 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 of Bookmap Limited Materials, Information and Presentations are for educational purposes only and should not be considered specific, investment advice nor recommendations. Disclosure treating 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. 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-doug chat channel that is 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. And for those of you who are not on Bookmap Discord, it is free and available to everyone. There's a lot of great content there, including my channel of course, content focused on a wide variety of topics in a variety of languages. And I'm also on X, formerly known as Twitter. My name there is at Doug Place. The focus of my presentation and the focus of the options-doug chat channel is options order flow, the impact of options markets on stocks and futures and the influence of market maker hedging flow on price action. Have a two-step process for trading and the first is planning and I use positional analysis. I look at how traders and market makers are positioned at the options market and how those positions change from day to day to develop a thesis regarding the expected trading range and volatility for the day as well as the directional bias. The second step of my process is execution. I look at real-time order flow in Bookmap and real-time market maker hedging flow and spot gamma hero to confirm my thesis and for setups for entries and exits. And when I talk about setups today, I will be talking about an underlying asset and setups can be taken any number of ways. For example, the SME 500 setups can be taken with ES futures, SPY shares, SPY options, SPX options, or even ES options. Questions and comments are welcome. And I will be watching both the options-dug chat channel and Discord as well as the chat in YouTube for your questions and comments. So please feel free to post and let me take a look at questions. Hello, Derek. I'll get to your question in just a few minutes. Hello, Don. Welcome. Glad you're here. Hello, TK. And Subucio, I'm not, I'm sorry for pronouncing that wrong. I'm sure I don't understand what that means. All right, Derek, again, I'll get to your question a little bit later when we take a look at setups. All right, so Derek, Don, TK, Subucio, welcome. Glad you're here. All right, here's my agenda for today, Friday, October 27th. The first thing that I want to cover is news items, economic data events, economic data events and earnings. Then I'll go through my positional analysis, then I'll review some setups. So TK, if you could give me a timeframe on that, I have a couple setups that I want to take a look at when I get to the setup review. So give me a time in terms of Eastern time and I'll take a look at that. And then we'll get to the live market. And when I get to the live market, if anyone has any stocks they want me to take a look at, please let me know and I'll be glad to do that. All right, let's start with economic data events, news, earnings. So for today, PCE data came out. Let's just take a look at, let's go to book map now. PCE data came out, 8.30 a.m. Eastern time, really not much of a market maker, market mover. Here's 8.30 a.m. Eastern time, slight bullish reaction to the PCE data came in in line. Consumer spending was also greater than expected and greater than previous than at 10 a.m. Consumer sentiment came out. That was also greater than expected and greater than previous and also an initial bullish reaction to that data. All right, then yesterday Amazon reported earnings after the market closed and so far the earlier today the reaction was bullish for Amazon investors, traders liked what they heard with Amazon earnings. All right, so that was the data for today wrapping up the week. And then next week there are a couple of very big events. First of all the FOMC meeting and announcement, 2 p.m. on Wednesday that will be midway through my session. All right, the next is on Friday next week, the jobs report. So FOMC meeting on Wednesday and Friday jobs report next week. So I'll cover that in more detail next week. All right, let's take a look at positional analysis now. This is the ES futures and book map. And 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 the 30 day one hour chart for SPX and note I have zoomed in a little bit. The call wall moved up to 4800, which is way out of play. And so it was showing way up here and obscuring the data that I want to take a look at today. All right, so this is the SPX again, 30 day one hour chart. Let me point out a couple of key turning points. So I had been talking about the September 15 call dominated expiration that is off of this chart and that as those calls expired, that we're stabilizing the market. That's when the downtrend began. And then this is the October 6th jobs report. Gamma squeeze after that. And then the SPX ran into resistance at the upper weekly expected move last week. And then now started moving lower with geopolitical events and the increase, the rise and the quick rise in the Treasury yields. This is the October, this is last Friday, October 20th expiration put dominated negative