 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. And if you would, please hold on just a moment. I need to make a change to the playback that I'm seeing on YouTube. Just a reminder, I am streaming at 1080p on YouTube. If you're having any problems with the screen resolution, you can just click on the gear icon on YouTube and change that to 1080p. And that's just what I did. So I'm watching on another computer so I can see chat and I switch to 1080p. Alright, 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 in Bookmap Discord, there's an Options-DougChat 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. I'm also on X, formally known as Twitter, and my name there is at Doug Pless. The focus of my presentation today and the focus of the Options-DougChat 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 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 in my process is execution. I look at real-time order flow in Bookmap and real-time market maker hedging flow and SpotGammaHero 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 in those assets can be taken any number of ways. For example, the S&B 500 setups can be taken with ES Futures, with SPY Share, SPY Options, SPX Options, or even ES Options. Questions and comments are welcome and I will be watching both the Options-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. And here's my agenda for today, Thursday, December 28th. So first of all, I want to cover news items, economic data, and events. And just a note there was really not much. And then the next thing I want to go over is my positional analysis. And then I'll review setups from earlier today and then I'll talk about 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 will be glad to do that. All right, let's get started. So first of all, before I get started, I want to remind everyone that Bookmap is having a sale on annual subscriptions. And the sale is good through January 3rd. And I posted a link in Discord yesterday. Just scroll up and you should see the link to the sale. Otherwise you can probably get to it just going to bookmap.com. All right, so Bookmap sale, if you're thinking about subscribing to Bookmap or have a current subscription, this looks like a great way to get a good discount on an annual subscription. All right, let's move on to positional analysis now. I want to start with the S&P 500. This is the ES Futures in Bookmap. And before I take a closer look at this chart, I do want to take a look, first of all, take a look at a larger time frame in the underlying asset, which is the SPX index. And this is the underlying asset for ES Futures for SPY. Again, the SPX index. This is a one-day chart in Thinkorswim. This is showing the current rally that began on October 30th. That rally is still intact. And SPX has been moving higher for a variety of reasons. Ivy claps, Put Vanna Rally, a sharp drop in Treasury yields. And somewhat dovish FOMC announcements and comments. So the rally, that began again on October 30th, still intact. All right, so that is a one-day chart. Now let's take a look. Zoom in just a little bit. Take a look at a one-hour... Oops, wrong chart. Let's go to a one-hour chart. And on this chart, I want to point out the... the key levels. So I'm going to zoom in just a little bit here and just focus on the levels on this chart. So first of all, the dash purple lines. That one may be hard to see or showing the lower and upper weekly expected move. That's based on the options market. That is, I update that once a week. Again, this is based on the options market. Those levels remain in place for the entire week. Then the dash blue lines are showing the lower and upper daily expected move. That changes once a day. I update that every day. Then the dark red lines are showing spot gamma levels. These are levels that our spot gamma provides. It's two subscribers. They're showing on a variety of trading platforms. This is thinkorswim. These levels are based on gamma-weighted open interest. Spot gamma takes the open interest data that's updated once a day, sometime overnight. And they apply their own proprietary algorithms to come up with these levels. And I'm going to point out the key daily levels. So first of all, here's the poop wall at 4,500. That's a strike with the largest net negative gamma that can be expected to act as support. And the next level up is the volatility trigger at 4,785. And we'll see in just a moment that level has been acting as support today. 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, 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. And note that, again, that level has been acting as support today. So SPX is now trading above that level. And finally, the next level up, just above that, is the 4,800 level. And that is the call wall and absolute gamma strike. So the call wall is the strike with the largest net, positive gamma, that can be expected to act as resistance. And then that level is also the absolute gamma strike. And that's a strike with the largest absolute positive and negative gamma. So 4,800 is where most of the gamma weighted open interest is concentrated. And we'll take a look at the absolute gamma charts in just a minute. All right, so for SPX, there was only one shift in level, and the volatility trigger did shift higher up to 4,785 today. All right, then finally, let's take a look at a one-minute chart. Again, SPX, the only spot gamma level in play for today is that 4,785 volatility trigger and acting as support today. And this 1,130 support was a good entry point for along today. And then it looks like SPX moved a couple of points lower than the volatility trigger, but again, that level acted as support. All right, let's take a look at book map now. And a really narrow trading range