 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 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-Doug chat channel in Discord is options, order flow, the impact of options markets on stocks and futures, and the influence of market maker hedging flow on price action. I have a two-step process for trading and the first is positional analysis. Planning, I use positional analysis. I look at how traders and market makers are positioned in 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 of my process is execution. And 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 just to be clear, I will be talking about setups and underlying assets and those setups can be taken any number of ways with futures, shares of stock, or options. My analysis is based on the options market and the setups again can be taken with futures, shares of stock, or options. Questions and comments are welcome and I will be watching the chat in Options-Doug chat channel in Discord as well as the chat in YouTube for your questions and comments. Hector, good afternoon to you as well. Glad you're here. My agenda for today. I'm going to go over, first of all, news items, economic data and events for today and the rest of the week. I'll go over my positional analysis and then I want to do review some setups from today as well as one from yesterday afternoon that was setting up right as my session was finishing. And then we'll take a look at the live market. All right, let's get started. First of all, news items, economic data and events. The primary events for the week have been the testimony from Jerome Powell before Congress yesterday and today and really the gist of it appears to be that Jerome Powell is looking for a potential more rate increases later on. All right, let's get started with positional analysis now and I'm going to take a look at some charts. I'm going to start with the S&P 500. This is the S&P 500 futures in Bookbap showing another range day today and before I take a closer look at this chart I want to take a look at a larger time frame. I'm going to start with an SPX chart. This is in Thinkorswim showing this is a 30-day one-hour chart. Again, this is just SPX and I have a number of levels on this chart. Let me point out the key levels. Draw your attention to first of all the dash purple line showing the lower and upper weekly expected move. This is based on the options market and note that SPX has been trading down just around the lower weekly expected move and then this dashed blue lines are showing the lower and upper daily expected move. So this is for the day and SPX is trading inside that range above the lower daily expected move and below the upper daily expected move. There are also some spot gamma levels, key gamma levels on this chart. First of all, here's the put wall at 4000. That is the strike with the largest net negative gamma that can be expected to act as support and the next level of interest is the volatility trigger that is spot gamma's proprietary gamma flip level. Below that level, market makers position on the gamma curve is negative. In a negative gamma environment, market makers have to trade with price to hedge their delta exposure and that tends to enhance or increase volatility. On the other hand, above that level, 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 volatility and right now, SPX is trading just slightly above that level, above the volatility trigger. The next level of interest is the 4400 level and that is the absolute gamma strike. That's the strike with the largest absolute negative and positive gamma and then finally, the call wall at 4500, that is the strike with the largest net positive gamma and that can be expected to act as resistance and as far as shifts in levels go, for the SPX, the volatility trigger did shift higher so it has been shifting higher all week or the last couple of days from 4295 to 4310 and now 4355. So again, SPX is trading just above that level. Let's take a look at one other chart and think or swim. This is SPX, this is a one day one minute chart, just showing the levels that are in play for today. So the dash blue line showing the lower and upper daily expected move and then the purple line is the lower weekly expected move and note that did act as support earlier today and then here's the volatility trigger at 4355. SPX is trading slightly above that and that level more or less acted as support this morning. All right, so simpan asks, SPOT gamma provides the SPX lower and upper weekly and daily expected moves so SPOT gamma does provide levels. That's not what I'm using here. I'm using my own levels that I get from a think or swim options chain. Let me show that quickly. Go to SPX, go to an options chain and I'm getting that information over here. So for example, this number right here right now at plus or minus 24.6 that would be the daily expected move for tomorrow. So that's where that information comes from. You should be able to get that from any trading platform with an options chain for SPX. All right, and for weekly actually I have a script in think or swim. Let's go back. But you can get this from an options chain as well. I just have this script. So these lines right here. So this is the lower