gamma. I was expecting a put banner rally that did not turn out. I guess the Treasury yields and geopolitical events were just too much. All right, so the downtrend, that lasted a couple of days, Monday and Tuesday. And now the downtrend continues. All right, let me point out some levels on this chart. First of all, the lower and upper weekly expected move shown with the dash purple lines. And those, that's the upper, lower and upper weekly expected move that changes once a week. That's based on the options market. Note that SPX is trading below the lower weekly expected move. It has been trading around that level for several days this week and the finally broke lower today. Then the dash blue line showing the lower and upper daily expected move. So so far, SPX is above the lower daily expected move. All right, let's take a look at the spot gamma levels on this chart. I'm going to point out the key daily levels. So first of all, 4,000 is the absolute gamma strike. That's the strike with the largest absolute negative and positive gamma. That is quite a large strike where most of the open interest gamma weighted open interest is concentrated. And there's quite a bit of open interest at that level. And that will only increase as price moves down to the, I guess this gamma will increase as price moves down toward that level and expiration approaches. So that is if price continues to move down, that 4,000 level should become even more significant. All right, the next level up is the put wall at 4,100. That's the strike with largest net negative gamma that can be expected to act as support. Note that level did move lower from from yesterday from 4,200 to 4,100 and that is bearish moving that potential floor for price lower. The next level up is the volatility trigger way up here at 4,300. That is spot gammas proprietary gamma 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. And note that SPX trading well below its volatility trigger in a very negative gamma environment. All right, then as I mentioned before, the call wall is up at 4,800, quite a large shift move up, move up from yesterday from 4,500 to 4,800 and well out of play for today. So the key levels, key daily levels and play, first of all, the put wall at 4,100 and then the large absolute gamma strike at 4,000 below that and then the volatility trigger at 4,300. All right, let's take a look at the closer look at a one day, one minute chart just to see the levels that are closer look at the levels and play for today. Going to zoom in just a little bit so we can see the put wall and the lower daily expected move right there at 4,100. Here's the lower weekly expected move. And again, as I pointed out on the previous chart, SPX has struggled, moved up and down around that level for several days now and now is trading below that level. All right, let's go back to book map now. Let me point out the levels and play for today. The key level is the 4,100, this is the spy 4,100 absolute gamma strike put wall and that is the for spy that is the potential floor note that level move lower yesterday. So the spy put wall move lower yesterday and the SPX put wall move lower today down closer closer to the same levels. So so far that today this 4,111 support that is SPX 4,111 support level as well as the spy 4,10 absolute gamma strike seems to be holding as support. And I'll talk about these setups. So TK, I think this is the setup that you're talking about right here right around 1117. And I'll talk about that for sure. And hello, Owen. Welcome, glad you're here. All right, so I have two setups I want to talk about in a few minutes. And right now I'm pointing out the levels and play for today. So this setup occurred again, I'll talk about it in more detail in a few minutes at spy 412 and the ES 4150 level. So before I talk about these levels more, let me point out that I'm using my own cloud notes here. So I can combine SPX levels and spy levels into one one column and then draw the lines on the chart I use an add on to do that. So I can show all this information on one column, round numbers, spot gamma levels, also round numbers for ES. And then here's the lower weekly expected move with this purple line. You can't really see the label, but it's there with a dash purple line. So I'm showing all those levels in one column, my own cloud notes. Note there is a difference in price between ES and SPX and earlier today it was closer to 20. And right now it is closer to 19 hovering around plus or minus 19. And again earlier today I used 20, but 19 might be better this afternoon. All right, so ES minus SPX 19 right now I'd used ES minus SPX equal 20. All right, let's take a look at NASDAQ now. So here these are in queue. This is the in queue futures and book map. Let me check on one thing here. So the QQQ 345 level is in play for today. So let's go take a look at a QQQ chart. So far acting as support and that is a large gamma 3 level. And the ranking of the levels is 1 to 5, 1 being the most important and 5 being the least important. So 3 and L3 is in the middle of that range. But around that level acting as support. So this is a one day one minute chart for QQQ showing the potential