 Hello everyone, welcome to options with Doug streaming live daily on book map discord and the book map YouTube channel at 1 30 p.m. Eastern Time Excuse me Before I get started. I need to go through the disclosures General disclosure all book map limited materials information and presentations are for educational purposes only and should not be considered specific and 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 The focus of my presentation and the focus of the options stash Doug chat channel and discord is options order flow the impact of options markets on stocks and futures and the influence of market maker hedging flow on price action I have a two-step process for trading and the first is planning and I use positional analysis I look at how traders and market makers are positioned 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 the directional bias and The second step in my process is execution and I look at real-time order flowing book map and Real-time market maker hedging flow and spot gamma hero to confirm my thesis and for setups for entries and exits Questions and comments are welcome and I will I would be watching both the option stash Doug chat channel in Discord and the chat and YouTube for your questions and comments My agenda for today what I plan on talking about First of all go over news items economic data For today and for the rest of the week and then I'll go through my positional analysis And then I'll review a couple of setups from this morning I'll review the sv 500 Nasdaq and Two or three stocks, and then we'll look at the live market All right, let's get started Economic data. There were a couple of items that came out this morning Services PMI that came out at 945 a.m. Eastern time and 10 a.m. And both were less than expected But greater than 50 so indicating expansion and then also factory orders came out at 10 a.m And that was also less than expected and as far as I know. There's no other significant data Coming out for the rest of the week and then I believe that probably the next big event is the FOMC meaning next week a Week from this Wednesday Alright, let's start with the positional analysis. I'm going to go to the S&P 500 futures and Bookmap This is the ES futures Again a book map and before I take a closer look at this chart I want to take a look at a larger time frame So I'm going to go to a thinkorswim chart. This is spx a 30-day one-hour chart and This is just showing price and key levels Let me point out some key levels here. First of all, this is the lower and upper edge the expected move for the week in The dash purple line again, that's for the week based on the options market and then this Dash blue line is the lower and upper edge the expected move for the day So right now spx is trading within both within the Daily expected move and the weekly expected move Let me point out some other levels on this chart and These are key spot gamma levels these provided to spot gamma subscribers for a variety of platforms again We're looking at thinkorswim So the first level is the put wall and that's the strike with the largest net negative gamma That can be expected to active support and that is not in play Currently and then the next level is the volatility trigger That's a very important level and that is at forty one ninety five and that level did increase slightly from From Friday So it's at forty one ninety five now And just looking back in my notebook So it was forty one ninety on Friday So a slight increase in volatility trigger and that a spot gamma's proprietary gamma 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 SPX is trading now above the volatility trigger Market makers position on the gamma curve is positive in a positive gamma environment They have to trade against price to hedge their delta exposure and that tends to subdue or decrease volatility So SPX is trading well above its volatility trigger and the next level is The forty three hundred level. That's a very important level. That is the call wall That's the strike with the largest net positive gamma that can be expected to act as resistance And that is the new absolute gamma strike the absolute gamma strike is the strike with the largest absolute gamma And that that is new like I said, so that level shifted up from Excuse me forty two hundred on Friday to forty three hundred today So that's a very important level. So those are the four Primarily primary or key daily levels that I follow the put wall volatility trigger call wall and absolute gamma strike and note that this forty three hundred level Did appear to act as resistance today as expected? Let's take a look at a Another thinkorswim chart, this is SPX in a One-day one-minute chart showing the levels that are in play for today and here is the This call wall level at forty three hundred and there's also a combo l one level and that is a significant level large gamma one combo means combining SPX and spy Gamma into one level converted to an equivalent SPX number and that level did act as resistance today So right there is the combo l one forty two ninety nine level acted as resistance All right, let's take a look at book map now and I have Two columns of notes of levels on my chart first these are the spot gamma cloud notes and Then I have my own column of notes the C levels and I show the same spot gamma levels and I do calculate the ES SPX difference every day and Right now it's pretty close to seven, which is what spot gamma is using so my levels Are in the same location as spot gamma so here's the Forty two ninety nine combo one level and also the forty three hundred absolute gamma strike and call wall Both doing their job and acting as resistance Then I also have spy levels on this chart and there is quite a concentration of gamma around the four four twenty eight Four twenty nine and then the four thirty level which is the spy call wall So this is should be a fairly sticky area with all this concentration of gamma and again the forty two ninety nine level did act as resistance there