 Hello, everyone. Welcome to Options with Doug. Streaming live daily on Bookbap Discord and the Bookbap YouTube channel at 1.30 p.m. Eastern Time. Before I get started, I need to go through the disclosures. General disclosure, all Bookbap 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. The focus of my presentation and the focus of the Options-Doug chat channel in Discord is options, order flow, the impact of options markets on stocks and futures, and the influence of market maker hedging flow on price action. I have a two-step process for trading and the first is 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 in my process is execution. And I look at real-time order flow in Bookbap and real-time market maker hedging flow in SpotGammaHero to confirm my thesis and for setups for injuries and exits. And I will be talking about setups today. And those setups I will be talking about are an underlying asset, but they can be taken any number of ways with futures, shares of stock, or options. Questions and comments are welcome, and I will be watching the Options-Doug chat channel in Discord and the chat in YouTube. So again, please feel free to post your questions and comments. All right, my agenda for today, what I'm going to go over is economic data and events, news items that came out this morning, the remainder of the week. Then I'll go through my positional analysis. I'll review a few setups until right before 2 p.m. at 2 p.m. that's when the FOMC announcement, the statement comes out and we will go to the live market and watch the live market at that time. All right, let's get started. So first of all, news items for today. PPI came out this morning, and it was at 8.30 a.m. Eastern time. Initially there did not seem to be much of a reaction to it, but it looks like it was lower than expected for the various measurements of PPI. So that was this morning, and then this afternoon, the FOMC announcement, again at 2 p.m., the press conference begins at 2.30 p.m., and that is I'll be ending in that time. Let's just take a look at this to set expectations. This is the CME FedWatch tool, and what this is showing, the current target rate is 500 to 525 basis points, and what this is showing is right now there is a 96.6 percent chance of a pause of the FOMC not doing anything at this meeting, and that has shifted just a little bit lower from a couple of hours ago when I checked it. It was around 98, almost 99 percent. So anyway, a very large percentage chance of no rate hike at this meeting, and then I think for the next meeting, July meeting, there is a slightly greater than 50 percent chance of a 25 basis point rate hike. All right, but we're concerned about the meeting today. All right, so the remainder of the week, there are some additional data items and events, first of all, retail sales tomorrow, and then Friday is the big June options expiration, and also consumer sentiment comes out at 10 a.m. All right, so that is the news items. Let's take a look at positional analysis now. So this is the S&P 500 futures, ES futures and book map, and before I take a closer look at that chart, I'm going to take a look at a larger time frame. This is SPX in a 30-day one-hour chart, and this is in thinkorswim. I'm using a script from Spot Gamma to show the Spot Gamma levels, these red horizontal lines. There's been an issue with this script for the last couple of days, so I know the primary levels that I'm going to show are correct. The other levels may not be correct. So I've sent a couple of emails to support and so far no response. All right, so let me point out levels. So first of all, here is the lower and upper edge of the expected move for the week, shown with this dash purple line, and note that SPX is trading above the upper weekly expected move, and D&T matter had noted earlier in Discord does not have UEDM. That's the upper edge of the daily expected move, and you can get that from any options chain, and that's what I do. So I'm showing that here with the dash blue lines, and again you can just get this information from any options chain and just look at the at the end of the day when the market is closed, when SPX closes, I just look at the close and then the expected move for the next day, and then I subtract that and add that to the current price, and that's how I get those numbers. So there's nothing special there, just again you can get that from any options chain. So right now, again, SPX is trading above the upper weekly expected move and in between the lower and upper daily expected move. Let me point out some spot gamma levels here. First of all, here's the put wall, and that's at 4,000. That's a strike with a large net negative gamma that can be expected to act as support, and the next level is the volatility trigger at 40 to 40, and that did shift five points lower from yesterday, and that level is important. It is the, it is spot gammas proprietary gamma flip level. Below that level, market makers position on the gamma curve is negative, and 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 SPX is trading now, market makers position on the gamma curve is positive. In a positive gamma environment, they have to trade against price to hedge their delta exposure, and that tends to subdue volatility. All right, the next level is 4,300, and that is the absolute gamma strike for SPX. That's the strike with the largest absolute gamma, and then finally, the call wall is at 4,400, and that is the strike with the largest absolute positive gamma, and that can be expected to act as resistance. All right, so those are the primary spot gamma levels. Put wall, volatility trigger, absolute