today. Not a lot to see here, but let's take a look. So first of all, I have my own cloud notes. So I can show SPX levels. And there is the SPX, 4,785 volatility trigger. And I can also show SPI levels on this chart. So there's the SPI 477 large gamma 2 level. Note that most of the volume today is concentrated just above that level. This is the point of control shown by that purple line. And you can also see over here in the session volume profile, most of the volume is concentrated at that level today. So price basically oscillating up and down around that level. And note there is a difference in price between ES and SPX. And this morning it was right around 45. So that's what I'm using. I'm showing SPX 4,785 at ES 4,830. And it might be a little bit higher now the last time I checked. It was closer to 46. That number changes a little bit during the day, but I'm using 45. And we'll talk about setups in a few minutes. All right, so those are the levels for the ES500 and for SPI, the put wall shifted higher. Kind of a strange shift higher. The put wall is actually shifted higher for SPI, QQQ, and IWM all pretty significantly higher. So yesterday the put wall for SPI was at 450 and today it's at 474. So the SPI SPX ES is trading above that put wall. All right, so that was the only shift for SPI. The put wall is shifting higher. All right, let's take a look at NASDAQ now. All right, so here's the NQ futures and book map. And before I take a closer look at this chart, I do want to, first of all, isolate the QQQ levels. So let's take a one minute, take a look at a one minute chart for QQQ. Note the 413 level acted as resistance before the cash open, which is shown at the darker area. And then prices oscillating up and down around the 412 level. All right, that's QQQ. Take a quick look at NDX. The last time I looked there was not much going on. So very narrow range again for NDX, gapped up and move lower now trading at a range. All right, let's go to NQ now. So just like the SP500 ES, I have my own cloud notes. So I can show SPI levels as QQQ levels. I'm sorry, QQQ levels. There are no NDX levels in the current range. If there were, they would show up on my cloud notes. So there is the 413 level acting as resistance. And note, here's the 412 level. Price oscillating up and down around that level. And it looks like the point of control is right on top of 412. But that would be shown by the purple line. Also you can see the session volume profile. And the volume, excuse me, most of the volume concentrated around that level. And note that VWAP has been a good entry point for shorts, for NASDAQ NQ. All right, shifts in levels for QQQ. The volatility trigger shifted lower. As I mentioned before, the put wall shifted higher pretty significantly from 360 to 410. And then the call wall shifted lower for 415 to 414. And then the absolute gamma strike also shifted lower from 410 to 409. So a hat trick for shifts lower for QQQ. And there were no shifts in NDX. All right, so somewhat bearish shifts lower in the key daily levels for QQQ. And again, we'll take a look at setups in a few minutes. All right, let's take a look at Gamma Notional now to see how market makers were positioned on the gamma curve at the beginning of the day. And I'm looking at a portion of the SpotGamma AM Founders note. This is the data table at the bottom of the note. I'm going to focus on Gamma Notional. This is market makers position on the gamma curve at the beginning of the day for the SB500, NASDAQ, and Rosso 2000. And I look at this data to get a sense of the anticipated volatility and trading range for the day. I know that Brent, the founder of SpotGamma, likes to look at the SpotGamma index, which ranges from minus 4 to 4. All right, so Gamma Notional again for SB500, NASDAQ, Rosso 2000, all positive. So SpotGamma assumes for an index that traders are short calls, market makers long calls in this positive gamma environment, and they have to trade against price to hedge their delta exposure. These numbers did change from yesterday. For SPX and SPY, the numbers shifted lower. So still positive, but less positive than yesterday. And then on the other hand, the numbers shifted higher for NASDAQ and Rosso 2000. But again, the point is they're all positive. All right, I'm going to skip over the Vanna model. There's really nothing to see here in this positive gamma environment. Not much of a Vanna headwind or tailwind. I do want to take a look at the absolute gamma strikes, just to look at the gamma landscape. We'll start with SPX. I'm going to zoom in on this chart. Again, try that one more time. All right, so what this chart is showing is market makers gamma that's shown on the vertical axis. And the orange bars are showing call gamma or positive gamma. So market makers are long calls. Hence the positive gamma for the calls. So that is the orange bars showing call gamma, positive gamma. Blue bars showing put gamma or negative gamma. And this is the 4,800 strike. That is the absolute gamma strike. Again, that's a strike with the largest absolute. Positive and negative gamma. That's pretty obvious. It's also the call wall, the strike with the largest positive gamma. So that would be the orange bar minus the blue bar. That is the call wall. And based on this, high concentration of gamma weighted open interest. What spot gamma is looking for is sticky. They call it sticky upside movement to 4,800. And we'll just locate the other levels. Here we go. So here's the put wall at 4,500. And there are a lot of strikes in between current price at 4,500. And also there is a fair amount of gamma weighted open interest concentrated at 5,000. And a price continues to move higher that should increase as gamma increases as the 5,000 strike comes closer to the