support at the QQQ 345 level. All right, let's take a look at NDX. This is two days of data for NDX. And for NDX this is a pretty narrow range, especially given the current negative gamma environment. So NDX trading in between these two combo levels. Let's go back to in queue futures and book map now. So the key level in play is this 345 level. And again, I'll take a look at setups in a few minutes. The chart is very similar to the S&P 500. All right, shifts and levels. For the S&P 500, put wall shifted lower. That's most significant. Call wall did shift higher well out of play. For spy, the volatility trigger shifted lower. And the call wall also shifted higher to 460 well out of play. And then the absolute gamma strike shifted lower to 410. So for spy, the most significant level of gamma weighted open interest is at 410. You can see that is the absolute gamma strike and put wall. And then for SPX, the 4,000 level is the most significant. Although 4100 domain is the put wall. There were no shifts and levels for NDX. And then for QQQ, the only shift lower was the put wall from 350 to 340. So that potential floor for price for QQQ shifted lower. 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. This is what I'm looking at. Gamma notional for SPX, spy, NDX, QQQ, the RUT, Russell 2000 index, and IWM. Note these numbers are quite negative. And the numbers all in the billions, negative 1.459 billion, for example, for SPX, quite negative. For also for spy, QQQ, and IWM. So what this means is traders are long puts. Market makers are short puts. And in this very negative gamma environment, they have to trade with price to hitch their delta exposure. So let's take a look at the VANA model and see what this means. All right, so this is the SPX VANA model. I'm going to zoom in on this chart. The vertical axis here is showing market makers delta notion of their delta exposure. And the horizontal axis is showing price. There are two curves on this chart. The light gray curve shows how market makers delta notional will change with changes in price only. And then the purple curve adds implied volatility to the equation. That shows how market makers delta notional will change with changes in time, changes in price, and implied volatility. And that change in delta with the change in implied volatility is the VANA effect. VANA is a second order Greek. So again, that's indicating how delta will change with changes in implied volatility. So the purple curve is what we look at. So let's see where do a quick check on SPX again. So trading right around 41.18. So well up on the steep portion of the curve here, somewhere between these two lines. So what this is showing as price has been dropping today, market makers delta notional increases. And they have to sell futures to hedge their delta exposure. So prices falling, implied volatility increasing, market makers delta notional is increasing. And they have to sell futures to hedge their delta exposure. And this works both ways. At price rallies, implied volatility drops. Market makers can buy back short futures. That's a put VANA rally, certainly not happening today. All right, so that's SPX. Let's take a look. Take a look at SPI, similar curve SPI trading right around 4.10 and 1.5 just above the put wall, right around here on this very steep portion of the VANA model, indicating market makers will have to trade aggressively with price in both directions. Let's check QQQ. QQQ trading right around 3.45. At large gamma 3 level, there's QQQ right there. Again, on the very steep portion of this curve, indicating market makers have to trade aggressively with price to hedge their delta exposure. And the gamma notional for all of these indices did shift lower. Or for actually for IWM, it shifted slightly higher. But for the SMB500 and QQQ shifted lower, more negative than yesterday. All right, so my thesis for the day was, first of all, looking for higher volatility. The SPOT Gamma AM Founders Note was quite informative today. For those of you who do not have a SPOT Gamma subscription, they do offer a free seven day trial. Definitely worth it if nothing else than to read the AM Founders Note today. All right, so this is the one little clip. From the AM Founders Note, somewhat of a summary. So this is saying, therefore, through Wednesday, that's next Wednesday, the FOMC meeting and announcement. They're anticipating trading action look like the last few days. Very fast mean reverting price action. So that will come into play. There was a question about a, I did post a set up earlier today, the bullish set up, long set up, as traders start up buying SPX by calls and stop buying puts. And this will play into that set up, having this thesis in mind with looking for mean reverting price action, fast action, in a very negative Gamma environment. All right, so let's take a look at some setups now. So I'm going to start with the S&P 500. And what this chart is showing is the hero signal, hedging impactful time options. This is from Spot Gamma, available to Spot Gamma subscribers. There are two lines on this chart. The first, the white line is price for SPX. And the purple line is the hero