and note the Spy four twenty eight and four twenty nine levels Have also been in play for today And now this four twenty eight level may be acting as support and we'll talk about setups in a few minutes so for SPX and spy I I covered the shifts in levels so or for SPX Volatility triggers shifted up slightly and the absolute gamma strike made a large shift higher from forty two hundred to forty three hundred and For spy the volatility trigger also shifted higher From four nineteen to four twenty six and then the absolute gamma strike also shifted higher From four twenty to four twenty five so overall bearish, but the thing to note is the call wall the ceiling for the S&P 500 for SPX and spy neither levels shifted higher so for SPX The call wall remains it for forty three hundred assuming that's going to be the ceiling And then also the spy four thirty call wall that I just pointed out up here Also remains the same so these call wall levels Have not shifted higher So I'm you know based on that slightly bullish looking for price to be contained by those levels And until the call wall shift higher All right, let's take a look at NASDAQ now, and I'm going to take a look at a QQQ chart here Showing this is a one-day one-minute chart again think or swim showing the levels that are in play for today And note that QQQ is treating Well above its volatility trigger also in a positive gamma environment, and here's the call wall Up above at three sixty and That level remains the same so for QQQ The volatility trigger put wall call wall and absolute gamma strike all Remain the same from last Friday, so no shifts in levels for the NASDAQ In the level that it has been in play for today is this combo level also a large gamma 2 level at 355 and That was actually noted as resistance in the spot gamma AM founders note So those are the QQQ levels that have been in play for today stick look at NASDAQ and NASDAQ was definitely more bullish This morning than the S&P 500 and recall last Friday. It was the S&P 500 was in more of a broad-based rally and The usual suspects the Large cap tech magnificent 7 was not not especially strong on Friday And that seems to have Reversed today and the Magnificent 7 or have been in charge Again today leaving the market higher up to a certain point All right, so the levels in play we talked about the 355 level there's the QQQ 355 level also a Ndx level at 14,000 561 and then the NQ 14600 level and we'll talk about setups in a few minutes. So again shifts and levels for QQQ there were none, but there were some significant shifts in Ndx all higher put wall shifted higher the call wall shifted higher And that's the only call wall that shifted higher and then the absolute gamma strike Also shifted higher for Ndx All right, let's take a look at The Vana model now we're going to get an idea of how market makers are positioned and I'm still going through my my planning process So this is SPX. This is the Vana model and this is something that I look at every day I think it's very important to look at it what this chart is showing is Market makers Delta exposure Delta notional and how that changes with price so Delta notional shown on the vertical axis and Price shown on the horizontal axis There are two curves on this chart The light gray is showing how market makers Delta notional changes would changes in price only and what this is showing is As price increases Market makers will have to sell futures to hedge their Delta exposure and that tends to subdue Volatility when they're trading against price and that's typical of a positive gamma environment and all the indices are in a Very positive gamma environment right now and then this Second curve the purple curve adds implied volatility to the equation and that's showing how market makers Delta exposure changes with changes in price and implied volatility and that change in Delta with a change in applied Volatility is the Vana effect. So hence the name the Vana model here and what this is showing is Market makers as price increases may have a little bit less Delta notional To hedge as predicted by the Delta only curve and then on the other hand really more significantly as price decreases They will have significantly more Delta to hedge So as price decreases and implied volatility increases They will have more more Delta to hedge All right, let's take a look and see where spx is trading right now Give me just a moment. So I've got spx at 42 86 so that's somewhere between these two lines indicating that there's certainly no tailwind from Vana at this point and Potentially more of a headwind as price increases or decreases So interesting Vana model today, and it appears that spx right now is just at the bottom of the gamma curve Let's just take a look at spy quickly. Let me take a look So spy is trading around 428 a little bit of a Not really much of a tailwind and let's do a final check on QQQ QQQ is trading 356 so again pretty close to the bottom of the gamma curve One other thing I want to take a look at on this chart while I'm here This is the spy absolute gamma I'll just take a quick look at this and I mentioned the concentration of gamma right around the 428 To 430 level so there's the 428 this chart is showing Call gamma or positive gamma with the orange bars above the zero line and Negative gamma or put gamma with the blue bars below the zero line So definitely in this range right here Call gamma is is controlling the 428 for to 430 level Well, let's take a look at one other thing here and the data That I like to focus on is This gamma notional and the spot gamma gamma index for spx spy Ndx and QQQ and note the gamma notional All these numbers are positive And they became more positive today than on Friday. So the Market makers position on the gamma curve shifted higher into more positive gamma territory So for SPX right now it is 1.095 billion Right. So Truman asked what effect does absolute gamma have on price and it can act as support or resistance or a magnet for price So in a positive gamma environment, I'm