and upper edge of the expected move for last week. And note that SPX traded again massively above the upper weekly expected move last week. And then the purple lines again are just showing that what I lay over on top of this. So you can get this information if you have a script or it comes from an options chain as well. So pretty easy. Just add and subtract that from the closing price. All right, let's take a look at book map now. And a book map I have Hector asked that script is on pin message no. That is not mine to give away. I got that from another organization so it is not mine to provide to anyone else. All right, let's take a look at book map now. And I have a couple of levels, columns of levels here. First of all, this is the spot gamma cloud notes. And then I have my own C levels, cloud levels. This is what I'm using. So I have this SPX levels and JEC, I don't think the script that I'm using is freely available. Unless you're a member of the organization, the trading organization that I belong to, then they make all of their scripts and all of their information available to members. That's where I got it. I won't mention the name here. It's probably easy to write. You may write your own, but it's, again, this is not mine to give away. All right, let's move on. So what we have here is, first of all, the SPX levels. So there's the volatility trigger that somewhat acted as support this morning. And then the SPI levels. There's the 436, large gamma 2 level. Also the SPI 435 absolute gamma strike. And note that level did move lower from yesterday. It moved down from 440 yesterday to 435 today. And that has been a key strike in recent days, mainly acting as support. All right, so those are the levels that are in play. So again, primarily the SPX, 4355 volatility trigger as support and the SPI 436 large gamma 2 level acting as resistance. And we'll talk about setups in a few minutes. So those are the levels that are in play for today. Slight shifts in levels for the S&P 500. Volatility trigger for SPX shifted higher. Absolute gamma strike for SPI shifted lower. All right, let's take a look at NASDAQ now. Note here, again, S&P 500 trading in a range today and much more of a trend day up today in the NASDAQ. So levels that are in play for today in the NASDAQ. Let's take a look, first of all, at a chart showing the levels for QQQ. This is a one-day one-minute chart. And really the level to note here is this volatility trigger at 364 and price is really after the sharp move up at the morning of the first 30, 45 minutes. Price is really oscillated up and down around that level. Let's go back to book map now. Go back to NQ. So levels that are in play above the 364. So again, I've got my cloud notes here and I'm showing QQQ levels and also there's the upper daily expected move. That's for NQ and also the NDX 15,000 level that did act as that cluster of levels did act as resistance earlier today. So that's the 65 level for QQQ, upper daily expected move, and the NDX 15,000 level. And note now that NASDAQ is above, trading now again above its lower weekly expected move. All right. So those are the levels that are in play for the NASDAQ. Again, we'll look at setups in a few minutes and note that bullish order flow has been very bullish in NASDAQ today. All the lines in the sub-charta rising, CBD, cumulative volume, delta rising, large traders buying with iceberg orders shown by the rising light blue line and then also buy-stop orders, fueling the move higher and the numbers here, cumulative numbers all showing positive for the day. So very bullish order flow for the NASDAQ, although I did post a short setup. I'll talk about that in a few minutes. I posted that just because of the large divergence in hero and price action. All right. So that's the NASDAQ, shifts and levels for NASDAQ. There were no shifts and levels for NDX and then for QQQ, the only shift was the put-wall shifted lower from 362 yesterday to 355 today and Sampan asks from options chain, can it calculate for any equity daily expected move? So if you're just using an options chain for equities, most equities now have options that expire at the end of the week so you can't get a daily expected move from the options chain unless you're looking on Friday. But that is easy enough to calculate. Just you can do a Google search for options expected move and you should get the equation. It's just price times implied volatility times the square root of the days to expiration divided by some people use around 250 for trading days or you could use 365 or there are other ways of doing that. So maybe JEC can chime in on that. All right. So that is the NASDAQ. I've talked about shifts and levels. Let's take a look at the Vana model now to see how market makers are positioned at the beginning of the day and we'll take a look at these. So this is the Vana model. We'll take a look for SPX, SPI, and QQQ. What this chart is showing is market makers delta notional or delta exposure on the vertical axis and how it changes with price shown on the horizontal axis. There are two curves on this chart. The light gray is showing how market makers delta notional changes with changes in price only. So what this is showing is as price increases market