signal. Again, hedging impactful time options. That's showing options trades and market maker hedging activity for a combined signal for SPX, spy, XSP, and ES futures. All under one combined signal. Let's zoom in on this chart. All right, so I'm going to focus on two setups, this long set up and the short set up. And we'll look at the signals in book map as well in a few minutes. So TK, there's that reversal lower at 11.17. I'll talk about that. All right, so first of all, let's take a look at the long setup. And note the options trades the last few days have been more confirming. Sometimes hero will be a leading indicator for price action. And recently, it's been more of a confirmation. So let's, and I'm going to do this quickly. I've had some issues with this auto zoom and hero. So what I pointed out in the post that I posted in Discord is traders were buying puts. They stopped buying puts. Buying puts shown by the falling blue line. Then they sold a few puts. Then that leveled off. And just around the same time, they started buying calls. That's shown by the rising orange line. So they stopped buying puts and started buying calls. And that's when price reversed higher. So that's one confirmation there of a long setup. Let's go to book map, zoom in. So I know that when I'm trading, I'm watching two screens at the same time, watching hero on one screen, book map on another screen. So I see simultaneously in book map in hero that shift in the hedging flow from bearish to bullish, negative delta to positive delta. Here are a couple levels I anticipate may act as support. Round number levels. They're not spot gamma levels, but round number levels. And then you see the shift in order flow. So also I know from my thesis I'm looking for fast mean reverting price action in a very negative gamma environment. Stop run down to these levels that's shown by the falling yellow line there, as well as this small green dot. Then the volume dots, magenta on the way down. The volume dots are showing market buy, minus sell. Magenta dots indicate more sellers than buyers. Green dot indicates more buyers than sellers. Those are market orders. So I see on one screen, hero shifts from negative delta to positive delta. I see in order flow here a stop run down to this level. And then the shift in order flow that's also shown by cumulative volume delta here, shifting from moving down to moving up, v bottom there. So Neo CTO, this is what I'm looking at. I'm not looking at hero in a vacuum. I'm looking at book map, looking at hero. Also, let's take a look at one other thing that's important to look at. This is volatility futures, VX futures, VIX futures. And then you can see at right around the same time, VIX futures spike higher than to start to move lower. So I've got a confluence of all those signals at a potential support level and price moves higher. So again, you just can't look at hero in a vacuum and make any firm decisions. You have to look at book map and look at something and like VIX futures, VIX, VX futures, VIX, whichever you prefer to look at. So I'm looking at all of that information. All right, so that's the long setup. Now let's take a look at the short setup. So notice the strong, all these green volume dots as price moves up, rising cumulative volume delta shown by the pink line. Also, bystop orders fuel the move higher as shown by the rising yellow line. Also, these green dots here and what's up above here, all of this resting liquidity. The order book, the heat map and book map is showing the history of the limit orders in the order book as some traders may call that overhead supply. But a lot of traders wanted to get short at that level. So they had limit orders. Also, here's one large iceberg execution, 500 contracts executed that shown by that icon up above price as well as the falling blue line. All right, so those are the clues in book map. For the short setup here, also note the shift in order flow. Aggressive sellers start to come in. Price makes a lower high, a couple of lower highs, then breaks below this 414 level. All right, let's go take a look at, go back to hero now and see what options traders were doing. Sorry about that. All right, so at the same time on my other screen, I see that options traders are starting to take negative delta positions. This is right at that 1117 setup. And let's just see what they were doing. So they continue to buy puts. Actually, they'll put activity levels off. They start to buy puts again, and they stopped buying calls. Note the orange line levels off there and price moves lower. So there are the signals in hero and book map. We can go back to the VIX chart. So it really takes a little bit longer for the VIX futures to turn about 1130. But they start moving higher as another confirmation. But really, the primary confirmation was in book map and hero here. For the long setup, then the short setup. Let's go back to book map. So now it looks like the 410 level is not holding. Let's just zoom out and see what's down below. So the lower daily expected move down below. And then this, you can't see the label here. But this white line would be the SPX put wall at 4100. All right, let's go take