer look at the levels in play for today. And here's that call wall. Absolute gamma strike at 4,600 and certainly not to the tick but acting as resistance today. And note this 4,575 level. Large gamma 2 level acting as support this morning. So those are the SPX gamma levels in play for today. Let's take a look at book map. Now in book map I have my own cloud notes so I can show SPX levels and SPI levels on the same chart. So you can't see it here but in between the SPI 4,60 call wall and this combo level that's the 4,600 call wall SPX 4,600 so I'm showing SPX levels on this chart. Note there is a difference in price between ES and SPX and today it's right around 4, 4 points. So ES minus SPX equal 4 that will widen substantially next week with the March contract. So it gradually tends towards zero as the rollover approaches and then it will expand pretty substantially. So right now there is a pretty big difference between the Z contract price and the H contract price. Alright so I'm showing SPX levels on my chart. I'm also showing SPI levels. I pointed out several of these levels before. This was the SPI 4,56 large gamma-3 level acting as support before the cash open after the 8.30 am jobs report and right at the cash open the SME 500 found support at the SPI 4,57 level that's the volatility trigger and zero gamma level. Then there was another pullback to the SPI 4,58 level. And that's not a SPI gamma level, just a round number level. And then finally the SPI 4,60 call wall is just above the SPX 4,600 call wall acting as resistance. I'll talk more about setups in a few minutes. So the SPI round number levels, SPI gamma levels definitely in play today for the SME 500. Alright I talked about shifts in levels for SPX volatility trigger down absolute gamma strike up and for SPI the volatility trigger shifted slightly higher up to 4,57 from 4,56 yesterday the level that acted as support. Alright let's take a look at NASDAQ now. This is the ENQ futures and book map and before I take a closer look at this chart I want to take a look at a QQQ chart just so we can isolate the QQQ levels in play for today. Note the zero gamma level here at 387 more or less acting as support before the cash open right after the jobs report. Here's the 388 volatility trigger so QQQ trading above its volatility trigger then this 390 level that is the absolute gamma strike acting as support and just above that there's a combo level and note 390 is the again the absolute gamma strike that level did shift higher from yesterday also the volatility trigger shifted higher on the other hand both the put wall and call walls shifted lower. The call wall now at 395 for QQQ still well above current price. Let's take a quick look at NDX 16,000 level back in play that's very close to the QQQ 390 level so there's that 16,000 level and NDX is trading above that level now. Alright back to ENQ futures and book map again I have my own cloud notes so I can show QQQ levels there's that cluster of levels there that is the QQQ 390 absolute gamma strike and just above that the NDX 16,000 level note quite a bit of volume concentrated right around those levels that's shown in the session volume profile as well as the point of control that purple line just above that cluster of levels alright so those are the levels in play today for the NASDAQ NQ futures not sure why prices shifted down like that on the chart there's so much empty space above alright so that's NASDAQ levels in play I'll talk about setups in a few minutes alright let's take a look at gamma notional now see where market makers were positioned on the gamma curve at the beginning of the day so what I'm going to take a look at is gamma notional this is available in the spot gamma AM founders note I look at this every day for the SMB500 NASDAQ and Russell 2000 this gives me a sense of how market makers may react to changes in price and implied volatility these numbers are positive and a positive gamma environment market makers are long calls, traders are short calls that's the assumption market makers have to trade against price to hedge their dealt exposure so as price increases the value of the calls increase and they have to sell futures on the other hand if price drops they can buy back their short futures again all these numbers are positive so market makers position on the gamma curve is positive for SMB500 NASDAQ Russell 2000 these numbers all shifted higher from yesterday spy gamma notional and QQQ gamma notional were both negative yesterday and now they have shifted back to positive alright let's take a look at the Vana model the difference of a graphical representation of what that may mean this is SPX the Vana model what this chart is showing is market makers delta notional on the vertical axis and the spot price for SPX on the horizontal axis there are two curves on this chart the first the light gray curve shows how market makers delta notional may change with changes in price only the purple curve adds implied volatility to the equation that shows how market makers delta notional may change with changes in price and implied volatility and that change in delta with the change in implied volatility is the Vana effect Vana is the second order Greek and that's the curve that we want to take a look at alright let's check the current price so SPX trading right around 45.97 right here at the bottom of the curve so what this is showing is there's really no Vana headwind or tailwind with any immediate movement up or down but if price continues to increase market makers will have to start selling futures their delta notional will increase the positive gamma environment and market makers will have to sell futures to hedge their delta exposure and that tends to slow down any