makers will need to sell futures to hedge their delta exposure. So that's typical of a positive gamma environment and then this purple curve adds implied volatility to the equation. So that's showing how market makers delta notional changes with changes in price and implied volatility and that change in delta with a change in implied volatility is the Vana effect and hence the name of this, the Vana, and that's a second order options Greek. So this is showing as price increases market makers will have slightly less delta notional to hedge as predicted by the delta only curve. On the other hand, as price decreases they will have significantly more delta to hedge as price decreases and this is typical on the left side of this curve of a negative gamma environment. Alright, let's take a look and see where SPX is trading now. I've got SPX at 43.71. So let's see if we can find that on the chart here. So that's somewhere between these two lines right here, so about right at this intersection. So while this is showing and note that SPX is still in a positive gamma market makers position for SPX is still positive and this is showing there may be a slight tailwind as price increases and as price continues to increase market makers will have to start selling futures. Then on the other hand, if price decreases from here market makers will need to sell futures to hedge their delta exposure and that could accelerate any move lower. Alright, let's take a look at SPI now and note that SPI gamma notional is negative. So this curve is more typical of a negative gamma environment and SPI is trading around 4.35 right at that absolute gamma strike. So that's right here also at that intersection. So this is showing as price increases market makers delta notional will decrease and they can buy back some of their short futures. On the other hand, price decreases. They will have to sell futures to hedge their delta exposure. So right now market makers position on the gamma curve is negative for SPI. That means that traders are long puts market makers are short puts and as price increases those puts will lose value market makers delta notional will decrease and they can buy back short futures. Let's take a look at QQQ and gamma notional for QQQ is also negative. Right now QQQ is trading around 3.64 so right around that volatility trigger that has been central today. So note that for QQQ let's see I'm going to go take a look at book map let's see where we'll take a look at QQQ here. So QQQ at the low today was just above the 3.60 absolute gamma strike. So that's right around here where I'm holding my cursor now. This is why it's so important to understand how market makers are positioned. So this is the starting point right here this morning. Market makers position on the gamma curve was negative and as price increases market makers can sell some of their short NQ hedges as those puts lose value and their delta notional decreases and they can buy back their short futures their short future hedges. So that was definitely helping to fuel the rally this morning that's called a put banner rally. So again for QQQ market makers position on the gamma curve is negative traders a long puts market makers are short puts as price increases market makers delta notional decreases and they can buy back their short hedges and that was again helping to fuel the move higher in NASDAQ this morning. Let's take a look at the data behind that and I'm going to take a look at gamma notional. Hold on just a second. So I'm going to take a look at gamma notional for SPX, SPI, NDX and QQQ. As I mentioned, gamma notional for SPX positive but definitely lower than yesterday so gamma notional has decreased the last couple days for SPX still positive and for SPI that number has become more negative starting on Tuesday and becoming again more negative now down to minus 1.368 billion and NDX I don't pay a lot of attention to that's pretty insignificant compared to the other numbers and then gamma notional for QQQ is negative and that has also decreased from yesterday. All right so Hector asked could you tell me if I understand correctly futures is more risk for handling a big capital on position where options allow you to move high capital with less risk? I think for escalating fast is better futures and then invest through options make sense? No I'm not sure I understand your question so let me just clarify what I'm talking about. Traders buy and sell options and market makers in the index products the S&P 500 and NASDAQ market makers buy and take the other side of those trades so they're buying as if traders are buying puts market makers are selling puts and that's a positive delta position so they have to sell futures to hedge their delta exposure that's the most efficient way for market makers to hedge their delta notional so that's all this is traders buying and selling options market makers take the other side they want to remain delta neutral so they have to buy and sell futures to hedge their delta exposure so this is with market makers that's what I'm talking about now so this is the basis of my planning my positional analysis based on this I was still looking for more of a range day in the S&P 500 or potential so that's based on