gamma strike, and the call wall, and just to note, like I mentioned before, the volatility trigger did shift slightly lower, just five points from 4245 to 4,240. Otherwise, there were no shifts in levels for SPX and SPI. All right, let's take a look at another thinkorswim chart, just to get a clear view of SPX and levels that are in play for today, and this is a one-day-one-minute chart, and according to this, the primary levels, there are no primary levels in play. Call wall above, and again, price trading well above the volatility trigger. All right, so DNT Matter asks, how do I get that from an options chain? I'll take a look at that in just a minute. So let's go to Bookmap now. In a Bookmap, I have updated levels. These are all the correct levels. I'm showing in my cloud nodes here. So I have SPI levels, and there's the SPI 439 combo one level. So that's an important gamma level, and that did act as resistance, and then there's price suspended, a large amount of time around the SPI 438 level. Note the cluster of volume there, shown in the session volume profile, right there, and then price has tested the SPI 437 combo four level, and then also the SPX 4373 combo level. And note the SPI 437 level was near the top of the range yesterday, and today, at least in the RTH session, it is at the lower end of the range for today. So price is trading above it today, and was trading mostly below 437 yesterday. All right, so those are the levels in play for SPX. Again, no shifts in levels other than the slight shift in the volatility trigger for SPX. Let's take a look at NASDAQ now, and we'll talk about setups from this morning in a few minutes. All right, so here's NASDAQ, and again, I'm showing my cloud notes here. So here is the NDX, 15,000 level, large gamma 3, and then also QQQ levels. There's the QQQ 365. I'll run this down just a little bit, and then here is the QQQ 363 level. Yesterday, that was near the top of the range, and today, just like the S&P 500, that level is the lower end of the range for the day. Let's just take a look at a QQQ chart. Let's take a look at the levels, find that chart. So there's QQQ, and so far today, the upper end of the range is the 366 level. And again, these levels, other than the primary levels, might not be correct. So here is the call wall that should be resistance down at 360. So QQQ, the NASDAQ is trading well above the QQQ call wall. And for the NASDAQ, there were no shifts in levels. NDX and QQQ, the volatility trigger, put wall, call wall, and absolute gamma strike all remain the same from yesterday. All right, let's take a look at, let me answer D&T matters question. So let's go to SPX. All right, so this may be difficult to see. You should get the idea here. So this is SPX, an options chain. So what I will do at the end of the day, let me open up just so this, you can see what I'm showing here. So today is the 14th of June. So that is, that's already in play. I've already got the levels. And that was a very high IV, 53.97%. And at the end of the day yesterday, that was plus or minus 35 points. And then for tomorrow, that's shown right here. And this thinkorswim, it may be different in another platform. But I'm looking at, right now, it's plus or minus 46 points. So when this is closed, when the SPX closed, after the RTH session, I will take a look at the closing value, take a look at this number right here. And it should be a little bit less, volatility should come off. And I'll subtract that and add it, add that to the number to get the lower and upper edge the expected move for the day. All right, so I hope that answers your question. And while we're here, let's just see what is what's driving the market today. Here's the SP500. And it looks like a lot of large cap tech, NVIDIA, Broadcom, AMD, Microsoft, Oracle. And it looks like a little bit of financials too. All right, so there you go. All right, let's take a look at a couple of other things. I've just got a couple of minutes before the announcement. I want to take a look at the VANA model. Oops, wrong chart. Chart again. Give me just a second. All right, here we go. So this is the VANA model for SPX. I'll go over this quickly. What this chart is showing is market makers delta notional and how that changes with price. Delta notional shown on the vertical axis and price shown on the horizontal axis. There are two curves on this chart. This light gray curve is showing how market makers delta notional changes with changes in price. And this is showing that as price increases, market makers will need to sell futures to hedge their delta exposure. So that is typical of a positive gamma environment. And then on the next curve on this chart is it adds implied volatility to the equation. So this is showing how market makers delta notional changes with changes in price and implied volatility. And that's the VANA effect, has the name of the VANA model. But VANA is the change in delta with a change in implied volatility. And it is showing basically the same thing as the light gray curve, just they will have slightly less delta notional to hedge as predicted by the delta only model. Then on the other hand as price decreases, market makers will need to sell futures to hedge their delta exposure. And that's typical of a negative gamma environment. Let's take a quick look and see where SPX is trading right now. And I've got SPX at $43.73. Let's see where that is on the chart. So that's right around the bottom. So this is showing as price increases from here, market makers will need to sell futures, and at price decreases from here, market makers will need to sell futures. And then finally, let's take