looking for a fair amount of stickiness at these levels and Market makers to be Hedging against delta exposure and Really the only way that I would expect a significant increase in price At this point is for the call walls to shift higher and certainly guess it Truman asked can it pin price? Yes so there are Let me just finish with this and we'll take a quick look at the absolute gamma levels again and one one reason for Looking at those levels just to show show the source of the levels that I showed on the book map and think or swim charts That's where that information comes from They put wall the call wall absolute gamma strike all come from Those absolute gamma charts. So note that SPX spy Ndx QQQ all positive gamma So again market makers are trading against price to hedge their delta exposure and that tends to lead to You know an expectation for a range day today low volatility or range day Price trading at a narrow range mean reverting type market rather than trending market That you would expect if all these numbers were negative So this is where this information comes into play again the expectation for low volatility Range day All right, let's take a look at the absolute gamma levels oops One more time. Let me point point out one other level. This is for SPX looks like I'm going to do a refresh One other level that could be in play Is this 43 20 level and this is the short strike of the JP Morgan collar that expires at the end of June and That level certainly has been a pin at the and the past price and Fairly frequently actually when price gets close to that level and those are all short calls that expire on the end of the month the June quarterlies and so as price approaches and Expiration approaches the gamma of that level will increase gamma increases Closer to the money and closer to expiration So that level may come into play and note the high level of call gamma at the 4300 level All right, let's take a look at some setups now and I'm going to start with Spot gamma hero What this chart is showing is Price with a white line. This is the SMB 500 and Alex ask how are you able to see the? The call of the JP Morgan Buyer I'm it should be strike. So actually what JP Morgan does they have Three different mutual funds, I believe that Will carry a basket of a portfolio of stocks and then they hedge those With SPX options and what they do is they buy a put spread That's their hedge and then they pay for it by selling a call and those strikes are known I'll take a look at thinkorswim and in just a minute and I can show you Exactly where that is and I just showed it on the absolute gamma strikes, but we can see the we'll go to the June expiration and we will see the Open interest at the 43 20 level there's no question that that is the strike and anyway those strikes are well known anyway So that again, they have three three funds that Roll every quarter and so they're also they're rolling their hedges once a month But each fund is Yes, it is so the one that's an Alex ask is it possible to see where other funds have calls and puts and Yes, it is so I believe the I can't recall the the May Strike but SPX closed Just take a look at the end of May and see where SPX closed and that is this strike for the the May the fund that Has the End of May short call So take a look at where SPX closed At the month of May and that's where that Short-call strike was for the JP Morgan column. Let's get back to the hero chart So this is the white line showing price in terms of SPX and the purple line is showing market maker hedging activity options trades and Market maker hedging pressure hedging flow for a combined signal For the S&P 500 SPX spy XSP and ES futures, all right, let's take a look. I just want to take a quick look at the individual components of this the primary components SPX very close core close correlation between price and hedging flow and SPX spy not so much more negative So SPX Slightly positive now 440 million spy negative minus 794 million and then the ES futures positive 670 million and that should net out To this total signal right so the idea here is that market maker hedging flow Is a key driver of price action and can also often act as a leading indicator and Let me point out a couple of setups This is just a setup review from this morning So the first was a short and the slight divergence more of a confirmation Just around 940 and then the better setup was a long so options traders have been Fading the move so they were fading the move higher Started to take negative delta positions and then as price decreased They started taking positive delta positions, and this is the again the type of Mean reverting behavior that you can expect in a positive gamma environment So let's take a look at those two setups So a short at 945 and then along at 10. We'll go back to book ma'am Go to the sb 500 I'm gonna zoom in a minute bit here. Well, we'll go all the way so Here's the short setup At 945 at the 429 combo one level an important level That we looked at just a couple of minutes ago in the absolute gamma levels and note the shift in order flow green dots up to the 429 level just above and then Aggressive sellers shown by the pink volume dots take price down Almost to the 428 level spy 428 So that was the short setup Then the long setup it took a while to play out Just around the 428 level and Price finally resolves higher remember that traders were taking positive delta positions for quite a while and price after that Hero hero kickoff Made it to the first target and then almost almost to the second target at the call wall and The 4299 combo one level All right, so those are the setups the morning setups and the sb 500 quick short and Then the better setup the long which was shown by a Or led by a pretty significant Divergence here in hero That really started before 10 a.m. And it took about 15 minutes for that to play out well, let's Before I take a look at Nasdaq, let's take a look at The question Alex ask Are you able to see the call of the JP Morgan collar? Let's