SPX by quite large negative gamma notional but definitely for the NASDAQ QQQ gamma notional also negative so this move higher especially looking at the gamma curve for QQQ makes sense of the put van a tailwind for the move higher in the morning and also just dip buyers coming in so let's take a look I'm going to go back to thinkorswim here so this is the S&P 500 we can take a look at NASDAQ and you can see that the magnificent seven I guess with the exception of meta are all moving higher so when these stocks are green NASDAQ is going to go higher this is the bulk of NASDAQ well over 50% it looks like all these stocks are participating except Nvidia and Meta and a very strong day for Amazon we'll take a look at that in just a minute so red pan to ask please have a word on why you prefer QQQ Vano model rather than NDX we can take a look at that I normally don't look at the Vano model for NDX just because the options position for NDX is not very large you can just see by this gamma notional here that for spy for example we're talking about 1.37 billion versus 8.5 million for NDX so NDX and especially even compared to QQQ at 389 million is insignificant I just normally don't look at the Vano model for NDX yeah NDX volume is low it's a big index bit ass spreads are wide now I do look at the hero signal for NASDAQ that combines NDX and QQQ but other than that I don't look at the NDX Vano model this QQQ Vano model provided much more of a clue about the potential the rally potential today in the NASDAQ you'll combine with them we'll see in a just a minute when we look at review some setups from this morning we'll see that call buyers were back in the in the large cap tech stocks alright so let's start with some setups now and let's go to the S&P 500 first what this chart is showing is SPX price shown with the white line and the hero signal shown with the purple line and this is showing options trades and market maker hedging flow for a combined signal for the S&P 500 SPX spy XSP and ES futures alright and this is showing a very strong correlation between this total signal and price action today this is something that I haven't seen this quite this close correlation in quite a while let's take a look and I'll take a closer look at this chart in a minute first let's take a look at the individual component so first of all SPX straight up traders are taking positive delta positions in SPX they have been all day and spy pretty much the opposite especially starting in the afternoon so SPX was positive and this number notional value for spy negative and then ES futures also positive like SPX so let's take a look at the combined signal now zoom in on this chart talk about setups so really the way to go today was long and it took a little while remember SPX we saw on the book map chart and also on the SPX chart chopped around the 43.55 volatility trigger well for about 10-15 minutes this morning before moving higher and note that options traders came in just a couple of minutes later note by the rising hero line confirming that that move higher so in the morning there were hero was confirming long-end short setups so here would be the the short set up hero makes lower highs price makes slightly lower high so that's around 10.30 which is kind of a typical turn around time the close of the first hour and then a reversal higher again just a few minutes later right so let's go take a look at book map now look at the SP500 and actually before I do that before I forget I do want to do a follow-up from yesterday so this is I was talking about this right at the the end of my session yesterday right around 4.30 watching ES move up between the 4.30 4.36 level the spy 4.36 and that is also the SPX 43.76 level and then the spy volatility trigger and I believe what I said was I was looking for a reaction a move at 4.37 or 4.36 so what actually happened is first of all let me point out that there were some traders in here this is shown by the liquidity in the book map heat map showing that there are some larger traders were in there with sell orders front running this 4.37 volatility trigger and note that price did reverse almost exactly at that level and there was a stop run up into that level and then aggressive sellers started coming in and moved price all the way down to the 4.35 level that today that's the spy 4.35 level that is now the absolute gamma strike so that's the setup that I was watching yesterday and that played out really as I expected that spy 4.37 level acted as resistance and price moved lower and if you missed that initial entry here was a pullback for another good setup for the short setup and note at that point that the order flow was pretty clear to read that sell stop orders were in aggressive sellers shown by the falling stop line and the cumulative volume delta alright so that's from yesterday then let's get back to today so today we're looking for a long setup from this morning let's zoom in on the morning session and we'll go over this quickly and get to the get to the live market volatility trigger aggressive buyers started to come in and actually one of the keys to this setup probably the key to this setup were these iceberg orders actually coming in before the cash open or