a look at some data. All right, so what I'm going to look at here is the gamma notional. This is market makers position on the gamma curve for SPX, SPY, NDX, and QQQ. Give me just a moment, open up CNBC on another screen so I can see what they say about the announcement. All right, so gamma notional is positive for SPX, SPY, NDX, and QQQ. And the only number that has changed this week, which is kind of strange, is gamma notional for SPX. All these numbers remain the same from Monday. And this number did increase from yesterday. So a little over 1 billion, positive 1 billion, gamma notional for SPX. So SPX and SPY and the NASDAQ are all pretty firmly in the positive gamma environment, indicating again that market makers will need to trade against price to hedge their delta exposure. All right, let's take a quick review of some setups this morning. And what I'm looking at here, this is the SPOT gamma hero signal for the S&P 500. This is a combined signal SPX, SPY, and XSP and ES Futures. And what this is showing is options trades for all those NDX products and combined, they're all versions of the SP500, combined into one signal showing price of the white line and hero of the hero signal, options trades and market maker hedging activity, again for the combined signal. So let's actually, let's take a look at puts and calls here. So what this is showing, I've separated out puts and calls, this rising orange line is showing that traders are buying calls. And this is what is driving price today. Note the, the notional value here is positive 1.1 billion. Traders buying calls, market maker sell the calls, they have to buy futures to hedge their delta exposure. And this number put, the blue line is also positive, indicating their selling puts. And SPOT gamma has talked about this recently that what seems to be happening is traders are fear missing on the upside. So they're buying calls. And that is, that's definitely been driving price higher. And that led to a nice setup this morning, the zoom in on this on the morning. So multiple pullback entries for a long setup. So this is at the cash open over on the left side of the screen. Note the rising orange line with multiple pullback entries. So let's go take a look at book map. We'll take a look at ES for book map. I'm going to zoom in. So there's the morning session. This is very similar to yesterday, the setup yesterday that I posted in discord and on Twitter. So a pretty easy read this morning. Remember, traders are buying calls, market makers are selling the calls, they have to buy futures to hedge their delta exposure. So there's the first entry. Note the shift and aggressive buyers coming in there that's very clear. As Bruce would say, that's an easy read. The shift in order flow, aggressive buyers coming in. And note also the larger traders were buying with iceberg orders. 505 contracts and four transactions. And iceberg orders, large traders buy that first dip. That's 952 contracts and eight transactions. And the shift in order flow again. Pink dots on the way down, green dots up, another pullback, another pullback. And it looks like the the final price target for the warning was the spy 439 combo one level. Rising yellow line here indicating that buy stop orders were helping to fuel the move higher. And that's also shown by these small green dots here. Buy stop orders fueling the move higher. Right. I've got less than a minute to the announcement. So let's just switch to the live market here. And it was a similar setup for the the NASDAQ and also call buyers were in buying calls and Google, Meta, Microsoft, Nvidia, you know, all the usual suspects, the large cap tech stocks that have been driving the market higher for quite some time. All right, I'm going to go take a look at quick look at hero. One thing to keep in mind is when I'm trading, I have, I have multiple screens, so I don't have to jump back and forth. All right, so there's the announcement. So it looks like it remains unchanged. As expected, let's zoom in on this a bit. So the first move is lower. Let's see. Let's take a look at options traders. I'm going to switch to a shorter timeframe. I'm going to go to a 30 minute rolling window period, shorter look back period. And what this is showing is that heroes sleep, sloping down slightly, coming into the announcement. Traders were taking negative delta positions or closing longs. So they were selling their calls and buying puts as the time for the announcement approached. Let's go back to the total signal. And again, remember, we're on a 30 minute look back period. So Al go, Al goes are parsing the statement now. And initially, larger traders were buying the move lower with iceberg orders that shown by this rising light blue line. On the other hand, aggressive traders are selling shown by the following cumulative volume delta, the pink line. So now price ES is approaching the upper weekly expected move and also the spy 435 call wall. And this also the SPX 4350 level that actually acted as support yesterday. And that was noted as support in the spot gamma AM founders note. So CNB says Fed pauses but median forecast rises to 5.6%. So I'm not sure that must have been in the statement. So they're apparently just based on what I saw on CNBC. FOMC is forecasting more increases in the future. Let's see what options traders are doing. So they continue to take negative delta positions shown by the following purple line. So now the question is, can will ES find support at the support level from yesterday, the SPX 4350 and the spy 435 call wall or will it continue lower? So if it continues lower, the next level in play is the spy 434 combo