go to spx and And note what I said before about the at the market today. Here's the the usual suspects leaving price higher Microsoft Apple Google Tesla and this today it does appear health care is also strong But that's about it. Alright, so let's go take a look at an options chain for spx and I'm going to take a look at the Here's the June end of month Let me just adjust this down And what I'm looking at here This is this column right here is open interest for calls Looking at that number right there So there you go Alex There is the confirmation that 43 20 is the The short call strike of the JP Morgan collar that that rolls on the quarterly basis March June September December All right, so that's how I know for certain that that is the Short strike of the JP Morgan collar All right, so those the setups for the SMB 500. Let's take a look at Nasdaq now and for Nasdaq the hedging flow was not Not as easy to read and by the way, this is a combined signal for NDX and QQQ and There was really no confirmation of this long Set up there was a divergent short So for this quick move lower here Note that hero was falling traders taking negative delta positions as price was increasing and set up a short around 945 and then otherwise there's been no confirmation of price moving higher With Nasdaq options traders, so let's go back and let's take a look at book map Go to Nasdaq So here is the let's zoom in a little bit Here was that short setup in the morning that was confirmed by hero note the green volume dots right up to the 650 level and then aggressive sellers Start to come in note the shift from green volume dots to Pink volume dots aggressive sellers and then after that really no confirmation from hedging flow But definitely bullish order flow note here in the sub chart cumulative volume Delta that's shown by the dark blue line rising and then the Light blue line is showing iceberg orders. These are Orders that large traders use to hide their size and this is a pretty Kind of unusual to see large traders Consistently buying like this with with iceberg orders and then finally this rising Yellow line is showing by stop orders also fueling the move higher So options traders not so much today for Nasdaq, but definitely Order flow and book map is you know, definitely bullish and I just drew this wedge pattern on On book map here drew these lines and you know, of course you can see that Nasdaq broke out to the upside of this this wedge pattern. All right, that's Nasdaq And let's we'll take a look at a couple stocks and let me just point out Apple it looks like it made it up just below the 185 call wall and let's take a look at a hero for Apple So here's Apple. Here's the 185 call wall and that did its job today acted as resistance Not a lot of clue for clues from options traders today. This Notional value is negative and I think this was Up at this 185 call wall an all-time high for Apple today and of course their Worldwide developer conference kicks off today and they're they may have already announced or expected to announce some very expensive Virtual reality hits it So CNBC was parked outside their headquarters With their show today during launch Alright, so that's Apple. The next is Google a lot easier read here and note that call buyers are driving price higher and Google and That's shown by the rising Rising orange line And this is having a large impact on price when traders buy calls market Make yourself a cause and they have to buy stock to hedge their delta exposure And that is a great thing to look for if you're looking for a long set up in stock in a stock and Notice how notice how price levels off as traders stop buying calls clear driver of price action Traders again buying calls market makers selling the calls and buying stock to hedge their delta exposure. Let's take a look at Google in book map And I believe 125 was the put wall and second winds ask yeah, I can look at coin I don't have in a book map But I can take a look at it in hero. I'll do that in just a moment So there's Google call buyers driving price higher and the next is meta and let's take a look Hero for meta and in the morning it did appear that call buyers were driving price higher. I think what I was looking at is this large block order here this is something that an indication of large institutional trader buying a big block of calls there and that did have a positive effect on price Large block order of calls and price responds and at this point note that puts level off and Price moves higher as traders large traders buy calls and they continue to buy calls Let's just zoom in on on this morning session. All right. So anyway, that's meta and in video It looks like in video traders continue to unwind Really confirming a short here Note that hero makes a slightly lower high here as price makes a higher high and then both move lower and That's around 945 let's go take a look at book map and if to zoom in on this So there's the short set up at 395 as traders traders start taking negative delta positions and Price Price moves lower. All right. Let's go Take a look at coin now coin base and hero. All right. So there you go second wins Definitely bearish today Very easy read and price has moved below the hedge wall the key gamma strike at 60 and Now baby heading toward the 55 key delta strike And traders are selling calls and buying puts both notional value negative for calls and puts Yeah, second wins. This is what is so easy to read about stocks. The SMB 500 is very complex they're they're multiple components and and a lot to read in the order flow and This is what is so great about stocks so and if you have coin base open and book map you can see the liquidity levels and the order flow and then looking at hedging flow So what market makers are doing second wins ass market makers will now trade with price. So with the model for stocks is a little bit different than Or at least spot gambas assumption for stocks is different than index products. So for an index product Market maker spot gamma assumes that