 Hello everyone, welcome to Options with Doug, streaming live daily on Bookmap Discord and the Bookmap YouTube channel at 1.30 pm 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 option stash Doug chat channel that's a great place to post questions, comments, and content related to the topics of my presentation and the topics of the channel that I'll go through in just a moment. The focus of my presentation today and the focus of the option stash 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 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. I look at real-time order flow on Bookmap and real-time market maker hedging flow on spot gamma hero to confirm my thesis and for setups for entries and exits. And when I talk about setups today, I will be focusing on an underlying asset and setups can be taken any number of ways. For example, the ESP500 setups can be taken with ES futures, spy shares, spy options, SPX options, or even ES options. Questions and comments are welcome and I will be watching both the option stash 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, Monday, December 18th. First of all, I want to cover news items, economic data and events for today as well as the rest of the week. Then I'll go through my positional analysis. Then I'll review some setups from earlier today and then I'll take a look at 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. Our list could start up with news items, economic data and events. I think there was some housing data out this morning, apparently better than expected. And then tomorrow there's some, excuse me, there's some medium impact data coming out, 8.30 a.m. Eastern time, building permits, housing starts. Then on Wednesday, consumer confidence, 10 a.m. And then on Thursday at 8.30 a.m. Eastern time, GDP data and jobless claims come out. And then Friday, PCE data comes out. That is probably the most important data release for the week as well as durable goods. So that's on variety, PCE data and durable goods. All right, so overall a pretty light week for economic data and events. All right, next positional analysis. Let's start with the ESP500. This is the ES Futures and BookMam. And before I take a closer look at this chart, I want to take a look at the underlying index. That's the SPX, ESP500 index. And I'm going to start with a one-day chart, taking a look at a larger time frame. So this is a one-day chart for SPX. Note the rally that began on October 30th, the day before, that was on Monday. On Friday before, traders were loading up on puts, concerned about weekend risk. And as price started to rise on Monday, implied volatility dropped. That led to a huge IV collapse, put-vanna rally. Market makers position on the gamma curve shifted from very negative to positive now. And price continues to move higher up from around 4100 all the way up to almost 4750. So a huge rally in a short period of time in SPX. All right, let's take a look now at a 30-day chart. This is the chart that I usually show. And this is showing the upper portion of that rally. And let's zoom in and focus on the levels on the chart. So again, this is SPX, a 30-day one-hour chart. Focusing on the levels, first the dash purple lines are showing the lower and upper weekly expected move. This is based on the options market, updated once a week. Those levels will remain in place for the entire week. Next the dash blue lines are showing the lower and upper daily expected move. That's updated once a day. I update that once a day, also based on the options market. And note that SPX is now trading above its upper daily expected move, which was around 22.5 points, plus or minus 22.5 points. That's based on the close on Friday afternoon. The dark red lines are showing SPOT gamma levels. These are proprietary SPOT gamma levels that SPOT gamma provides to their subscribers shown on a variety of platforms. This is thinkorswim. Levels are shown with the dark red lines. I'm going to point out the key daily levels. So SPOT gamma takes the open interest data that's released once a day by the OCC, applies their own proprietary algorithms to come up with these levels. They're basically gamma weighted open interest. First of all, here's the put wall at 4,500. This is strike with the largest net negative gamma that can be expected to act as support. That level did move up from 4,400 on Friday. And the next level up is the volatility trigger at 4,695. And that 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, market makers 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 above that level, 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, leading to lower trading ranges and more mean reverting price action. And just above that level, at 4,700 is the absolute gamma strike. That's the strike with the largest absolute positive and negative gamma. That's where most of the gamma weighted open interest is concentrated. And then finally, the call wall at 4,750. That's the strike with the largest net positive gamma that can be expected to act as resistance. So that is the potential ceiling for price, 4,500, the put wall being the potential floor, and 4,750 being the potential ceiling. So I mentioned the put wall moved higher from Friday. Also the volatility trigger moved higher pretty substantially, up 100 points to 4,695. And finally, let's take a look at one other SPX chart just to get a close look at the levels that are in play for today. And this is showing about two and a half days worth of data. So this is today and the dark portion on the right side here. This is price action for today. And note that SPX, again, is trading above its upper daily expected move. Let's just zoom on this chart just a little bit so we can see just above. There's the call wall at 4,750 and then there's a combo L1 level combining SPX and SPY gamma weighted open interest into one level, in this case converted to an