 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 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 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 dash 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 in the options market and how those positions changed from day to day to develop a thesis regarding the expected trading range and volatility for the day as well as a directional bias and the second step in my process is execution and I look at real-time order flow and book map and real-time market maker hedging flow and spot gamma hero to confirm my thesis and for setups for entries and exits and just to be clear I will be talking about setups in an underlying asset like the S&P 500 futures or Apple stock or Tesla stock and those setups can be taken any number of ways with stock shares of stock futures contracts or options contracts and again my my thesis my planning my analysis is based on the options market but the setups can be taken any way you choose and questions and comments are welcome and I will be watching the options dash Doug chat channel and discord and the chat in YouTube for your questions and comments so please post your questions and comments and I'll do my best answer all right what I want to cover today my agenda for today first of all go over news items economic data events and earnings for today and for the rest of the week and then I'll go through my positional analysis then our view a few key setups from the morning the S&P 500 NASDAQ and then a few stocks and then we'll take a look at the live market and see if we can see any setups or see what's happening in the live market right let's get started so first of all news items today there was there was some news that came out this morning and let's just take a look at we'll take a look at the live market here let's go to the S&P 500 and there was a slight reaction to the data this morning first of all at 945 a.m. manufacturing PMI data came out that was lower than expected less than 50 indicating contraction and then services PMI PMI came out better than expected and that was greater than 50 indicating expansion so data came out at 945 and at 10 a.m. minor reaction all right for the rest of the week the big event is tomorrow and that is the FOMC minutes that will be released at 2 p.m. Eastern time and that will be at the halfway point of my session tomorrow so we'll we'll stop whatever we're doing and watch the watch the futures at 2 p.m. and then Nvidia reports after the market closes tomorrow and then Thursday GDP comes out at 8 30 a.m. Eastern time and then finally on Friday PCE data and durable goods come out at 8 30 a.m. Eastern time and then Michigan consumer sentiment at 10 a.m. all right so let's start with positional analysis now so that was the news news items for today in the rest of the week so in the morning session actually before I go under this chart let's take a look at a larger time frame so I'm gonna go take a look at SPX and this is a 30-day one hour chart for SPX just showing price and key level so let me point out the levels on this chart so first of all with a dash purple line I have the lower and upper edge of the expected move for the week and then this dash blue line is showing the lower and upper edge the expected move for the day and note that SPX is trading below the lower edge the expected move for the day and let me point out some spot gamma levels now these horizontal dark red lines these are provided to spot gamma subscribers for a variety of platforms here we're looking at a thinkorswim chart so I'm going to point out the key daily levels that I follow first of all there's the put wall at 4,000 that's the strike with largest net negative gamma that can be expected to act as support and hello JEC glad you're here so there is the put wall at 4,000 and then is the next level up is the absolute gamma strike at 4,150 that's the strike with largest absolute gamma and then just above that is the volatility trigger as JEC points out SPX is now trading below the volatility trigger and the volatility trigger is spot gamma is proprietary gamma flip level below that level market makers position on the gamma curve is a negative and negative gamma environment market makers have to trade with price to hedge their delta exposure and that tends to increase or enhance volatility when market makers are trading with price and there was some discussion some to questions and discord from this morning about positive and negative gamma and I really don't assign that much of a directional edge to positive gamma or negative gamma the market can move both ways in a negative gamma environment and a positive gamma environment and now I think spot gamma does assign a little bit of a bearish edge to index market trading below the volatility trigger and and positive above the volatility trigger and the volatility trigger again is spot gamma is proprietary gamma flip level negative gamma below and positive gamma above in a positive gamma environment market makers have to trade against price and that tends to subdue volatility so that's the main thing that I look at regarding the volatility trigger and and positive and negative gamma and then finally the call wall is up at forty three hundred that's the strike with the largest net positive gamma that can be expected to act as resistance so those are the spot gamma proprietary daily levels as well as the upper and lower edge of the expected move for the day and the week all right let's take a look at another think or swim chart just so we can focus on the levels and this is a think or swim chart one day one minute showing the levels that are in play for today and primarily again as the lower edge the expected move for the day as well as the volatility trigger so now SPX is trading below the volatility trigger and presumably has