traders are long puts and short calls and They assume market makers are taking the opposite side of that. So they're short puts and long calls So in the short put region of the gamma curve Market makers position is negative gamma and then in the positive or the call region Market makers position on the gamma curve is Positive so that's for an index product like the SMB 500 spy or SB X or QQQ on the other hand. So that hence the positive and negative gamma the The assumption for stocks is different spot gamma assumes that traders are either Long puts or long calls and hence market makers are short puts or short calls So there is really no positive negative gamma For for stocks. So market makers are always going to be trading if traders are buying puts market makers are selling puts and They are selling stock to hedge their delta exposure if they're buying calls If traders are buying calls market makers are selling calls and they're buying stock to hedge their delta exposure So it's a lot simpler model as well All right, so there you go. There's There's coin base. So again for stocks different assumption Very simple. This is you know, if you're looking for something to trade that is Totally clear here you go and again, I'm sure if you saw this in in bookmap you can see the Liquidity levels and the order flow that would also inform your decisions Let's take a look at the Live market now Let's go back to the S&P 500 and Note that All right, so second wins already has some puts here great and glad you confirm my bias. You're welcome That really helps having this information All right, so for the S&P 500 now hedging flow is definitely negative and The total this is the total signal Notional value is negative. Let's go take a look at book map and again the SPX 429 level did act as resistance order flow shifted Barish and let's just see if there's anything to do now Let's take a look at Vix see if that provides any clues So Vix is shifting lower. This is a one-day one-minute chart Let's go take a look at hero and see if price could be reversing at this 428 level and notice that iceberg orders are starting to come in and buy shown by this rising blue line light blue line Not very large orders not very large iceberg orders Let's take a look at hero and the overall trend of hero is still down still Options traders taking negative delta positions Let's just see what they're doing So they're buying puts and buying calls that's shown by the falling blue line minus 1.5 billion and Also this blue orange line which is positive, but still but flat right now Let's take a look at a Let's change the rolling window Down to 30 minutes, so I'm just going to look at the last 30 minutes of data Instead of the cumulative for the entire day So right now it looks about even For calls and puts Let's just go back to the total signal Maybe shifting up a little bit Let's see what zero DTE traders are doing go to book map So it looks like this 428 level Right now is acting as support looks like order flow shifting somewhat bullish and NASDAQ So maybe finding support at VWAP here shown by this light blue line Large traders continue to buy with iceberg orders and this is about the level that Intube broke out of this wedge pattern. Let's see what options traders are doing see if they have Shifted around right so for ES Hedging flow has shifted to positive or shifting higher NASDAQ remember want we're on a 30 minute rolling window here Yeah, right so looks like options traders are starting to Have been taking positive delta positions. I'm looking at a Combined chart of a multiple large cap tech stocks it looks like on my other screen, so you can't see that Apple has been moving higher found support at the 182 level and about at 183 and a half now AMD moving higher looks like Amazon found support at VWAP Google holding in there Metta still trending down Microsoft Finding support at VWAP and it looks like Nvidia still moving lower as well as Tesla to the S&P 500. I'm gonna go back to the one day in here. This is typically What I look at and I'm looking at the the overall trend and the overall trend is lower Heroes making lower highs and price is making lower highs. Let's go back and take a look at book mount Right, so now the S&P 500 is trading below the RTH open Some iceberg orders coming in 700 700 executed in two transactions, but overall We know that hedging flow is bearish and now we see order flow bearish CVD falling Cell stop orders helping to fuel the move lower and let's take a look for targets down below so here is the Well down below the spy volatility trigger at 426 Lower edge the expected move for the day LDM elder lower daily expected move and then the spy 425 level Okay, overall pretty slow day is expected in a very positive gamma environment and if this holds true then if the I Guess the positive gamma Dynamic holds true that I would expect to see some sort of Reversion back to a mean, you know somewhere between 428 and 429 right so max Says Apple and I announced the headset a few minutes ago. Could we take a look sure? We'll take a look at Apple And I looked at a Chart on my other screen and that was rising higher, right? So there's Apple after announcing their Anticipated VR headset. Let's take a look at hero for Apple and it looks like traders are starting to take positive Delta positions No real clarity from looking at calls and put separately All right, so there's Apple We've looked at Nasdaq the sb 500 and a few stocks Google Apple Google meta and video and coinbase With those stocks much stronger correlation between hedging flow and price action and Again today that really the key take away from the indices is the positive gamma environment slow-moving mean reverting Market makers trading against price to hedge their delta exposure and in that environment you can expect range day type trading Which is exactly what has happened so far today All right, that's all I have. Thank you very much for your questions and comments. Thanks for watching And I will see you tomorrow. Thanks again. Bye