SPX price. All right, let's go to book map now. On book map, I have my own cloud notes so I can show these SPOT gamma levels, SPX levels. There's the 4,750 call wall and there's that combo level just above that. I'm also showing SPY levels on this chart. Here's the SPY large gamma 2 level just right next to the ES, upper daily expected move. There was some consolidation at that level earlier today. Also the SPY 471 level acting as support just after the cash open at 9.30 a.m. Eastern time. So pretty narrow training range today with a bullish bias, price grinding higher and a positive gamma environment. All right, so those are the levels in play for the ES today and note there is a difference in price between ES and SPX and today it is around 52 points, that's what I'm using. So ES minus SPX equals 52, so the 4,750 call wall SPX, 4,750 is showing at ES 4802. All right, let's take a look at NASDAQ now. So this is the NQ Futures and Bookmap and before I take a closer look at this chart, I do want to take a look first of all at QQQ levels so we can isolate the QQQ levels in play for today. So for QQQ, this 405 level, that's an L3 level. One being the most important amount of gamifying being the least important, so L3 in the middle acting as support this morning and note that for QQQ the call wall is at 410, that is higher, that shifted higher from Friday. Also I forgot to mention for SPY the put wall shifted slightly lower and also the absolute gamma strike shifted slightly lower to 470, so more in line with the SPX absolute gamma strike and again for QQQ the call wall now has shifted up to 410, moving that potential ceiling for price up a range up higher. All right, so those are the QQQ levels in play for today. Let's take a look at NDX. So NDX, here's the call wall absolute gamma strike at 16,650, acting as support, price grinds higher and for NDX the absolute gamma strike and call wall shifted higher to that 650 level and the put wall and the volatility trigger shifted lower and for QQQ again the call wall shifted higher and the volatility trigger also shifted higher. All right, let's take a look at book map now and go back to NQ Futures. So just like DES I have my own cloud notes so I can show NDX levels, there's that 650 level absolute gamma strike call wall and that was a support level for good setup higher right at VWAP and also the again the 650 level and there's the QQQ 405 level acting as support earlier in the morning. All right, so those are the levels in play for NASDAQ. Again the most important level really is this 650 level that was the support level for a pullback and then a move higher and that's the setup that we'll take a look at in a few minutes. All right, so those are the levels in play for the SB500 and NASDAQ now let's take a look at gamma notional to see how 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 market makers gamma notional for the SB500 NASDAQ and Russell 2000 and I look at this information every day to get a sense of how market makers may react to changes in price and applied volatility as well as expected volatility and trading range for the day. All these numbers are positive but mostly lower than on Friday is expected with the large expiration on Friday the December expiration and a lot of call gamma expiring. So these numbers again are positive but for the most part less positive than Friday except for QQQ which did increase slightly. So in a positive gamma environment again for an index spot gamma assumes that traders are short calls market makers are long calls and they have to trade futures against price to hedge their delta exposure. All right let's take a look at the Vantamodel to get a sense of or a graphical representation of graphical representation of what that means. I'm going to start with SPX and this chart is showing market makers delta notional that's their delta exposure 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 and then the purple curve adds implied volatility to the equation. That shows how market makers delta notional may change with changes in price and applied volatility and that change in delta with the change in applied volatility is the Vant effect. Vant is the second order Greek and that's the curve that we want to take a look at the purple curve. Now let's check on prices now SPX currently trading right around $47.44 so right about where I'm holding my cursor here this vertical line. So this is indicating that as price continues to increase market makers will need to sell futures to hedge their delta exposure and that tends to subdue or decrease volatility. So right now SPX trading toward the bottom of the curve but approaching the right portion of the curve indicating market makers will need to sell futures to hedge their delta exposure as price increases. Let's take a look at SPI. SPI currently trading just above $472 also in a very similar portion on the Vant model and again market makers will need to sell futures to hedge their delta exposure as SPOT price increases. Finally let's take a look at QQQ trading just about $407 also in an almost identical position on the Vant curve there. Alright so my thesis for the day was first of all looking for lower volatility although gamma notional did decrease from Friday it's still positive and so looking for more mean reverting price action and then considering directional bias first of all there's the seasonality to take into effect and that is apparently what's happening today and then also it's also important to watch what options traders are doing during the day. So let's do that now. So this is the hero signal in SPOT gamma hero. Hero is hedging impact real time options. So everything that we've looked at so far other than book map has been based on static data that's updated once a day sometime overnight and that's what I use for my planning and positional analysis and then now we're going to shift