 Hello everyone. Welcome to Options with Doug. Streaming live daily on Bookmap Discord and the Bookmap YouTube channel at 1.30 p.m. 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 in 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 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 of my process is execution and I look at real-time order flow and bookmap and market maker hedging flow and spot gamma hero to confirm my thesis and for setups for entries and exits. Questions and comments are welcome and I will be watching both the Options-Doug chat channel in Discord and also the chat and YouTube for your questions and comments. So please feel free to post and hello gray. Hope you had a great fourth as well. Long weekend. Glad you're here. All right my agenda for today. I want to go over news items, economic data that came out today and events for this afternoon the rest of the week. Then I'll go through my positional analysis and then I'll review a few setups and then we'll go to the live market. So just to note the FOMC minutes come out at 2 p.m. today and wherever I am in this agenda I will stop and we'll take a look at the live market. All right so first of all news items today. The factory orders came out at 10 a.m. a little bit lower than expected and as I just mentioned FOMC minutes come out at 2 p.m. and we'll stop and look at the live market at that time. Tomorrow PMI data comes out at 10 a.m. and then Friday the big event other than the FOMC minutes is the employment report that happens on the first Friday of the month that comes out at 8 30 Eastern time. All right so big events for the week, the main events, FOMC minutes today at 2 p.m. and then the employment report at 8 30 a.m. on Friday. All right let's get started. Start with positional analysis now and this is the S&P 500 futures in book map. Before I take a closer look at this chart I want to take a look at a larger time frame. I'm going to go to an SPX chart. This is a 30-day one-hour chart in thinkorswim showing just price and key levels and let me point out some levels on this chart. First of all the dash purple lines are showing the lower and upper weekly expected move. This is from the options market and you can get this information any number of ways and I just I actually have a think script that does this and you can also just look at the SPX options chain and that is how I get the lower and upper daily expected move. Show them with the dashed light blue lines. So right now SPX is trading in between the lower and upper daily and weekly expected range. Let me point out some additional levels on this chart. Spot gamma levels. First of all there's the put wall at 4200 and note this level did increase from last Friday. It was at 4,000 I believe last Friday and now is up at 4200. That's the strike with the largest net negative gamma that can be expected to act as support and of course not really in play today. The next level is the volatility trigger and that a spot gamma is proprietary gamma flip level. Below that level market makers position on the gamma curve is negative and a negative gamma environment market makers have to trade with price to hedge their delta exposure and that tends to increase volatility. On the other hand like SPX is trading now above that level market makers position on the gamma curve is positive and a positive gamma environment market makers have to trade against price to hedge their delta exposure and that tends to subdue volatility and the next level of interest is the absolute gamma strike that's also at 4,400. That's the strike with the largest absolute gamma and then the call wall at 4,500. That's the strike with the largest net positive gamma and that can be expected to act as resistance and that level did increase from last Friday as well as the volatility trigger. So looking at the numbers from last Friday the volatility trigger put wall and call wall for SPX all shifted higher and note the really the range I think in play for this week at least is the 4,400 to 4,500 and that lines up very well with the lower and upper weekly expected move. All right so that's SPX now let's take a look at ES in book map and I have a column of cloud notes here these are my own cloud notes and I'm showing actually before I do this let me forgot to look at one other chart this is SPX today actually let me just a moment let's zoom in on just today so this is showing SPX for today in a one-day-one-minute chart showing the level so to imply for today note the lower daily expected move this is for SPX acted to support SPX gap down and then continued higher just did not quite touch this level and then the 4450 level has definitely been in play for today and welcome karma FX and John D and YouTube glad you're here all right so this is back to ES now let me point out some levels so as I was saying I have my own column of cloud notes here there's the SPX 4450 level that was noted as a resistance level in the spot gamma am founder's note right now there's about a 37 point difference between ES and SPX so that's why the SPX 4450 level is shown at 4487 that accounts for that difference I'm also showing spy levels there's the spy 443 volatility trigger and it has been acting as support earlier today and also just in the last few minutes and