shifted to a negative gamma environment and by the way spy is already at the beginning of the day was already trading in a negative gamma environment we'll look at that in more detail in a couple of minutes right so let's take a look at book map now and in the morning session that was very very quiet with the S&P 500 trading between spy 417 and 418 so let me point out my columns on this chart and I'm I have my own cloud notes here these are spot gamma cloud notes these are mine the C levels and I'm showing key spy levels and that is the 418 volatility trigger and notice how many times that acted as resistance today and this just shows how key the spy levels are to the S&P 500 whether you're looking at spy itself or ES futures in this ratio the spy to ES ratio changes a little bit every day I have a think script that calculates it automatically all right so again in the morning session 418 volatility trigger resistance and the 417 level was support until finally breaking over around just after 1230 all right so those are the levels are in play and now it looks like maybe the 416 415 level for spy are in play and then here is the lower edge of the expected move for the day as well as the 4170 volatility trigger that was also noted as support in the spot gamma am founder's note and we'll look at setups in a few minutes all right so that's the S&P 500 let's talk about the NASDAQ now and for the NASDAQ pretty similar price action let's just take a look at a QQQ chart you have to rearrange this a little bit so this is QQQ a one-day one-minute chart and think or swim showing the round number levels as well as the spot gamma levels so the level spot gamma level and play for today is this 335 l3 level and that is also the absolute gamma strike for QQQ 335 so a key level for QQQ and similar to the S&P 500 trade in the morning was in a narrow range between QQQ 336 and 337 until it broke lower about the same time the S&P 500 did all right so let's go take a look at book map now and a book map I for NQ I still I have my cloud notes levels again so there's the 337 level that acted as resistance and the 336 support and now the NASDAQ is also trading below the lower edge the expected move for the day so price broke below or and then that acted as resistance so now price is trading below the 335 absolute gamma strike so again very important to keep track of the ETF levels on your futures charts all right so that is the those are the primary indices that I follow the S&P 500 the NASDAQ there were just a few a couple of shifts levels basically for SPX no shifts in levels for spy no shifts in levels I'm talking about the volatility trigger put wall call wall in absolute gamma strike all those levels remained the same from yesterday so let's take a look at the absolute gamma levels and we'll start with SPX so for SPX the put wall remains at 4,000 this chart is showing positive gamma or call gamma above the zero line with the orange bars and put gamma or negative gamma below the zero line with the blue bars and this is the strike with the largest net negative gamma that can be expected to act as support and then the absolute gamma strike at 4,150 strike with largest absolute gamma and then the the call wall is at 4,300 strike with largest absolute or net positive gamma although there is more more call gamma orange bars larger at the 4,200 strike all right so that is the SPX all the levels remain the same let's take a look at spy and for spy again the levels remain the same volatility trigger at 4,18 absolute gamma strike at 4,20 and that appears to be the center of the universe for spy right now and the call wall up a couple of points at 4,22 and the put wall remains at 400 so the range for spy for 400 floor and 4,22 ceiling and that was expected to act as resistance today according to spot gamma all right let's take a look at NDX before I do that I'm gonna need to refresh this page let's go to NDX and for NDX the center of the universe is the 13,850 strike and that is the absolute gamma strike as well as the call wall and the volatility trigger shifted higher up to 13,175 and that is not actually shown on this chart and then QQQ so that was one one of the two shifts in levels for today for these NDX products and that finally QQQ take a look at this zoom in just a bit so for QQQ the volatility trigger also shifted higher from 334 to 338 so here's the volatility trigger and for QQQ 335 is the absolute gamma strike and the put wall remains at 327 oops right here no not a lot of gamma but this is taking the difference between the put gamma and the call call gamma so that net negative gamma is there at 327 and then the call wall remains at 340 or let's take a look at one other thing while we're on this page we'll go to the Vana model I'm going to take a look at SPX and I like to look at this chart every day because it gives me a sense of how market makers may have to hedge so what this 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 and the gray curve is showing how market makers delta notional changes with changes in price and that is the this line again is showing delta delta change with price only and what this is showing is if price increases market makers delta notional will increase and they'll have to sell futures and that's typical of a positive gamma environment and then this purple curve adds implied volatility to the equation and that is showing how market makers delta notional will change with changes in price and implied volatility and that's the Vana effect the change in delta with a change in implied volatility and this curve is showing as a price increases market makers may have less delta notional to hedge than predicted by the delta only curve and then on the other hand as price decreases and implied volatility increases they will have more delta notional to hedge so as