a look at the SPX chart. So there's the put wall aligned pretty closely, actually, right on the lower daily expected move. So that is the next level down. And the most likely target for today. All right, let's take a look at NASDAQ. Well, let me check for questions. And hello, pass to 2910. All right, so TK asked, ES is now falling toward the 4120 put wall. So I look at the put wall in terms of SPX. So SPX, the put wall is actually at 4100, which is equivalent to around ES4120. So yeah, the same thing. All right, let's take a look at NASDAQ now. Earlier today, NASDAQ was quite a bit stronger. Now it's broken below the 345 level. All right, let's go take a look at HERO. Actually, while we're on the SP500, let's just see what traders are doing in terms of puts and calls. So they have been buying calls. That activity just stopped right around 1115, 1120. And they have continued to buy puts all day. What I want to take a look at is the zero DTE versus the all expirations and focusing really on puts. So this is all expirations and this is zero DTE. So this is showing that traders are buying puts that expire further out than today. So the zero DTE put buyers, that's only making up about 25%. Maybe just a little bit more, 25% of the total notional value of puts today. It's mostly longer term puts. All right, so this is showing total signals. So there are, they were buying calls, that activity has stopped and they continue to buy puts, mostly longer term puts. All right, let's take a look at NASDAQ. Very similar pattern to the SP500. Long setup, then short setup, really the best setup of the day as it turns out. Confirmed by Hero. All right, let's take a look at BookMap now. So here's the long setup at 346. And then the short setup, you can see very clearly the shift in order flow, large magenta volume dot, aggressive sellers coming in, price moves lower. All right, TK asked, how do I set up the cumulative delta purple indicator on BookMap? So first of all, cumulative delta is, comes with all versions of BookMap. And let's just go to, I'm right-clicking cumulative volume delta settings. So here you go, here are my settings. I'm using session range. And then I have separate colors for positive and negative. All right, so when the number shifts positive, that is dark blue. When it shifts negative, it is this magenta color. All right, so there you go, TK. All right, let's take a look at some stocks. So first of all, let's take a look at Amazon. Again, Amazon reported earnings after the close yesterday, initial positive reaction. Let's see what options traders were doing. Go to Amazon. So initially in the morning, options traders were taking positive delta positions. Show them by the rising purple line there, note that there were a couple of flow alerts, timely alerts for long, zoom in on this. So initially traders were buying calls. Then that activity shut off pretty quickly. Stop buying calls. And now it looks like Amazon is kind of giving it up like the rest of the market. And traders have continued to buy puts all day. And so far, net for the day, notional value for the total is slightly negative, minus 4.75 million negative. And TK, you're welcome. All right, so that's Amazon. After reporting earnings yesterday, let's, a couple of other stocks I wanted to take a look at first, Google. And this was a nice divergence long. Notice that traders in the morning were taking positive delta positions. And Derek, you're welcome as well. Up until about 12, 12, 10, that activity leveled off and price started to move lower. Just as a basic reminder, when traders in a stock take positive delta positions, either buy calls or sell puts, market makers take the opposite side of that and they have to buy stock to hedge their delta exposure. All right, so that's Google. Another, actually an early alert here and price reversed around 9.50 just above the put wall, moved up almost to the 123 call wall. And remember, Google reported earnings earlier this week and was beat up pretty badly after earnings. So let's go take a look at book map. Let's go to Google. So here's that reversal long hero divergence just above the 120 put wall and headed back toward the 123 call wall. All right, let's take a look. One other stock I wanted to take a look at. It's Microsoft. All right, Microsoft, note that 335 is the call wall and price overshot that level just a bit. Let's go take a look and see what options traders were doing in Microsoft. Note, 330 is the key gamma strike. Price reversed higher around that level. It took a while for options traders to get going. Call wall 335, acting as resistance. Price does overshoot that level a little bit. So we'll go back and look at book map in just a moment. But there were some aggressive buyers coming in then the call buyers came in a little bit later. So in this case, actually kind of lagging the price action higher. Let's go to, sorry about that. Go back to book map. Opening print just above the 330 level then aggressive buyers come in. Let's take a look at CVD, cumulative volume delta for Microsoft. So initially aggressive buyers moving price higher. Just buying stock then the options traders come in start taking