then note the spy 442 large gamma 3 level acting somewhat a support this morning that was kind of a launching pad for the move higher at the open to the aggressive move higher at the open so those are the levels in play spy and SPX and then here's the ES lower daily expected move that's a little bit different from the SPX lower daily expected move so those are the levels in play for today SPX I talked about the shifts in levels for spy the volatility trigger shifted higher this is based on from Friday the put wall actually shifted lower from 430 to 420 call wall shifted higher from 440 to 450 and the absolute gamma strike for spy remains at 440 so now the call wall is up at 450 so the important takeaways from these shifts in levels spy call wall shifted higher to 450 and the SPX call wall shifted higher to 4500 raising that ceiling for potential movement right so again the key takeaways the ceiling now for spy and SPX has moved higher alright let's take a look at NASDAQ now and that's the in queue futures before I take a closer look at this chart I want to take a look at a QQQ chart so we can look at levels that are in play for today this is the QQQ one day one minute chart let me point out a couple levels so for QQQ the put wall remains at 330 and the call wall has shifted higher from 370 to 375 and if you recall from last Friday the QQQ call wall was at 370 and that was a brick wall price could not get past that level and there were large sellers in there at the 370 level but now that potential ceiling for QQQ has also moved higher to the 375 level and then here's the QQQ volatility trigger at 369 and that was a launching point for price this morning so both those levels have shifted higher volatility trigger and call wall for QQQ and right now this 370 level that acted as resistance last Friday and I think Monday as well is now acting as support let's go back to in queue futures so for in queue I have again my cloud notes here that's the QQQ 372 level acting as resistance and there's the launch from the QQQ 360 369 volatility trigger and also the NDX 15,125 level and right now there's about a 155 156 point difference between NQ and NDX so I've got NDX QQQ levels as well as the big round numbers for NQ marked here the zeros in the fifties so again here's the 370 level this kind of cluster of levels this is the NDX 15,200 level that's the absolute gamma strike call wall for NDX and then the 15,350 level and again also the QQQ 370 level that was the call wall last week so those are the levels in play for the SME 500 and then NASDAQ we'll talk about setups in a few minutes and John D asked us do those levels show up automatically no they don't let me show you what what does show automatically if you let me come back to NQ so if you subscribe to spot gamma you can use the cloud notes that's what I have here the problem with these is spot gamma does not keep track of the act the current ES to SPX difference so this level is is not correct that's why I'm using my own cloud notes and SCS can we look at the Dow I'm sorry I I don't I don't trade the Dow I don't look at it I just trade and look at SAP 500 and NASDAQ so sorry about that I'm looking at the these indices index products are heavily influenced by the options market I don't know about the Dow alright so I've talked about the SAP 500 the NASDAQ shifts in levels and then how I'm looking at levels on these charts with my own cloud notes and I use an add-on that's available in the book map marketplace called price lines all right let's take a look at some additional information that I use look at in my planning process first of all I'm going to take a look at the Vana model this is for SPX and I'm using this to get a sense of how market makers will be hedging with changes in price and applied volatility so what this chart is showing is market makers delta notional and how that changes with changes in price delta notional shown on the vertical axis and price shown on the horizontal axis there are two curves on this chart this first curve the light gray is showing how market makers delta notional changes with changes in price only and this is showing as price increases market makers will have to sell futures to hedge their delta exposure and that's typical of a positive gamma environment then the purple curve is showing is adding implied volatility to the equation this is showing how market makers delta notional may change with changes in price and implied volatility and that change in delta with a change in implied volatility is the Vana effect hence the name of this the Vana model that's a second order Greek so what this is showing is again market makers as price increases market makers will have to sell futures to hedge their delta exposure although the purple curve is showing that the they will have a little bit less delta notional to hedge as price increases then on the other hand if price decreases and implied volatility increases market makers will have significantly more delta to hedge they will have to sell futures to hedge their delta exposure so the left side of this curve is typical of a negative gamma environment and the right side is typical of a positive gamma environment let's take a look and see where SPX is trading now I've got SPX at 44 48 so let's find