price decreases in a negative gamma environment they'll have to sell futures with price to hedge their delta exposure so let's take a look and see where SPX is trading now so remember the last time we looked SPX was below the below the volatility trigger at 4170 and also spy was below the volatility trigger at 418 so right now SPX is trading around 4162 so somewhere around here where I'm holding my cursor this vertical line so this is showing as price decreases market makers delta notional will increase and they'll have to sell futures and that tends to enhance volatility and when they're trading with price on the other hand if price starts to increase and implied volatility drops market makers delta notional will drop and they will have they can buy back some of their short futures so this this is how this works both ways in a negative gamma environment so that this will provide in the case of price increasing a tailwind price up to a certain point and then market makers will have to start selling futures again and let's just see how this has shifted the last couple days and just to one thing to keep in mind is market makers gamma notional for SPX is still positive but it has decreased over the last three days so let's go back a couple of days so there's a more positive gamma environment slightly less negative gamma environment and then again a slightly less negative gamma environment still positive for SPX alright so let's take a look at those numbers so what I'm talking about is this gamma notional there's another measurement of this spot gamma gamma index this is for SPX spy Ndx and QQ QQ QQ QQ QQ this is market makers position at the beginning of the day and this is showing that again gamma notional is positive for SPX although less positive than yesterday so it did shift down and for spy it is more negative than yesterday and then for QQ QQ it actually shifted it's still negative but not as negative as yesterday so a shift down in SPX and spy and shift higher but still negative for QQ QQ alright so take profit in YouTube ask why is hero gamma positive and Vanna negative so I'm not quite sure I understand your question we'll take a look at a hero in just a minute so I know that at least earlier today that hero was was positive was that's a delta that we're looking at with with hero so when when hero line is rising market traders are taking positive delta positions and Vanna is really what we're looking at is market makers position on the gamma curve whether that's positive or negative and Vanna is just again the change in delta with a change in implied volatility and it helps us to predict how market makers may be hedging alright let's let's move on now so that is the that's the information that goes into my positional analysis for the indices based on this I was looking for a range day today directional bias neutral at no shifts in levels there was really not enough to you know assign a directional edge one one way or another and then finally for volatility I was looking for moderate volatility more than the last couple days since gamma notional is shifting for more positive to either less positive or negative all right let's take a look at some setups so I'm going to start with with hero here and this is for the S&P 500 combined signal so this is what take profit is asking about so first of all this chart is from spot gamma spot gamma heroes showing price with the white line hero the hero signal hedging impact of real-time options H I RO and this is showing a combined signal for the S&P 500 for SPX spy XSP and ES futures and again this is hedging pressure or hedging flow so this is showing for the combined signal and it's really SPX spy and ES futures it is positive let's take a look at the individual components of the signal so first of all let's take a look at SPX and I'm looking for the SPX signal there it is so remember the total signal was about positive 1.7 billion so SPX positive so traders have been it looks like taking positive delta positions in SPX positive 450 million spy that's negative 189 million negative and then ES futures very positive 1.5 billion positive to get the total signal all right so let's zoom in on this so really as far as trading setups options traders in the S&P 500 were not helpful this morning they were maybe early in the morning remember when early in the morning the S&P 500 was trading in a very narrow range between 417 spy 417 and 418 and this was really just supporting longs with hero rising you know that traders are taking positive delta positions and market makers are buying futures to hedge those so in this case taking these long long set up some pullbacks or that they trend a fade trades favored longs but you know that there were good trades short and long between 418 and 417 all right so let's go take a look at book map let's go back to the S&P 500 I'm gonna zoom in on the morning session expand this just a little bit so this is the morning range very narrow between 417 and 418 to spy levels and again with hero rising somewhat favoring longs and I would say that order flow supported the same with cumulative volume delta increasing that shown by the the dark blue line and then also stop orders by stop orders shown by the rising orange yellow line then on the other hand it looks like the larger traders with iceberg orders had the right idea they were fading this move higher so they were selling as the S&P 500 approach the 418 volatility trigger so there is for example an execution of 1000 contracts it looks like three transactions those are those are iceberg orders that large traders use to hide their size and there's 1606 there's another one 1402 so larger traders were fading that move while options traders were were buying all right so that's the morning setup range day fades both short at the 418 level long first one at