positive delta positions. Price moves up above the 335 call wall and now is back down to 330. Note the liquidity at that level that comes in right at the cash open. All right, let me check for questions. And Derek says Microsoft call wall is a good short. Yes it was. That is a very good play. Call gamma unwind and also anticipating that level acting as resistance. You could have sold a call spread there, bought a put spread or just sold stock. Good entry point with this trend break. Lower high right at right below the 335 call wall. There you good. There you go. Move down for at least five points so far in Microsoft. All right, let's check and see how the indices are doing today. Let's go back to the S&P 500 and see if that SPX 4100 level is holding. So it looks like now price is back above the spy 410 level. Absolute Gamma Strike put wall. Zoom in on this a bit. So there were some buyers at this level. Heatmap showing limit buy orders. Interesting there are some large traders selling down at this level. Note the iceberg orders, sell iceberg orders. And now breaking below the 410 level again. That's kind of unusual behavior for larger traders. Normally they sell strength and buy weakness but in this case they are, in this case right here they are selling that move higher. So I guess in a very small timeframe they are selling strength but definitely near the lows of the day. Stick a look at NASDAQ. So now price is below that 345 level. Let's take a look and see what options traders are doing. Let's take a look at one other signal here. This is the Magnificent Seven. And this shows what large traders are doing in this combined signal Magnificent Seven. This combines the hero signal for Apple, Amazon, Google, Meta, Microsoft, NVIDIA and Tesla on the one signal often a very good leading indicator and traders are taking negative delta positions starting right around 1115 and then again at 1215 and they continue to sell large cap tech. And note the notional value for this signal is negative for the day. Taking negative delta positions again as they continue to dump large cap tech. NASDAQ signal also moving lower, negative notional value. S&P 500 signal also moving lower, negative notional value. Let's go back to book map. So the slow grind down continues and all of these traders with these limit orders here right around 4176 are having a pretty good day. Right, so really the question now is the one of the 410 level hold and it certainly does not look like it. Options traders still on the gas on the negative side and then there's really no sign of buyer so far. So if the 410 breaks, then the next level down is the S&P X 4100 put wall level. All right, so Gokur asked what about market maker doing on Magnificent Seven? So they're, let's go back to hero. Sorry about that. So with the Magnificent Seven, traders are taking negative delta positions. So right around 1130, they stop buying calls, start to buying puts. So when this is in those seven stocks, so when traders buy puts, market maker sell the puts and they have to sell stock to hedge their delta exposure exposure. All right, so that's what they're doing in the Magnificent Seven and these seven stocks are certainly a leading driver of price action and NASDAQ and as well as the S&P. Let's go back to book map. And Gokur, you're welcome. TK asked, could you talk through why the short sellers should have held from 4176 entries as I exited prematurely? So I wanna know how to make a better decision at that time. Well, watch the signals that I'm talking about. Watching hero, it is just sloping down. I don't see anything at order flow that indicates a reversal stops trending down. That's usually a very good directional indicator as well as CVD. So I'm looking at yellow line for stops, CVD for CVD for the magenta for CVD. So certainly a potential target was this 410 level and if you held down to there, may almost likely caught the bulk of the move and there are other ways to play that. You could have just bought a put, spy, SPX put and held on. So that's Gokur or TK, that's all I can say there. Trade management is something that you'll have to work out. But just looking in this larger timeframe here, zoomed out, I don't see any reason that I would take a long position or exit or short. And it also helps to have a target. Maybe exit it, if you're trading multiple contracts or multiple options have price targets at different levels. So one potential price target first, the former support level at 4150, next at the spy 410 level. And note there have been some buyers at those levels. You can see from the heat map, let me just turn that up just a little bit. So it's certainly not as obvious as the sellers up above at 4176, but there have been some buyers and potentially taking profits, right? Gokur, you're welcome. And past 2910 says he's still holding shorts, but don't like it. You know, certainly depending on where you got in, you've had a good day if you're still holding shorts. Nothing wrong with taking a profit. All right, everyone, my time is up. Thank you very much for your questions or comments. Thanks for watching. Have a great weekend and we'll see you on Monday. Thanks again, bye.