to real time data. So what this chart is showing is price for SPX with a white line and then the hero signal is showing options trades and market maker hedging activity for a combined signal of SPX by XSP and ES futures and this is the chart that I typically look at if I'm trading any form of the SP500 whether it again is ES futures or spy shares, SPX options. This is the total picture. All right let's zoom in on this chart. All right I'm going to zoom in just a little bit here and this is the cash open right here 9.30 a.m. Eastern time and I'm just going to focus on one setup and this is the setup just around 11 a.m. somewhere between 11 and 11.10 and before that traders were taking negative delta positions that's shown by the falling hero signal and then note the sharp reversal on the hero signal just right around 11.10 as traders started taking positive delta positions market makers were taking the opposite side so they had to buy futures to hedge their delta exposure and let's just take a closer look and see what they were doing. So I've separated outputs and calls and notice initially they were buying calls traders buying calls shown by the rising orange line and just before 11.10 sorry about that spot gamma continues to work on this issue and Kaleed you're welcome all right let's take a look at this again call signal levels off then traders start aggressively buying calls again shown by the rising orange line and at the same time for at least a short period of time they stop buying puts put shown by the falling blue line so falling blue line indicates traders are buying puts rising orange line indicates traders are buying calls and notice for today they are they are buying calls and selling puts and the call bars are more aggressive primarily driving price today all right so let's go take a look at book map and look for that setup right on out right around 11 a.m. and look for the clues and book map zoom in on this just a bit so just looking at the entry point first of all focusing on the volume dots the volume dots are showing market buy minus sell but just a dots indicate more sellers than buyers green dots indicate more buyers than sellers so note the shift in order flow here a lot of aggressive buyers coming in there were about three tests of VWAP a very good entry point for a long aggressive buyers start to come in right at VWAP and expected a level that you would expect to act as support and note there were a few iceberg orders not very large in fact pretty small but I'm looking at the light blue line here in the sub chart and create increasing indicate that large traders were buying with iceberg orders and there's one one small order shown here and then there's another one obscured by the stop orders on chart indicator so traders large traders were buying with iceberg orders they used to hide their size traders in the SB 500 started buying calls again and stopped buying puts and price moves higher so traders options traders taking positive delta positions and then a reversal higher at VWAP and then aggressive buyers come in so pretty clear signal here and book map zoom back out and note that price was already making a series of higher lows from before 8 a.m. so really just a continuation of that uptrend all right so there's the long entry in the SB 500 very similar setup in NASDAQ just looking at NASDAQ here you can see the again the very similar setup but just the dots aggressive sellers on the way down aggressive buyers start to come in at levels that you expect to act as support first of all VWAP light blue line as well as the 650 absolute gamma strike call wall that I have pointed out as before before let's go take a look at hero now to see what options traders are doing in NASDAQ so here's the reversal right or not right around 1110 initially traders were taking negative delta positions and they shift start taking positive delta positions price moves higher let's take a look at puts and calls so at least for a short period of time they start buying calls and stop buying puts price moves higher let's take a look at another signal this is a combined signal for the stocks known as the magnificent seven that's Apple Apple Amazon Google Meta Microsoft Nvidia Tesla and this is very bullish I posted this in discord earlier today so what this chart is showing is that traders and net for this combined signal were buying calls for a while they started selling calls then right around 1110 they started buying calls again sorry about that so right around 1110 they started buying calls again or stopped selling calls and they continued to sell puts so both the blue line and the orange line rising higher moving in the same direction that is a very powerful directional signal so traders are back in the mag seven stocks and this these seven stocks are very large component of the NASDAQ as well as the SB 500 and they typically will drive price action in the especially in the NASDAQ so this is a very important signal to look at for the NASDAQ especially let's go back to book map alright so to me this was the most clear long entry point again noticing the shift in order flow magenta volume dots down to 650 and VWAP aggressive buyers start to come in traders are continuing to take positive delta positions in the mag seven stocks and then as price starts to move higher aggressive buyers continue to buy that shown by the rising cumulative volume delta and also buy stop orders help to fuel the move higher that shown by the rising yellow line and the sub chart as well as these on chart indicators the small green dot so buy stop orders and aggressive buyers and shown here in book map so another pretty easy read for a long setup right there read right around 11 a.m. or let's take a look at some stocks now and note the stocks that I keep in book map and the stocks that I trade mostly the mag seven stocks as well as AMD and Netflix these