the 417 level then higher highs and then price broke lower and I was actually making launch so I did I did not see this let's go back and take a look at hero and see if there was any any clue for this final move lower and not really other than hero leveled off some time later so traders stopped taking positive delta positions but that was after price already started to move lower let's just see what traders were doing first of all we'll break out puts and calls so it looks like call buyers are still more aggressive than put buyers I'm looking at the number over on the right side here that's 3.8 billion positive versus minus 1.9 billion negative so that is showing that traders are buying calls and buying puts all right let's take a look at zero DTE and see if that provides any additional insight and no not really so that is showing just trades options trades that were today's expiration let's take a look at the total expirations this is showing all trades all expirations right so not a not a lot of clue for a hero today other than really kind of supporting the long fades up in the in the range day this morning all right let's take a look at Nasdaq now so this is similar to the S&P 500 showing a combined signal of NDX and QQQ so let's zoom in on this and there's I think more clarity here first of all let's zoom in on the morning so briefly hero supporting longs up until about 10 a.m. rising hero line traders are taking positive delta positions up until again about 10 a.m. and then hero starts to move lower it looks like price chopped around for quite a while let's go take a look at book map for Nasdaq I'm going to zoom in on the on the morning session here and just like the ES trading at a narrow range between two ETF levels 336 and 337 and then after 10 a.m. we saw that hero was trending lower fading favoring shorts as NQ made a series of lower highs until finally reversed and let's over a little bit until finally breaking lower and breaking below that 336 level about 1230 so that's the Nasdaq and let's go so if you're using hero is kind of a one of the signals primary signal for trading remember heroes rising up until about 10 a.m. so supporting longs up until 10 a.m. up to the 337 level and then supporting a short at the 337 level so it looks like the the best trade was probably to buy a put by the 337 put although on a low volatility range day I generally don't I would if I buy a put I'm looking for big movement all right so that is the that's the Nasdaq let's take a look at a few stocks and then we'll come back and take a look at the live market for stock I want to take a look at his Amazon let's go take a look at hero and we'll see the call buyers were driving price higher in Amazon separate outputs and calls I'm going to zoom in on this so up until about noon so traders were buying calls show them on the rising orange line and they were also buying puts call buyers were winning and then help to dry price higher when traders buy calls market makers sell calls and they have to buy stock to hedge their delta exposure and that can drive a price higher so that's Amazon and the next one is meta total signal so first of all notice meta here this hero signal and that is showing a weak hero signal what this is showing is that the hero signal for today is the weakest that it has been in the last 30 days and that may be difficult to see that's a light gray on this black background showing the range within the last 30 days that entire length of the slider and so it is the low end of the last 30 days and then the colored portion shows the range of the hero signal in the last five days and this is the hero signal for today is also within that range and it's you know just basically at the low end so we know that the hero signal for meta was weak today so that's what I was looking at and now let's go take a look at hero for meta zoom in on this and this is what I was looking at it in the morning so note the call wall also the key gamma strike at 250 and meta jumped right up to that let's zoom in on this just a bit so what I saw this morning was pretty much lack luster options trades as price zoomed up to that call wall level and then this alert fired off that meta had breached the call wall and that typically call wall is expected to act as resistance so that got my attention so now notice that hero starts to shift lower just a couple minutes later let's go take a look at bookbump so meta has been up and down so what I'm looking at and this is this was just a clear setup from this morning and again remember kind of lackluster options trades straight up to the call wall resistance level and then let's zoom in some more note the shift in order flow at the at the call wall look at all the pink volume dots so by sweep show them a very small green dots up to the 250 call wall resistance level and then the aggressive sellers come in you can tell that with the large pink volume dots those are market sell orders traders selling that 250 level so a short set up there in meta and another one let's take a look at Nvidia let's go back and take a look at hero because there's meta really hero supporting and you know the way I see this more short setups let's go to Nvidia and at video I also see this as confirming shorts so let's zoom in on the morning session so a couple things to note here first this looks like a somewhat of a divergence so hero starts falling before price falls then his price increases again somewhat lackluster trade up to a certain point and a couple of large block orders shown by those vertical lines drives price up for another short as hero continues to fall right so let's go take a look at book map that with this line and video makes a series of lower highs then breaks this wedge pattern whoops tool pulls back gives another opportunity for short as hero oscillates up and