that on this chart so that's right around here so what this is showing is if price increases there may be a slight tailwind but if price continues to increase market makers will have to start selling futures to hedge their delta exposure then on the other hand if price decreases market makers will have to aggressively sell futures to hedge their delta exposure helping to fuel the move lower all right that is SPX and SPX right now is in a positive gamma market makers position on the gamma curve for SPX is positive actually at the beginning of the day it was positive for SPX spy and DX and QQQ so let's quickly take a look at SPY Vana model gamma notional slightly is less positive so this gamma curve is a little bit more ticket typical of a slightly less positive gamma environment right now I've got SPY at 443 just above the volatility trigger and again showing there may be a slight tailwind if price moves up just a little bit not much but a significant headwind or a fuel for price to move lower as price moves lower and I'm just watching the purple curve there and how it shifts to the left and to the right of that line and there's the Vana model for QQQ pretty similar to SPY all right let's take a look at some data what I'm going to focus on here is gamma notional so this is just what I was talking about market makers position on the camera curve this provides some numbers for SPX spy and DX and QQQ note all these numbers are positive they did increase from yes from Monday so again market makers position on the gamma curve at the beginning of the day today was positive for all these indices index products all right let's take a look at some setups well so first of all let me point out my thesis for the day based on this information so I've talked about the shifts and levels higher especially the call walls for SPX spy and QQQ call walls potential ceiling upper end of the trading range all shifting higher that's bullish and then also the positive gamma environment for all the index products and based on that I was looking for a lower volatility day more of a trading range rather than a trend day so bullish directional bias and looking for a tighter range today smaller range based on the positive gamma environment so that was my thesis for the day all right let's take a look at some setups now we'll start with the S&P 500 and I want to start by looking at what options traders are doing or have been doing today and what they're doing now so this is the spot gamma hero chart this is showing price for SPX with a white line and the hero signal in the purple line so this hero signal is showing a combined signal for options trades and market maker hedging activity for SPX spy XSP and ES futures all into one combined signal so again showing market maker options trades traders are taking positive delta positions and market makers have to buy futures to hedge their delta exposure so let's take a look at the individual components of this primary components first of all SPX and net for the day that's actually negative and note SPX options do trade before the cash opens so that is the cash open right there that's when it really gets going but this number is slightly negative so net for the session options trades for SPX are negative delta let's take a look at spy and for spy they're positive 2.16 billion and then for ES futures also positive at 1.1 billion all right let's go back to the combined signal now gonna zoom in on this right trying to adjust it so I'm just looking at the all right so this is beginning of the cash session here and note that call buyers are in here enforce as soon as the market opens at 9 30 a.m. Eastern time we'll take a look at what they were doing in just a minute one thing that I want to point out I want to show a chart from Monday so keep in mind this is Monday pre holiday half-day session so again Monday half-day session close at 1 p.m. Eastern time and this is showing that traders were buying calls and buying puts on Monday and this is a pretty significant number here for calls 3.15 billion for a pre-market a pre-holiday half-day session so that is significant traders were in there Monday buying buying calls and that to me adds to the bullish narrative at least you know at least for today so that's again this is Monday half-day pre-holiday session all right so today let's take a look at what traders are doing separate outputs and calls and note right at the open tripping all over themselves to buy calls and note the the number here at 4.3 billion positive excuse me so they're also buying puts today but the call buyers so far for the most part have been winning 4.3 billion positive versus 1.3 billion negative and that nets out to right around positive 3 billion and note the strong correlation between price action and hedging flow all right let's take a quick look at book map and I've just got two or three minutes before the FOMC minutes come out so let's go to book map go back to ES right so here's ES I'm going to zoom in on the zoom in on the morning so we know that traders were buying calls at the open they were buying calls on Monday and one other thing that stands out here is this large large iceberg orders that's shown by the rising light blue line in the in the sub chart let's see if we can find that order