movement higher leading to kind of a grind higher I showed that in the 30 day chart for SPX where the rally shifted from negative gamma to positive gamma and price the price increase consolidation and it slowed down on the other hand if price drops down toward 45.00 market makers delta notional will increase again and they will have to sell futures so in that case they would be trading in the direction of price that's SPX Vana model for today let's take a look at SPI SPI trading right around 459 just below the call wall also at the bottom of the curve so in this point of the curve no Vana headwind or tailwind and QQQ trading just below 392 also at the bottom of the curve alright let's take a look at some set ups now oh just to mention so my thesis for the day first of all I look at expected volatility in that my expectation for volatility was low based on the positive gamma for the SP500 NASDAQ and Russell 2000 so looking for more of a range mean reverting price action and the last couple days the direction up or down has really depended on movement of the magnificent seven or about that in a few minutes alright let's take a look at some set ups now so the first thing I want to take a look at is what options traders have been doing today and they typically have a very strong influence on price for the SP500 and NASDAQ and I'll show that and that is as well as many stocks a lot of the stocks that I trade the large cap tech stocks and price action very largely driven by options trades market maker hedging activity alright so this is the hero signal everything that we've looked at so far other than book map has been based on static data that's updated once a day spot gamma takes the open interest data from the OCC applies their proprietary algorithms to derive the levels and the gamma notional the Vana model everything that we've looked at and that I use in my planning my positional analysis for the day alright so this is real time just like book map and what this chart is showing is price for SPX and the hero signal hedging impact real time options showing options trades and market maker hedging activity for a combined signal for SPX by XSP and ES futures so if you trade any form of the SP500 this is the signal that you probably want to look at this is the signal that I look at this combined signal alright let's zoom in and I'm going to zoom in so I'm showing price action of the hero signal from the cash open at 9.30 and note from the cash open purple line rising indicates traders are taking positive delta positions and note here's the 4600 call wall for SPX so that was definitely leading to a very bullish setup from the open we'll take a look at book map in just a minute alright let's take a closer look separate outputs and calls so we can get a little bit more clarity on what they're doing so initially in the morning traders were buying calls that's shown by the rising orange line sorry about that nothing I did that's an issue with the hero so initially they were buying calls and selling puts blue line and orange line rising the same direction rising orange line traders are buying calls rising blue line prices move in the same direction that's a very bullish that's a very strong directional signal right around 1015 alright so right around 10 traders start buying puts 1015 they start selling calls price moves lower 1030 they start buying selling puts buying calls price moves higher mean reverting price action in a positive gamma environment both lines moving in the same direction price moves lower in 1215 they start buying calls again and then the put line really levels off so from 1215 on they continue to buy calls and the call line really is having a pretty strong influence on price today notice the notional value just around 1 billion which is pretty small but traders are buying calls in spx spy xsp and esfutures when traders buy calls market makers have to they take the opposite side so they're selling calls and they have to buy futures they hedge those options trades with esfutures so up and down price action heavily driven by options trades and market maker hedging activity today alright so let's go take a look at book map go back to es and let's just take a look at this first setup we'll start back at 830 and go to the second test of the call wall so remember initially traders were buying calls and selling puts and actually that starts at the starts at the cash open we looked at the hero signal and then price continues higher note that the turning points the pull backs let me zoom in on that just a little bit more so we can get from 932 just watching order flow here order flow and levels just before the cash open test of the spy 457 volatility trigger the volume dots are showing buy minus sell magenta dots indicate more sellers than buyers green dots indicate more buyers than sellers magenta dots more sellers than buyers noted all the pull backs aggressive buyers come in volume dot shift for magenta to green green volume dots green volume dots at the pull backs even up at the at the call wall and the sub chart indicators were pretty mixed at this time and that indicates to me that options traders were really driving price today and note at this turning point here the signals and book map are pretty clear let's go over those first of all the shift to magenta volume dots a lot of aggressive sellers come in note the liquidity in the order book here the heat map and book map shows a history of the limit orders in the order book this is dark shaded area indicates there were a lot of limit sell orders a lot of buy orders just below but again also aggressive sellers also large traders starting to sell with iceberg orders that's shown by this on chart indicator as well as the sub chart indicator