right at the cash open that's shown by this rising light blue line let me scroll over just a little bit more before the cash open even around 9 o'clock large traders coming in with iceberg orders so that's shown on the sub chart by that rising line and also here these are large orders over 2,000 contracts multiple executions here are 700 contracts and that is often a very good sign that price is going to go higher some traders are in there buying with iceberg orders here's another one 800 contracts a lot of executions so there's your really the first clue and then after the market opens we saw that traders started options traders started taking positive delta positions and then the reversal lower at the 436 large gamma 2 level let me just scroll over a little bit so we can see this and note how these spy levels are so important we just saw yesterday that the 437 volatility trigger almost to the tick acted as resistance and then here's the spy 436 level that's a large gamma 2 level acted as resistance so that was a target for the long setup in the morning and then resistance and this looks almost identical to the setup from yesterday afternoon that I just showed lower high there's your entry point for the move lower back down almost to the cash open price just above the 4355 volatility trigger alright so long short and short setups this morning in the SAP 500 alright so Sam Pan asks what is 9 and 30 signifies in these orders I believe that is so the E stands for execute so the first number there you're showing 800 contracts executed and my understanding is that is 9 transactions so if I zoomed in if I spread that out I would see those individual transactions but as I zoom in and look at a larger time slice of time in book map it aggregates those into one number showing the number of transactions so I believe that's what that is you can check in the book map knowledge base to confirm that alright so that's the SAP 500 let's go to the Nasdaq now so Nasdaq this morning pretty easy read note the bullish order flow I've pointed that out before and price reversed higher right at this NDX 14,800 volatility trigger so there's the supported at level the reverse whole higher just at the cash open price took off straight up straight up shot from the cash open let's go take a look at hero see what options traders were doing and yes that means that 800 executed and 2493 executed yes let's take a look at hero for Nasdaq and just like the S&P this is S&P 500 this is a combined signal NDX and QQQ so this is showing that right from the open we'll look at the first couple of hours of trade here right from the open options traders taking positive delta positions and price follows higher so there's the long setup in this morning the thing was just moving so fast try and find a way to get long alright the second setup is a short setup and this is what I posted in discord is this divergent setup now I really didn't play out very long but it was a clear setup showing the sharp drop in hero traders taking profits with their options or starting to take negative delta positions for whatever reason and then price followed and there was a break below the QQQ 364 volatility trigger and that was good for I don't know 50, 60 points or so in the Nasdaq alright so let's go take a look at book mount zoom in on the morning session just these first two setups so here's the blast off from the 14,800 volatility trigger NDX right at the cash open find a way to get long looks like there were some pause at the QQQ 363 level note the very bullish order flow shown by the rising icebergs volume delta and stop orders so there's the long setup and price starts to chop around the chop around the 364 level and order flow kind of levels off stop order CVD and then price breaks below the 364 level again as options traders really around 1015 negative delta positions and it took maybe 20 minutes or so but price finally follows lower breaks below the 364 level and again good for maybe 60 points in Nasdaq but again that was short lived and of course again with this bullish order flow trade Nasdaq was definitely long for the most part today let's go back and take a look at hero and let's just see what zoom in a little bit here so in the morning traders were buying calls and buying puts call buyers were winning this notion of value around 418 million versus minus 332 million so slightly more positive more positive notional value for call buyers and again we saw the bullish order flow in book map helping to definitely confirm the long setup now it looks like options traders are starting to fade this move we'll take a look at the life market in just a moment I'm gonna go through some stocks quickly so here's Amazon that was the brightest green on the thinkorswim heat map call buyers so call buyers are back in Amazon helping to drive price higher helping to drive Nasdaq higher we'll go back to book map take a look at Amazon that went with me to take a look at let me know and RJ says Amazon call wall holding this far and that is correct 130 is the call wall for Amazon and it's doing its job acting as resistance so it was a great target this morning for the sharp move up as traders were buying calls and let's just take a look at a hero again