are stocks that have very liquid options markets and they are price action is heavily driven by options trades and market maker hedging activity and these stocks so I'm going to point out a few stocks today first of all Amazon very bullish day in Amazon let's go take a look at heroes see what options traders have been doing in Amazon so on Amazon note the rising orange line also the blue line that is positive notional value so they're buying calls that shown by the rising orange line when traders buy calls market makers sell the calls and they have to buy stock to hedge their delta exposure that's a very powerful driver that can drive a stock price much higher so if you're looking for a long entry this is what you want to take a look at in the stock and note that Amazon is trading above its call wall and key gamma strike so D&T matter I don't know if you're listening to this or not so there you go these calls concentrated at the call wall and key gamma strike going further in the money delta is increasing and market makers continued have to buy stock to hedge their delta exposure so traders and long calls market makers are short calls and that is what spot gamma assumes for a stock so market makers have to continue to buy stock to hedge their delta exposure so there's Amazon let's go back to book map and note that 150 below is the call wall key gamma strike don't all the green volume dots other than the opening print shown by that large magenta volume dot after that a lot of aggressive buyers as well as call buyers helping to dry price higher in Amazon the next is Google and a very strong day in Google this is a lot of movement for Google usually Google is not much of a mover let's see what options traders are doing separate outputs and calls and today call buyers definitely driving price and Google and note that 135 is the key gamma strike 140 is the call wall up above this is a very typical pattern aggressive call buyers in the morning they take their foot off the gas price consolidates and that can happen anywhere from 10 a.m. to 1 p.m. so they took their foot off the gas price consolidated just above the 135 key gamma strike and then traders resumed buying calls price moved higher and then they took their foot off the gas again and price consolidates let's go take a look at book map so there's that first consolidation where there's the first push up traders aggressively buying calls market makers selling the calls buying stock first consolidation then that second leg up and now price consolidating again as call buyers have taken the foot off the gas again also note the green volume dots there are a lot of aggressive buyers here just buying stock and Google all right the next is meta and bullish day and meta as well let's see what options traders are doing zoom in on this chart and for meta the put call picture is a little bit more mixed so up until about 1220 they were buying calls and selling puts and note right around 1220 traders sorry about that right around 1220 traders started selling calls and stopped selling puts started buying puts and then price consolidates and note that meta did is trading above its call wall so again those calls that are concentrated at the 340 level spot gamma assumes traders a long cause market because short market makers are short calls as those calls go further in the money their delta increases market makers have to continue to buy stock to hedge their delta exposure with that call wall breach so let's go back to book map zoom in on this just a little bit so here's the 340 call wall toned down these volume dots just a little bit so price breaks above the 340 level and then come back comes back and retest the level just above VWAP good entry point for a long pullback to that call call wall and price continues higher as traders take positive delta positions and those calls at 340 go further in the money all right that's meta let's take a look at netflix very bullish morning quick quick jump up in netflix up to 490 let's take a look at heroes see what options traders are doing so here's that a great example of that typical pattern separate outputs and calls call buyers very aggressive in the morning and they take the foot off the gas pretty quickly right around 10 a.m price consolidating not doing much with puts initially they were selling puts and now that line has leveled off and there are a couple of ways to trade this first of all to catch the opening move you'd have to be pretty fast buy a call buy a call spread buy netflix shares and the way to play this this consolidation is now I would not necessarily buy a put but buy a put spread or sell a call spread just above price and all all netflix has to do is stay below that level right next in video and bullish day here in invidia note for invidia now trading above its 500 key gamma strike call wall and calls definitely driving price higher note the flow alerts here kind of a cluster of them indicating significant options activity very timely so if you're watching flows that would have been anywhere around when these flow alerts came in would have been a great entry point so net for the day traders are buying calls that's definitely driving price and also they are selling puts it looks like lords put seller came in right around 2pm also buying calls at the same time could have been the same traders trader or traders selling puts and buying calls and potentially selling the puts to pay for the calls let's go take a look at book map so remember 500 is the call wall key gamma strike it's doing down those volume dots just a little bit that level acted as resistance earlier today note all the liquidity at that level this is the heat map and book map shows a history of the limit orders in the order book and the darker the color the darker the shading that indicates there are more liquidity there and price absorbed at that level twice today