the following blue line indicates that's a cumulative indicator in the sub chart indicating traders large traders were selling with iceberg orders they used to hide their size again magenta volume dots so a buy stop run up to above the call wall aggressive sellers start to come in and cumulative volume delta also shifts lower as traders started taking negative delta positions alright that's the sb500 and now testing the call wall again the call walls I should say the 4600 and above that the spy 460 let's go back to hero and see what options traders are doing right now so right around 1215 the hero signal shifted back to positive delta traders taking positive delta positions as we saw before buying calls rising orange line traders buying calls they have stop buying puts and again when traders buy calls market makers sell the calls and they have to buy futures to hedge their delta exposure and note a pretty timely flow alert here right around 1215 let's go back to book map and here's where that alert came in right at 1215 with that shift in hedging flow let's take a look at nasdaq and good afternoon VHU welcome glad you're here I will take a look at tesla today yeah I will nasdaq again I'm not sure why it's my book map is not showing more than the price action anyway there we go here's nasdaq let's go back to hero now first thing I want to do is take a look at the magnificent 7 so I mentioned this before just like the sp500 this is a combined signal in this case for the 7 stocks known as the magnificent 7 that's Apple, Amazon, Google, Meta Microsoft, Nvidia, Tesla and notional value for today is positive known in the morning let me zoom in on this in the morning traders were taking positive delta positions and here's that 1215 turn around pretty sharp turn around in the hero signal and price moves higher in both the SM500 and nasdaq as well as these 7 stocks most of them let's see what traders are doing so they're buying calls and selling puts orange line shows calls rising orange line traders are buying calls blue line shows puts rising blue line indicates traders are selling puts positive delta positions moving in the same direction today let's take a look at the nasdaq signal and in the morning there was pretty strong correlation between options trades hedging flow and price action then right around 11 traders start taking negative delta positions price moves lower and then levels off now hero levels off price consolidates traders start taking positive delta positions again in the magnificent 7 and now they're joining the party in the nasdaq so what this is showing is traders this is a combined signal showing options trades and market maker hedging activity for qqq and ndx so mostly qqq ndx is pretty thinly traded let's go take a look at book map Muhammad asked what about options on spy I'm not sure I understand your question do you want to take a look at the hero signal for spy and if so that's just a component of the SMB500 signal so if you could clarify that question I'll do my best answer so let's go back to book map nq futures remember traders were taking positive delta positions from the open shown right here price makes a series of pull backs looks like my sub chart indicators are turned off turned those on we'll give that just a moment to update while that's updating we can just take a look at price action and order flow so the uptrend starts at 8 30 a.m. eastern time the data release back to nq 950 at the cash open price makes a series of higher lows and pretty typically aggressive buyers come in and at these pull backs a price higher and the nq 16100 level and the qqq 392 level acting as resistance earlier today then here's this 1215 turn around as traders started taking positive delta positions in the magnificent seven zoom in on that and nasdaq more or less finding support near this cluster of levels and then the afternoon rally rally began a lot of aggressive buyers coming in right at VWAP there that's the light blue line that's VWAP and now nq continues to move higher all right Muhammad let's we'll take a look at spy options so let's go back to hero and as I mentioned this SB 500 signal is a combined signal for SB X SSP and ES futures and I can also take a look at the individual components so here's the looking at the afternoon rally spy options traders start to take positive delta positions and price moves higher all right so Muhammad there you go I can take a look at the individual components of any of this signal I prefer to take a look at the combined signal they all have an influence on the movement of the SB 500 or let's take a look at some stocks so like I mentioned in my introduction the theme of the day is call walls so I'm going to take a look at some stocks so we've seen the interaction of the call wall with SPX and spy and SPX and spy trading back up toward those levels now let's take a look at some stocks also interacting with our call walls so first of all this is Apple call wall at 195 let's go take a look at book map go to Apple so 195 is the call wall note there were a couple of touches of the call wall earlier today acting as resistance and then finally breaks above that level note the large volume dots aggressive buyers buying that liquidity buying those resting limit sell orders in the order book quite a lot this dark red band shows again a history of the limit orders of the order book the darker the shade the wider the band the more orders there are at that level and finally it took three tests and finally the buyers consume all of those limit orders and now price moving higher acting as resistance before and now support and note also the point of control at that level point of control initially at the opening prints or a wrong tool point of control