three level and also the lower daily expected move. And let's see what the NASDAQ is doing. Also moving sharply lower. NASDAQ is down since the announcement looks like over a hundred points and continues lower down just back down to the upper weekly expected move and the NQ 15,000 level and also the 360 QQQ call wall. So when price trades above a call wall, spot gamma considers that to be overbought. So the spy QQQ and NDX, I have been in an overbought condition for quite a while. Let's go back to ES now. So now trading below the spy call wall 435, heading down to the lower daily expected move. Large traders continue to buy on the way down with iceberg orders they use to hide their size. 900 there in nine transactions, 1321 there and note the sell stop orders helping to fuel the move lower shown by the red dots there. Let's see what options traders are doing. So now they started to take positive delta positions as price moved lower down toward the lower daily expected move that's shown by the rising purple line. Note the slight lead effect in options trades and about 30 seconds later price starts to move higher and that was just above the lower daily expected move. Let's take a look at VIX and see what VIX is doing. So initially VIX moved higher. This is a one minute chart just for VIX and now it's reversing lower and it is lower for the day and that should support price move higher and now large traders are selling strength. We can see that with the this falling light blue line. Large traders coming in with iceberg orders and so now the question is will the upper weekly expected move and the spy call wall and SBX 4350 the cluster of levels there will that hold as resistance or will price continue higher and so far. So it's kind of a battle of iceberg orders here. Let's see what options traders are doing. See if they give us any clue. So so far options trading has leveled off right now. Let's see if we get any clues from NASDAQ. So so far NASDAQ does not show any signs of moving higher. Still moving lower. Let's see what options traders are doing again. Let's go take a look at NASDAQ. This is a combined signal for NDX and QQQ and they're taking positive delta positions and that could potentially lead to a move higher in NASDAQ. Again we're on a 30 minute rolling window period. Let's just take a look at some of the large cap tech stocks. Amazon was shifting higher now maybe moving lower. Google hero also turning up and hero has leveled off for NVIDIA and Floyd's garage says hi Doug hi how are you glad you're here. Fed speech in OPEX Friday. Yeah I don't know about the the Fed speakers but yeah Friday is the big June options expiration. All right so there's Tesla moving lower. Let's take a look at NASDAQ. Hero still moving higher. Take a look at the SAP 500. Hero also starting to move higher. So options traders are buying calls and they're actually buying puts net buying puts for the day. Let's go back to the total signal and that is rising negative for this 30 minute rolling window period but the hero line is rising. Does anybody have any questions or anything that you want me to take a look at? I can look at stocks or we can continue to watch the SAP 500. All right thank you D&T manner says great walking through this with you. All right Floyd's garage votes for ES as well so we'll stick with ES. Again when I'm trading I'm watching multiple screens at the same time so I have hero on one screen and book map on another so I can watch order flow and hedging flow at the same time and then the the levels are key for me knowing exactly where these levels are and how price is reacting at these levels. Let's go take a look at hero again and now it has turned lower for ES. Hero turning lower and after this pull back move higher ES continues lower so so far the SPY 435 call wall and the upper weekly expected move have acted as resistance and price is still heading down toward the lower daily expected move. Let's see what SPX is doing. All right Trader Carlson asked do you trade intuitively or statistically quantitative based as in you know exactly what you're looking for and we're looking for it so I I am a discretionary trader uh not necessarily statistically quantitative based so it it's hard for me to call the market and trade make trading decisions at the same time especially when when the market's moving higher so I'm looking generally to follow the larger traders whether that be market makers or um other larger traders that leave their uh footprints here and I'm expecting reactions at certain levels so the the setup that I showed this morning was uh again I thought a pretty easy read let's assume we'll go back to that so I'm reading order flow and hedging flow at the same time and I have a um a plan for the day again based on my positional analysis and I was really looking for a trading range today I knew that gamma market makers position on the gamma curve was positive and this was again a pretty easy read the shift large uh all these large green dots aggressive buyers coming in and also the large traders buying with iceberg orders as price moved above the 437 level also feewap and traders were buying calls that was the key seeing that traders were buying calls so following the market makers move higher uh knowing that as traders buy calls market makers sell the calls and they have to sell ES futures to hedge their delta exposure let's see what and you're welcome right let's see what options traders are doing and so now they have uh turned positive again and Floyd's garage asked what was the lower expected move again are you talking about for for e all right so for spx let's take a look