money. All right, let's take a look at spy now. Get a zoom out on this chart. So for spy, most of the gamma is concentrated at 4,75. That's the absolute gamma strike. And then this is pretty obvious, the call wall. The orange bar minus the blue bar at 4,80. And here's the put wall just below. That is the blue bar minus the orange bar. And then finally to complete our look at the gamma landscape. We'll take a quick look at QQQ. And for QQQ, the absolute gamma strike is now at 4,09. Call wall up at 4,14. And the put wall just below at 4,10. All right, so based on this, my thesis for the day for the SMB 500 was neutral to bullish. There were a couple of shifts higher for the SMB 500. The SPX volatility trigger spy put wall shifted higher. And neutral to bearish for the NASDAQ based on the hat trick shift lower for QQQ. All right, let's take a look at some setups now. So the first thing that I want to do is take a look at what options traders have been doing today. Let me zoom back out. So this chart is the hero signal. This is available to spot gamma subscribers. And this particular chart is showing the SMB 500 hero signal. Hero stands for hedging impact real-time options. So everything that we've looked at so far, other than book map, is based on static data that's updated once a day, sometime overnight. Spot gamma applies their proprietary algorithms to the open interest data to come up with all the information that we just looked at that I use in my planning process. So now we're going to focus on execution real-time data. So this chart is showing price for SPX with a white line. The purple line is the hero signal. Again, hedging impact real-time options. That is showing options trades and market maker hedging response, hedging activity for a combined signal for SPX, spy, XSP, and ES futures. Excuse me. All right, so that's the hero signal for the SP500. Spot gamma does provide several individual signals for those four instruments. I like to look at the combined signal. So let's zoom in on this chart and take a look. So again, it's been a very choppy day in the SP500. And I want to focus on one, actually one setup here right around 1130. And that, you know, again, this signal is very choppy. And I would say today pretty hard to interpret in a vacuum. Let's just zoom. Let's take a look at puts and calls. And that really doesn't provide much additional clarity. So what I want to focus on is this reversal higher just before 1130 right here. So hero is making a series of lower highs and then starts to make a series of higher highs. All right, so let's go to book map now and see how order flow and levels here shown in book map would have helped with this setup. So I'm going to zoom in just a little bit. So really the key here was watching this 4785 level and anticipating that to act as support. So I assume or anticipate any spot gamma level when it's tested from above will act as support and when tested from below will act as resistance. So I know around this time traders started taking positive delta positions then watching order flow here in book map. I can see that price touches that level. And this is small, but there were some iceberg orders. Looks like they're still in the order book shown by this horizontal blue line. And actually some were executed here with the second test of the 4785 level. Anyway, as hero starts to make a series of higher highs and higher lows, SB 500 does the same thing. Test a support level and here actually this is showing that there were some iceberg orders executed. These are buy orders that large traders use to hide their size. So reversal at a level that you anticipate to act as support and it does act as support as traders start taking positive delta positions. And it looks like right here just after 1 p.m. this is a reaction, the initial reaction to a seven-year node auction. Notice, note yesterday there was a five-year node auction and the reaction to that was positive and the initial reaction to the seven-year node auction today was negative, was bearish. And price moved back down just below that 4785 level and is now moving higher finding support at the 477 level. So very small range here in NES would take a great deal of patience to trade this today but the key was watching these levels as well as hero and order flow and book map. Alright, let's go back to hero. Let's just check a couple things. Alright, note first of all that I am showing only regular trading hours and I have turned off extended hours. So this chart opens at the 9.30 a.m. open. Let's take a look at puts and calls, separate outputs and calls. So the orange line is showing calls. Notional value is positive. This indicates that traders are buying calls. The blue line is showing puts. Notional value negative. This shows that traders are buying puts. This is pretty typical buying calls and buying puts and today the call buyers are more aggressive. The notion of value for calls is higher than for puts. Let's go back to the total signal. We can also take a look at this next expiry line. This is showing for the SB 500 options trades that expire today, the zero DTE trades and that just does not provide a lot of additional clarity. It looks like the notional value for the zero DTE trades is higher than the purple line which is showing all expirations. So let's turn that off. Alright, let's take a look at NASDAQ now. And NASDAQ, so for the SB 500 remember my thesis for the day was neutral to bullish. So I was looking for long setups and my thesis for NASDAQ today was neutral to bearish. So looking more for short setups. So there were a couple. First of all at the open traders were taking negative delta positions from the cash open setting up a good short from the open and then right around 10, 50, 11 o'clock options