scroll just a little bit so here at this at this point of view it is aggregated into this number here it looks like about 1476 and this blue line here light blue line shows that way a series of smaller orders here shown in this chart accumulated into one block order there but showing 40 transactions and if we zoomed in closer those would would appear and note after that flurry of buying right at the open now the blue line shifted lower traders continue to buy calls and then buy stop orders as well as cumulative volume delta buy stop orders and then cumulative volume delta aggressive buyers were market buy orders helped to fuel the move higher so there's the the setup in the morning definitely long all the confirmations in the order flow and book map as well as as well as hero alright it's 2 p.m. let's see if there's any reaction to the FOMC minutes so far are not much alright so not much of a reaction so far take a look at NASDAQ so now looks like a positive reaction let's see what options traders are doing so we'll go back to hero so there's somewhat of an uptick in in the hero signal traders taking positive delta positions let's go take a look at NASDAQ somewhere we're looking at this I'm gonna zoom in on the morning session and note the initial move higher positive hero signal options traders taking positive delta positions starting about five minutes after the open and that now has shifted shifted started to shift negative about 10 30 10 40 iceberg ESU 3 CME sell 403 let's go back to book map and I just got an alert of my year about a large iceberg sale and that was for this right here large trader in there 3,000 contracts selling right at point of control and that was absorbed by market buy orders shown by that green volume dot let's take a look at NASDAQ want to take a look at the the morning session so the we know initially traders were taking positive delta positions here's the launch at the cash open aggressive buyers wrong tool note the rising cumulative volume delta and that was also fueled higher by buy stop orders shown with the rising yellow line alright so D&T matter says note that location had the same amount of ice at 1215 ish let's take a look at that that could be interesting alright so what he is talking about and there's the 3,000 contract iceberg order and then right at that same level that is showing 2,900 and two separate transactions so there's a large trader that wants to sell just to write around 4486 between 4485 50 and 4486 and thank you very much for D&T for pointing that out let's go back and check what and see what options traders are doing back the S&P 500 so looking at hero in the afternoon there are a couple of ways of approaching this I think Brent had spot gamma has talked about just scrolling in like I'm doing now and another approach is to change the rolling windows so right now I'm looking at a cumulative value for the entire day and I can change that rolling window period so it's like changing to a shorter moving average and now that is showing just starting around 2 p.m. on net options traders are taking positive Delta positions they are they are buying and that's pretty clear from looking at the still sticking with the one-day rolling period alright I'm going to take a look at a couple of stocks from this morning and then we'll get back to the live market first is Google and note the 120 key gamma strike in play let's take a look at book map so obviously traders are taking positive Delta positions at the open on Google take a look at book map go to Google and there were several stocks that like this just like the Nasdaq took off like a rocket at the open and again for Google 120 the key gamma strike right the next is meta even more so of a launch hire 300 is the call wall for for meta that is a potential upper end of the price range and meta traded higher about 10 points in a matter of an hour this morning from the 930 open from the 287 to the 297 level so anybody who bought calls this morning in meta had a great day alright let's take a look at hero for meta separate outputs and calls so this is clearly showing that traders were buying calls this morning shown by the rising orange line and really about 1030 as price leveled off they stopped buying calls and price has flattened out now increasing a little bit so puts they're also selling puts but that's not significant not significant for comparative calls 18.9 million versus 343 million right so that's meta the next is Microsoft and note the call wall and play for Microsoft at 340 so in the morning hero rising traders taking positive Delta positions and price did breach the call wall and is now trained lower so hero rising price rising let's go take a look at book map there's Microsoft and karma FX thank you very much you're welcome thank you very much for your kind words have a great day is as well I've got another 20 minutes hope you'll be able to stick around alright so there is Microsoft and another blast hire at the open 340 call wall price did breach that and now is trading lower and finally in videos one more that I want to take a look at and again blast hire not much liquidity it was up who about four points in just a matter of a couple minutes let's go take a look at hero so hero looking at the total signal a little bit