we'll zoom in on this chart so here's the call wall at 130 and note the blue line for puts they are selling puts but that is pretty insignificant compared to the call buyers and really the call buyers have somewhat leveled off right around here so it became slightly less aggressive here and then price has again found resistance and RJ says would you consider selling 130 calls and I would not sell naked calls in Amazon if you want to if you do want to if you assume that level is going to hold perhaps a call spread so I would not sell naked calls in Amazon but a call spread would be I guess a valid trade and I might go I would have to look at an options chain but I might go up maybe a couple of strikes just to give yourself a little breathing room let's take a look at meta and in the morning call buyers were in there in meta and that's shown by the rising orange line, rising price let's take a look at Microsoft a little bit more clear in Microsoft call buyers definitely in from the open and they continue to buy calls again I'm looking at the rising orange line the 340 level, the call wall potential target up above maybe not for today let's go take a look at book map we'll go to Microsoft so there's the 340 call wall above pretty sharp move this morning up to the 338 level and then price gradually moving higher making higher lows as price tries to get up to the 340 call wall alright Truman wants to look at Tesla so we'll take a look at Tesla and let's go to hero so in Tesla traders are buying calls and selling puts and I think there was news for Tesla today I think at some analysts downgraded Tesla yesterday another analyst downgraded Tesla today and for the call the call buyers put sellers options traders doesn't matter any dip they're going to to buy in Tesla alright let's take a look at book map and we'll get to Netflix in just a moment second wins alright so here's Tesla and hero let's take a look at book map so pretty good rally today and in Tesla moving up toward the 265 liquidity and that would make it about a 15 point move higher in Tesla alright so I'm going to move on to Nvidia and we'll take a look at Nvidia in just a moment the first thing I want to take a look at is Netflix and Netflix I do not have in book map so we can take a look at the hero so as usual there's a pretty strong correlation between hedging flow options trades and price action in Netflix so net overall slightly traders are selling calls and buying puts both the both those numbers notion of value or puts and calls a negative alright let's go to Nvidia so far today in Nvidia traders are selling puts and buying calls let's take a look in book map nice uptrend in the morning let's check on gamma levels so the only spot gamma level in play today is the 430 key gamma strike and that appears to be right where Nvidia is trading right at the 430 key gamma strike alright let's go back and check on the live market we'll take a look at S&B 500 first so right now ES is heading back up to that 436 spy 436 level that it act as resistance earlier today and to me this order flow is not especially bullish other than looking at the the short term at the volume dots so this kind of looks like a small stop run up to this 436 level and I can see that with this green dot plus just all the aggressive buyers coming in you can just see all the the green volume dots again this looks like the setup that we were looking at around 230 yesterday afternoon except it was a point higher in spy at 437 let's see what options traders are doing go back to hero the total signal S&B 500 and they are buying they're taking positive delta positions let's just take a look at a 30 minute rolling window period so I would be be a little cautious here if I was looking for short with this rising hero line here and again we're on a 30 minute look back period let's take a look at Nasdaq so Nasdaq this is showing a different picture again remember we're on a shorter look back period showing that traders are starting to fade this move options trader taking negative delta positions hero making a series of lower highs let's take a look at Nasdaq so Nasdaq up at a this is the level that has acted as resistance earlier in the day more or less remember Nasdaq it's a very big very volatile can often overshoot levels just a bit but this cluster of levels here the QQQ 365 upper daily expected move and the NDX 15000 level has acted as support earlier so right now we know that options traders are taking negative delta positions but order flow still appears to be very bullish so if I were looking for short here I would definitely wait for a lower high to confirm that with Nasdaq it moves enough that you can definitely wait for a confirmation time is up we're keeping eye on SAP500 at potential resistance and Nasdaq at potential resistance so now it looks like the SAP500 has broken up above that level and larger traders are fading that move with iceberg orders not huge size and buy stop orders helping to fuel the move so that's it my time is up for today I want to thank you for your questions and comments Sampan, Hector, Red Panda and Discord Truman and Second Wins thank you all for watching thanks for your questions and comments and I will see you tomorrow thanks bye