down but order flow definitely negative there notice all the pink dots aggressive sellers alright so that's Nvidia take a look at Tesla and then we'll go to the live market and let me know if you have any stocks that you want me to take a look at any other stocks than the ones that I've looked at alright here's Tesla let's take a look at hero and as usual there's a very strong correlation between hedging flow and price action for Tesla and then the morning the move up was was driven by call buyers shown by the rising orange line and note the number here so in the morning up until about 11 positive 144 million versus minus 49 the input so traders call buyers were winning 144 to minus 49 and you could just tell that by looking at the strong correlation between the price action and call buyers right so let's go take a look at book map and there's the strong move up in the morning in Tesla as traders were buying calls right now the price starts to roll over somewhere between 1045 and 1115 and let's see what impact options traders had on that alright so notice that around 1115 traders stop buying calls they start selling calls orange line rises and price stops rising it starts falling and continues down so now the total call signal for the day the net is minus 38 so net for the day they are actually selling calls buying calls in the morning they stop or around 1110 1115 start selling calls and price moves lower all right again let me know if you have any stocks that you wanted me to take a look at otherwise we'll take a look at the broad market so the only thing I can discern from this is that so the total signal for hero is still positive but starting to trend lower let's take a look at book map take a look at order flowing book map go back to the S&P 500 and note the iceberg orders continue to be negative and this is it can only we'll take a look at Palantir I don't have that in book map but we'll take a look at Palantir with hero in just a minute all right so this is the S&P 500 I think one of the key takeaways from today are the large traders with iceberg orders and note this number now this is the cumulative for the session and I I start my session actually this is so this is MBO data so my session started around 7 a.m. when I opened book map so that is accumulated iceberg orders from about 7 a.m. Eastern time and that's 23,000 minus 23,000 around 550 23,549 right now that is quite large I don't think I've seen a number that large and quite sometimes so large traders are in there aggressively selling with iceberg orders they used to hide their size very interesting and also stops that number is also negative it about minus 4,000 cumulative volume Delta is still positive and that's actually accumulated from when I get backfield data I believe I backfield data goes back to the open yesterday evening so now the S&P 500 ES is trading down below the SPX 4150 absolute gamma strike that was noted as the second level of support in the spot gamma am founders noted a more substantial level of support than the 4170 level and price continues lowered notice now the first of all this 417 level did act as resistance sort of price never reached that level and then the 416 level acted as resistance price sliced right through the spy 415 level and as now down at the 414 level I love this this really helps my long-term position right so let's take a look at we'll go to hero take a look at Palantir and then we'll take a look at the NASDAQ so there you go Kenobi there's Palantir very strong correlation between options trades hedging flow and price action and call buyers are in charge shown by the strong correlation between the orange line and price action and note that when traders stop buying calls start selling calls price starts to move lower let's take a look at NASDAQ and overall a negative signal today for NDX and QQQ and again started to move lower just after 10 a.m. Eastern time trending lower and now price is really moving lower let's go take a look at that book map for NASDAQ notice again price is trading below the lower edge the expected move for the day shown by the dashed blue line so while I've been talking today there were a good short setups first of all at the lower edge of the expected move for the day and then the 335 key gamma strike absolute gamma strike for QQQ acted as resistance and then it looks like temporarily the 333 acted as support alright so RJ points out the VIX is up 10% let's check on that so the VIX made it up to 19 19.31 now seems to be rolling over just a little bit now for NASDAQ it looks like some larger traders are coming in and starting to buy with iceberg orders 175 contracts 145 contracts so NDX is still above its volatility trigger spy and SPX are below their volatility triggers and then QQQ is also below alright so RJ says great divergence with NAS so are you talking about hero let's see so it looks like yes so good spot so it looks like now options traders starting to take positive delta positions and Q reversed higher at the 333 level and also again large traders were coming in with iceberg orders let's take one last look at the S&P 500 then we'll call it a day so it doesn't look like a strong a balance and the S&P 500 but it looks like larger traders were buying with iceberg orders and maybe so let's go take a look at hero for for the S&P 500 so options traders still playing the bounce in NASDAQ S&P 500 not really heroes still trending lower and potentially just setting up a pullback to take a short alright my time is up turned out to be an interesting afternoon remember tomorrow the FOMC minutes come out at 2 p.m. during my session so we'll go through positional analysis and then at 2 p.m. start looking at the futures for setups alright thank you everyone thanks for your questions or comments and thanks for watching I'll see you tomorrow bye