traders started taking negative delta positions again setting up another short. So let's go take a look at book map now. So we're looking for shorts at the cash open at 9.30 and also right around 11 a.m. Go to NASDAQ. Alright, so this is the first short setup at the cash open as traders were taking negative delta positions and market makers take the opposite side of that and they have to sell NQ futures to hedge their delta exposure. And here it looks like the NQ 17,150 level was a good entry point for a short quick drop price recovers. A zoom in on this the order flow I think is a little bit easier to read. The volume dots are showing market buy minus sell. Green dots indicate more buyers than sellers. Magenta dots indicate more sellers than buyers. You can see on the way up everybody on one side of the trade a lot of aggressive buyers. They're exhausted and aggressive sellers start to come in price reverses lower. Right above VWAP there as traders started taking negative delta positions. So again traders were taking negative delta positions primarily in QQQ and options market makers take the opposite side of that and they have to sell NQ futures to hedge their delta exposure. Setting up the second short. So again both setups that I showed for the SB 500 and NASDAQ were in line with my thesis for the day based on shifts and levels. Alright, let's go back to hero. We can separate outputs and calls. So in the case of NASDAQ traders are selling calls and buying puts. So both negative note the notional value for calls. The orange line is negative indicating traders are selling calls. Blue line also notional value negative indicate traders are buying puts. So definitely more negative hero flow hedging flow in the NASDAQ than the SB 500. Let's take a look at one other signal. This is the MAG7 zoom out. So this is also a combined signal. By the way the NASDAQ signal that I was looking at is a combined signal of QQQ and NDX. This MAG7 signal is a combination of the stocks known as the Magnificent 7. That's Apple, Amazon, Google, Meta, Microsoft, Nvidia, Tesla. These stocks make up a large portion of the NASDAQ as well as the SB 500 but especially the NASDAQ. So overall the signal was bearish at the cash open supporting the short and NASDAQ. And then again right around 10.50.11 the hero signal spikes way up and then starts to move lower again. So those signals also support the short that I two shorts that I talked about a NASDAQ. Or let's take a look at some stocks. So the first stock I want to take a look at is AMD. And AMD has been bullish today. And let's see what traders have been doing. Separate outputs and calls and they've been buying calls. That's shown by the rising orange line. When traders buy calls, market makers sell the calls and they have to buy stock. In this case AMD to hedge their delta exposure. And they're also selling puts. So AMD bucking the tech trend lower by moving higher. Trainers buying calls, positive notion of value. They're also selling puts shown by the positive notion of value for the blue line. Note that and we'll take a look at book map in just a moment. Note that 155 150 is the call wall. This is a very typical pattern in the morning. Traders from the open are pretty close to the open start aggressively buying calls. And then anywhere from 10 to 12, they take the foot off the gas. And here they take their foot off the gas at a very near a very expected level. You know, you would expect the call wall to act as resistance. It's doing its job. Call buyers take their foot off the gas and price stops moving higher starts to consolidate. And note they have continued to sell puts today. All right. So remember 150 is the call wall. Let's go take a look at book map. Go to AMD. Remember 150 is the call wall. Very bullish day in AMD. And here's a nice entry point at VWAP. Looks like around 959 55 pullback to VWAP as price heads up to the 150 level. And note the liquidity shown by the heat map and book map here. This heat map is showing history of the limit orders in the order book above price. Those are limit cell orders and the darker the color that indicates there are more orders at that level. That's pretty typical at this zero level, the 150 level, a lot of large cell orders. And note most of the orders come in at the cash open and stay in the order book until they're filled. Let's just zoom in on this. It looks like, well, initially it looked like those orders might have been pulled, but it looks like those orders at 150 were consumed. Then they're back in again, not to the same extent, but more orders coming in at 150. Alright, so the 150 call wall doing its job so far today acting as resistance. So that's AMD. And the next one, that was really the most clear setup today. The next, let's take a look at Nvidia. And there was really a lot of chop in these stocks that I trade. These are the stocks on my watch list, Orange CapTech plus AMD and Netflix. These stocks have very liquid options markets. Also, if you want to buy shares of stock or options, very liquid in both cases. And these stocks are heavily driven by options trades. So when traders buy and sell puts and calls, market makers respond pretty quickly. And there again, this is very liquid options markets and almost always there is something to do in at least one or two of these stocks. Now, of course, everything is pretty quiet today in this week between Christmas and New Year should pick up next week. But anyway, this is Nvidia. So let's go take a look and see what options traders have been doing in Nvidia. And Nvidia and Tesla are both very reliable for trading. Alright, so really the setup for today was this long, right around 10-20. Let's separate out puts and calls, see if we get any more clarity. And traders were, note