at that first spx it is that uh 4333.83 so that's spx that's what I calculated uh yesterday and let's go take a look at book map now and that uh is at 4380 so that is for uh es and note there is a pretty significant point difference between es and spx let's see what it is right now and I was using 47 points this morning right now it looks like it has uh dropped down just a little bit to 46 points somewhere between 46 and 47 now back up to around 47 so it it changes a little bit but I have it at uh 46 47 so that's the difference between es and spx 47 points so trader call says so you follow large traders footsteps and essentially try to align yourself with them from traces in the form of certain criteria they've left that have historically led to certain price movement so yes you know again I saw that traders were buying calls market maker selling calls and they have to buy futures to hedge their delta exposure so it's as simple as that take a look at the uh the post in um and discord I posted yesterday evening a very similar setup today very easy read just um that's the value of this uh hero signal so at that point I'm watching once I know that traders are buying calls market makers are selling calls they're buying futures I'm just looking at order flow to confirm entries so looking at shifts in order flow that I talked about this morning those multiple pullback entries preferably to a key level was what I was looking for for for long entries I've got to say this move lower is um definitely providing some relief to my long term positions my my short calls were taking quite a beating so this this helps me pretty substantially one interesting thing to note here let me turn up the heat map and this is pretty typical uh see all these resting waters in the in the heat map I'm looking at looking at this right here this line no tell all traders pull their pull this liquidity a few minutes before the announcement there's almost a you know you can almost draw a line here where they pull their liquidity and then the final final pull right there all right let's see what options traders are doing now so now they're starting to take positive delta positions all right so trader Carlson asked once traders are buying calls and once market makers are selling futures what what did that indicate to you and what is the logic behind it all right so first of all when traders buy calls options market makers are selling calls they want to remain delta neutral so they have to buy futures to hedge their delta exposure that's the most efficient way to for them to hedge their delta exposure so again they want to remain neutral delta neutral when they sell calls they have to buy futures so they're taking the opposite side of the trade from traders so again they they buy calls and as price continues higher uh or they sell calls they have to continue to buy futures and that's a very powerful force that can drive a stock or in this case the smb 500 can drive that much higher now there's also you know many other factors in play especially for the smb 500 larger traders with iceberg orders with stop orders it's a little bit simpler with stocks so let's take a look at let's take a look at a stock for example so i'm going to take a look at so i'm back to a one day rolling window period let's take a look at google just as an example so here's the again it's a lot simpler for stocks to understand so note the for google this rising orange line indicating that traders are taking their buying calls that's positive delta with a rising line market makers are selling the calls and they have to buy stock to hedge their delta exposure i mean it's just very uh you know very simple and straightforward and hero uh shows this very clearly and note as this line levels off traders stop buying calls price eventually moves lower so again traders buying calls shown by the rising orange line positive delta market makers are selling the calls they have to buy stock to hedge their delta exposure so a lot simpler to uh to look at and visualize in a single stock let's take one last look at the smb 500 let's go to the total signal back to the 30 day 30 minute look back period and hero now is turning higher so again this may not lead to uh uh this exactly the same response that uh that we may see in in a single stock there are many other factors but it's a good clue and especially in the smb 500 maybe also the nasdaq can lead to a good leading indicator of a long or a reversal setup i should say so in this case potentially long as traders start taking positive delta positions again let's go take a look at book map so i would uh you know we know that now traders are um taking positive delta positions it looks like the press conference has began uh began now so i'm going to uh sign off in just a moment looks like this 434 level uh maybe support uh i don't see anything uh definitive and order flow yet we're going to take one last look at nasdaq so it looks like nasdaq may have found support in the uh 15 000 level all right so i'm going to wrap it up uh that's all i have for today um enjoy the rest of your afternoon and again remember uh tomorrow let's see tomorrow we have uh retail sales and then and again remember uh tomorrow let's see tomorrow we have uh retail sales and then friday is uh options exploration so i will see you tomorrow afternoon uh thanks again thanks for watching thanks for your questions and comments and i will see you tomorrow and trade or carlson d&t matter uh thank you very much for your questions and commentary uh it really helps so and floyd's garage as well and you too all right thank you everyone and i will see you tomorrow