more choppy than the other stocks that we looked at let's see if we can separate outputs and calls and get more clarity and yes we can especially in the morning in the first first 30 40 minutes so after that initial blast hire and video giving some pullback opportunities to go long as traders were buying calls all right let's go back to S&P 500 see what traders are doing now and if anybody has any stocks that they want me to take a look at please let me know all right so so far really not much reaction from the FOMC minutes let's go take a look at book map yes so it looks like the larger trader with the large iceberg order may be getting his way iceberg ESU 3C MESL 569 yeah there it goes 4450 SPX 4450 acting as resistance and more iceberg orders coming in so it took a while normally the algos parse the FOMC minutes in just a matter of seconds all right so Florida's garage says TNX up over 2% let me take a look at that all right TNX for those of you may not know that is the yield for the 10-year note so up over 2% now the yield that for the 10-year note is 3.94% so up over 2% today 8 around 80 basis points and how so when wisdom asks what do you think the direction of XOM is I don't know I don't follow XM XOM I don't have it in book map we can take a look and see if it is and it should be in hero here let's take a look so what options traders are doing so very light options volume and XOM so sorry I just don't have much clarity there looks it looks like there is this large block order did come in let's see so there was a larger block order someone buying puts that's him though that vertical line there so that's bearish again I just I would have to look at order flow on on book map and I just don't have XOM and in book map let's take a look at NASDAQ see what it's doing so really for the day after about 10 30 a.m. hero continues to trend down so options traders continue to buy puts and sell calls notion of value for calls and puts both negative traders are selling calls and buying puts and NASDAQ and house of wisdom you're welcome the total signal and S&P 500 also trending down let's go back to book map so definitely a break lower there iceberg orders giving an early warning of potential move lower and note this liquidity that was in the order book earlier at 4480 and that was in play earlier today let me zoom out just a little bit right here yeah so that liquidity in the order book at 4480 was in play earlier today so apparently acted as support and then they pulled that liquidity and now have come in with sell orders at 4480 and order flow definitely stop ESU 3 CME sell 270 another warning in my ear about the stop order there it is right there 500 sell stop order helping to fuel the move lower right there price now down just above the lower daily expected move note the bearish order flow here stops yellow line sell stop orders like we see here helping to fuel the move lower also iceberg orders there's another one 1800 so larger traders with iceberg orders smaller traders maybe with stop orders all helping to fuel the move lower with the break below below the spy 443 volatility trigger and remember at this point thinking back to the Vanna model market makers would be would be selling at this point most likely based on the Vanna model price decreases implied volatility increases and market makers are selling let's just take a look at vixx is somewhat of a proxy for implied volatility and this is vixx for today jump sharply right about 215 with that sharp drop lower in the s&p 500 let's go back and see what options traders are doing go back to hero so it looks like there was slight slight lead effect if we look at heroes starting at just after 2 p.m. started making lower highs and then dropped sharply as the index dropped so great short set up here focusing on options trades larger traders with iceberg orders smaller traders with stop orders and watching the water flow and potential levels for reactions all signal are pretty good short set up let's take a look at nasdaq so in es larger traders were selling with iceberg orders and it looks like larger traders are in here buying nasdaq although the numbers are not nearly as significant in nasdaq as they are in s&p 500 talking about the rising blue line here it's a little bit easier to see although there is there's one execution 58 contracts let's go back and check hero see what options traders are doing in nasdaq still trending lower for the day a little bit of an uptick now back to es so about the same time as as nasdaq aggressive buyers came in note the shift in order flow aggressive sellers this sell stop order and then sellers were exhausted after that and aggressive buyers come in shown by the green volume dots and at no particular level just around 44 76 so here's a potential level for reaction for nasdaq at the 350 level in q 350 and also the q q q 370 level that did act as resistance last week and also on monday take a one last look at hero nasdaq and again hero continues to trend lower so that may not act as resistance maybe just a pullback all right my time is up take one last look at the s&p 500 could be heading up to the spy 443 level all right i want to thank everyone for watching thanks for your questions and comments and i will see you tomorrow thanks again bye