that for today, traders are buying calls and selling puts. And that is bullish. Sorry about that, nothing I did. Smart Gamma is still working on that. So note at 10-20, traders are selling puts showing by the rising blue line. And right around 10-20, this call line, they stop selling calls, start buying calls, price responds higher. And then for most of the day, the orange and blue lines are moving the same direction, very powerful signal. Right around noon, they start shifting up again. And then they have both leveled off and Nvidia is now consolidating. Let's go back to book map. So looking at book map, Nvidia starts to make a series of higher lows. Good entry point right here at around 495. Good for a quick three points in Nvidia. Then a deep pullback to 496, just below view app. As traders were taking positive delta positions, buying calls and selling puts. And gh ask, is icebergs another or same word for dark pool money used by big banks? No, it's not. Iceberg orders are actually an order type that large traders use. These are only on CME futures. So this is an actual order type that large traders use to hide their size. And book map. So first of all, this is for CME futures only stops and icebergs orders. And rhythmic is the only data provider that provides this information and their data feed. So you can see I'm using rhythmic data for futures. So I get the stops and iceberg data and then spot a book map with the stops and icebergs add on. Dnbo bundle can detect that and show the stops and icebergs information on futures. So gh know it's a different thing. All right, so let's take a look at one other stock. And WRB, I see you've been typing for quite some time. Still waiting for your question. All right, so let's take a look at Tesla. All right, Tesla. So we looked at an uptrend somewhat of a neutral day for Nvidia and now a downtrend for Tesla. So let's go take a look at hero again for Tesla. We'll see what options traders have been doing. So note that options traders have been taking negative delta positions, mainly selling calls that shown by the falling orange line that is really driving price. When traders sell calls market makers by the calls and they have to sell stock tell in this case sell Tesla stock to hedge their hedge their delta exposure. And that is really what is driving price today. Note that 262.50 is the call wall. 260 is the key gamma strike and 257.50 the hedge wall. All right, so let's go take a look at book map. 262.50, 260 key gamma strike acting as support initially price breaks through access resistance. Now looks like the next target below is this liquidity at 255. Note the higher liquidity at the zeros and the fives 255, 260. So very bullish day in Tesla as traders take negative delta positions, mainly selling calls. Again, the key here is the interaction around the 260 key gamma strike support then resistance. And so far about an eight point move or so lower in Tesla. So that looks like the biggest range today is definitely for Tesla. All right, let me check for questions. All right, WRB says after your analysis of your watch list indexes, I have been working IWM Russell 2000 for about three weeks. Trade many other liquid market stocks. History dictates small caps will outperform most other indices. So it'd be nice for a DR check up on Russell 2000. So yeah, we can take a look at IWM. I don't have it in our RTY. I don't have either in book map here, but we can take a look in hero. So let's go back to hero. I have to get out. So first of all, let's take a look at IWM. So IWM, let me change this. So I'm just seeing these are the stocks that I trade. This is my main trading watch list. So IWM, the hedging flow definitely bearish today. Note that 205 is the call walky gamma strike and price reverses lower. Another point here, the hero flow pretty much neutral. A couple of very timely flow alerts. These can often indicate mean reversion. And that's what happens at the 205 level. IWM reverses lower as traders start taking negative delta positions. And this is actually a nice divergent setup here. Hero starts to move lower just after 10 a.m. And it looks like just before 10 30 a.m. At the 205 call wall, IWM reverses lower. Very nice setup in IWM, WRB. Thank you for pointing that out. All right, let me check for questions. GHH asks, are algos mainly the ones moving the markets and then bank moves? Because if you look closely close at those book map moves, it really seems like all algos. I don't know. My focus is really on the, first of all, the focus is on options traders. So in that case, both there are a variety of players, trading options, individual retail traders, institutions, and even market makers hedging with zero DTE options. But whatever the case, whatever is trading options, market makers, options market makers are taking the opposite side of that and they are hedging their exposure with either stocks or in the case of Tesla net, Apple and Vidya, or with futures in the case of the SB500 or NASDAQ. So I don't know how I'm sure there are algos and other players, but I'm focused primarily on the options market and then also, let's go back to book map, focused also on what large traders are doing with iceberg orders and then also what small traders are doing with stop orders. All right, does anyone have any stocks they want me to take a look at? And WRB, again, thank you for pointing that out, that set up with IWM. Great divergence short today in IWM. Options traders started taking negative delta positions as IWM was approaching the 205 call wall. Let's go back to NASDAQ, do a check. So NASDAQ, oops, it looks like I was muted. Everyone, I'm going to wrap it up. Have a great, great evening and I will see you tomorrow for the last trading day of the year. Thanks again, bye.