initially at the opening print that's pretty typical for stock and then there was enough volume at the 195 level that the point of control moved up to 195 so that's Apple the next AMD let's go take a look at hero so for AMD 130 is the call wall and today traders are buying put buying calls shown by the rising orange line and they're also buying puts shown by the falling blue line call buyers more aggressive price action up and down 130 is the call wall it's also the key gamma strike there was a price breach earlier today and then that level acted as resistance sorry about that let's go to book map so 130 the call wall key gamma strike initially there was a breach tool sorry I'm trying to look at multiple screens at the same time sometimes I do grab the wrong tool a breach of that level before and then it acted as resistance and now AMD is trying to get back up to that level and remember AMD was pretty strong yesterday after announcing their new AI chip the day before there's AMD call buyers in on AMD today the next is meta strong day in meta today and for meta, 330 is the call wall key gamma strike let's take a look at hero and see what options traders have been doing so I'm just going to leave it in the total signal here so here's the 330 call wall key gamma strike and meta has breached that level now trading above let's go back to book map so when traders buy calls and sell puts and a stock markmakers take the opposite side of those trades and they have to buy stock to hedge their delta exposure let's go to book map here's the 330 call wall key gamma strike initial breach traders absorb the limit sell orders price consolidates just below and now has breached again and continues to move higher as traders continue to take positive delta positions alright the next is Nvidia and for Nvidia 470 is the call wall so a pretty substantial breach of the call wall for Nvidia let's go take a look at hero see what options traders are doing here's the 470 call wall pretty substantial breach again as traders continue to take positive delta positions let's just take a quick glance at puts and calls so traders are buying calls shown by the rising orange line positive notion of value they're also selling puts shown by the rising blue line and the positive notion of value very bullish day in Nvidia a breach of the call wall and when a stock price does breach that call wall so first of all when traders buy calls market makers sell the calls they have to buy stock to hedge their delta exposure and so market makers position is short calls and as price rises those calls at the call wall that is where the highest concentration of calls that's the net positive that's where the net calls minus puts that's where a lot of calls are concentrated when those calls go in the money they go further in the money they gain delta and market makers have to continue to buy stock to hedge their delta exposure so there's Nvidia let's go back to book map then Veehu wants to take a look at Tesla let's take a look at Tesla pretty choppy day here in Tesla up and down let's see what options traders are doing so net for the day traders are taking positive delta positions and the reversal after the reversal started at 12.15 just like everything else and for Tesla 245 is the call wall let's zoom in on this chart acting as resistance today so sticking with the call wall theme call wall acting as resistance and now Tesla approaching that level again and notice price touches the call wall traders start taking negative delta positions and notice again as traders as Tesla price approaches the call wall options traders are taking their foot off the gas the hero signal leveling off let's go back to book map so there's that test of the 245 call wall notice the high concentration of liquidity at that level those limits sell orders often act as a magnet for price those limits sell orders at 245 were some were consumed here and then they come back in the order book again just after that and remain there looking to sell again at 245 alright I've got just a couple minutes left does anyone else have any stocks they want me to take a look at please let me know and I'll be glad to do that otherwise we'll circle back to the first the SB500 now back up above the up above the 4600 call wall and now testing the spy 460 call wall let's go check NASDAQ alright Shane wants to take a look at TLT I don't have TLT in book map we'll take a look at that in hero so pretty choppy action here in TLT and it looks like the 10 year note the 2 year and the 30 year yields are all higher today and then traders are taking positive delta positions in TLT at least in the morning up until about 1045 and then they've taken the foot off the gas alright wants to take a look at IWM so overall net negative delta for IWM right around 1015 hero signal started move lower then price responded then around 1215 just like everything else I don't know if there was some event at 1215 traders start taking positive delta positions and then price starts to respond higher and I do not have grizzly bull I do not have IWM in book map I mainly trade let's go back to book map I mainly trade these stocks right here that I have shown a book map all of these stocks have very good liquidity heavily driven by options trades and market maker activity so again very highly liquid easy to trade heavily driven by options on a consistent basis all right Cleed you're welcome Shane you're welcome hello Floyd's garage and grizzly bull you're welcome as well all right last call for stocks otherwise I'm going to wrap it up all right everyone thank you very much for watching thank you for your questions and stock suggestions in YouTube everyone have a great weekend and I will see you on Monday thanks again bye