acting as resistance and then finally aggressive traders consume the resting limit orders at at 500 and now nvidia is moving higher so at least for today it looks like the mag 7 stocks or back for the most part so very bullish day in nvidia as well as traders buy calls market makers sell the calls and they have to buy stock to hedge their dealt exposure and also now nvidia has also breached its call wall let's take a look at tesla and cwr group says nvidia full breakout yeah it's about time so nvidia reported great earnings last last month in november and then consolidated for a while and now is moving higher again all right so another story for tesla here today let's see what options traders are doing zoom in first so initially in the morning traders were taking positive delta positions turning right around 1020 they shifted started taking negative delta positions and price moved lower and let's see what they were doing so initially in the morning they were buying calls and selling puts and then right around right around 1020 they shifted started selling calls price moved lower and then right around noon they stopped now prices consolidating let's go back to book map so here's that reversal as traders started selling calls buying calls initially started selling calls order flow kind of interesting here magenta dots on the way up and aggressive buyers on the way down pretty interesting i find order flow for futures a little bit easier to read easier to read the volume dots all right speaking of futures let's go back all right david sharp asks what does it mean to breach their call wall a squeeze so let's take a look at something um go to let's take a look at meta zoom in on this chart this is the put and call impact chart in meta zoom in on this let's just see where meta is trading right now just under 347 so somewhere around here where i'm holding my cursor that white line so here's the call wall at at 340 meta trading above that level so what this is showing so first of all for stock spot gamma assumes that traders along puts and or long calls market makers on the opposite opposite side of that so market makers are short puts and or short calls market makers always would remain delta neutral so this is the call wall does the strike with the largest largest call gamma positive gamma for for traders so in this case market makers are short those calls as those calls go in the money their delta is increasing and they want to remain delta neutral so they have to sell futures to hedge their delta exposure as the delta of those calls goes further in the money again delta is increasing and uh they have to continue to buy stock to hedge their delta exposure so david i hope that makes sense we can take a look at um something else here let's go to go to thinkorswim let's take a look at meta take a look at an options chain so looking at delta you can see as these strikes go further in the money delta increases market makers want to remain delta neutral so they have to so they have to continue to buy stock to hedge their delta exposure this is a heat map for the sb 500 so you can see the stocks driving price higher today we looked at amazon google meta and video all right david i hope that helps all right let's uh does anybody have any stocks they want me to take a look at otherwise let's go back to the sb 500 check on that all right since about 11 a.m traders continue to take positive delta positions price is moving higher all right great uh you're welcome david check on nasdaq and the case of nasdaq traders are taking negative delta positions let's check mag seven and here's what dry is driving nasdaq let's go back to book mount sb 500 continues to grind higher uh just and now here's a stop run up to 4750 note the sharp rise in the yellow line in the sub chart showing buy stop orders and shown also by the on chart indicator that is a stop run up to 4750 let's just check the just confirm that price that is uh spx 4750 let's take a look at the zoom in on this chart so it looks like spx uh stops for right now just short of that at 4749 uh 0.52 so just short of the 4750 level all right paul wants to take a look at target all right paul i don't have target in book map but we can take a look in hero see what options traders are doing so target slightly lower traders taking negative delta positions shown by the negative notional value so they're not doing much with puts they're mainly selling calls today all right paul there you go anybody else uh any other stocks you want me to take a look at let's go back check nasdaq nasdaq continues to grind higher above its upper daily expected move and just below the qqq 408 level as traders continue to take positive delta positions in the mag seven stocks let's just go back and take a look at that heat map and book map we'll check the nasdaq so all these stocks helping to drive the nasdaq higher looks like uh out of the mag seven only uh apple and tesla are the stocks that are not really contributing and microsoft just slightly but it is positive for the day and so far this just slow mechanical grind higher continues so last call for stocks does anyone have any any stocks they want me to take a look at i've got about another minute back to nvidia continues to move higher above its 500 call wall key gamma strike amazon continues to grind higher google consolidating a little bit let's check meta meta still trading well above its 340 call wall all right my time is up i want to thank everyone for watching and i will see you tomorrow thanks again remember uh there's some building permits housing starts data to tomorrow at 8 30 am uh kind of medium impact data and we'll see if it has any impact on the market and we'll also see if this uh mag seven rally continues tomorrow all right everyone thank you very much for watching thank you for your questions and comments and i will see you tomorrow thanks again bye