 Hello everyone welcome to options with Doug streaming live daily on bookmap discord and the bookmap YouTube channel at 1 30 p.m. Eastern time excuse me before I get started I need to go through the disclosures general disclosure all bookmap limited materials information and presentations are for educational purposes only and should not be considered specific investment advice nor recommendations risk disclosure trading futures equities and options involves substantial risk of loss and is not suitable for all investors past performance is not necessarily indicative of future results the focus of my presentation and the focus of the options dash Doug chat channel and discord is options order flow the impact of options markets on stocks and futures and the influence of market maker hedging flow on price action I have a two-step process for trading and the first is planning and I use positional analysis I look at how traders and market makers or 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 on my process is execution and I look at real-time order flow and 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 bet when I talk about setups I will be talking about an underlying asset and setups that I talk about can be taken with futures if it's if I'm talking about ES or SPX or shares of stock or options that's up to you but my analysis and setups are based on an underlying asset questions and comments are welcome and I will be watching both the options dash dog chat channel and discord as well as the chat and YouTube for your questions and comments so please feel free to post and I will do my best to answer your question my agenda for today what I want to talk about first of all news items economic data events and earnings for this week and then I'll go through my positional analysis talk about level center and play for today and then I'll review a few setups from this morning and then we'll take a look at the live market so if anyone has any stocks they want me to take a look at when I get to the live market please let me know and I will do that alright so the news items for today first of all economic data there was a data release this morning retail sales came in higher than expected so that's for today retail sales higher than expected tomorrow a couple of big events first of all the vex expiration I believe that's at 9 a.m. tomorrow 9 a.m. Eastern time and then the FOMC meetings are released at 2 p.m. Eastern time and then finally Friday is the August monthly expiration and as I talked about yesterday that expiration is not as call dominated as the the past two expirations all right let me get started with my positional analysis now so this is part of my planning process I'm going to start with the SAP 500 and before I take a closer look at this chart I'm going to take a look at a larger time frame I'm going to go to SPX this is the the basic SAP 500 index this is a 30-day one-hour chart and thinkorswim and this is showing the the break in price action with the the Fitch downgrade Fitch downgrade of US debt long-term debt and really the SPX continues to trend lower and it looks like maybe trying to find support at the 4450 level and if not the next level down below is the 4400 level I'll talk about that in just a minute so levels on the charm first of all the lower and upper weekly expected move that's shown with the dash purple lines that's from the options market and then the dash blue lines are showing the lower and upper daily expected move and note that SPX is trading below the lower daily expected move let me just zoom in on this so we can see the get a closer look at the price for today excuse me alright so those of the weekly and daily expected moves let's take a look at some spot gamma levels now these are spot gamma proprietary gamma flip levels these should be levels where market makers are anticipated to react let me point out the key daily levels first of all here's the put wall at 4400 that's the strike with the largest net negative gamma that can be expected to act as support and again if the 4450 level breaks that looks like it is the next level of support down below so that's the put wall the potential floor and the next level up is the 4485 volatility trigger 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 so for much of the last few months the SB 500 has been on a positive gamma environment and then is now trading mostly in a negative gamma environment leading to larger swings as market makers are trading with price they're selling futures as the SB 500 drops and they're buying futures back as the SB 500 increases and implied volatility decreases and I'll talk more about that in a minute and the next level up is the 4500 level that is the absolute gamma strike that's the strike with the largest absolute positive and negative gamma and then finally the call wall is at 4600 so that is the strike with the largest net positive gamma and that can be expected to act as resistance so a floor potential floor at 4400 potential ceiling at 4600 and a pivot level around 4485 to 4500 so those of loves and play for SB X let's just take a look at one other SB X chart just for today so this is SB X in a one-day one-minute chart just showing the levels that are in play for today so this is showing that SB X is trading below the volatility trigger in a negative gamma environment and also below the lower daily expected move and now chopping around the 4450 level all right let's take a look at book map and regarding the shifts and levels for SB X for today there were none so no shifts and levels for SB X from yesterday to today and then on the other hand I'll talk about spy in a minute there were every single level shifted mostly higher but lower as well right so this is the ES futures in book map let me start with the levels on this chart so on this chart I have my own cloud notes and I have marked SPX levels so here are my cloud notes in this column right here I have SPX levels and that is a 4472 level that was noted as resistance in the spot gamma AM founders note I'll also have spy levels so here's the spy 444 445 put wall here's the SPX 4460 level that was noted as support also this 4450 level key level combo one that is the that's a significant combo level indicating combination of spy and SPX gamma so those of the levels and play also ES now trading below the lower daily expected move as it has been for most of the RTH session and we'll talk about setups in a few minutes all right so again there were no shifts and levels for SBX but for spy the volatility trigger shifted higher the put wall shifted higher from 440 to 445 so that 445 put wall not doing its job price trading below that level and then the call wall shifted lower from 460 to 455 and the absolute gamma strike shifted higher from 445 to 450 so framing the gamma levels between around 445 for the put wall and 455 for the call wall with the volatility trigger and absolute gamma strike being at 450 so shifts higher and lower for spy alright so that's the SMB 500 let's take a look at NASDAQ and again I'll talk about setups in a few minutes how we can use this information along with the hedging flow and order flow shown in in book map and spot gamma hero alright so here's NASDAQ and I want to take a look at a couple of charts just showing isolating QQQ levels and also NDX levels so first of all here's QQQ zoom in on this this is a one-day one-minute chart and for QQQ the volatility trigger shifted lower from 375 to 370 that shown here the 370 volatility trigger and that was acting acted as resistance today key level for QQQ that's also the absolute gamma strike so that's QQQ the levels in play let's take a look at NDX and note that the volatility trigger for NDX is at 15,090 and price has been chopping up and down around that level now below alright let's go to book map go to the NQ futures scrunch this gen just a little bit so we can see everything so here's the again I have my own cloud notes and I'm showing QQQ levels there's the 370 put wall a volatility trigger and absolute gamma strike also I'm showing NQ levels the zeros in the 50s the big round numbers there's the NDX 15,175 large gamma 3 level there's the NDX 15,090 volatility trigger so those are the levels in play for today primarily the 370 acting as resistance and making for potential reversal level for a great short this morning that I'll talk about in a few minutes so again for QQQ volatility trigger and call wall shifted lower and then for NDX the put wall shifted lower down to 14,700 all right let's take a look at and see how market makers were positioned on the gamma curve at the beginning of the day what I want to take a look at is gamma notional for SPX by NDX and QQQ so this will give us a sense and I'll show a graphical representation of this in just a moment give this a sense of how market makers may react to changes in price and volatility so we this shows that at the beginning of the day market makers position on the gamma curve for SPX spy and QQQ this is all negative these numbers became less negative from yesterday compared with yesterday so not quite as negative gamma positioning as yesterday but still negative gamma so in this case for all the for SPX spy and QQQ traders are long puts market makers are short puts and they have to trade with price to hedge their delta exposure so as price drops their delta exposure increases and they have to sell futures all right let's take a look at a graphical representation that illustrates what I'm talking about and I'm going to look at the Vana model I'm going to start with spy today what this chart is showing is market makers delta notional on the vertical axis and price on the horizontal axis there are two curves on this chart the gray curve oops wrong tool clean all that up all right so the gray curve is showing how market makers delta notional will change with changes in price only and then the purple curve adds implied volatility to the equation and that's showing how market makers delta notional will change with changes in price and implied volatility and that change in implied volatility is the Vana effect that's a second order Greek so hence the name of this chart all right so the low of the day for spy was around 443.5 so definitely on this negative gamma portion of the gamma curve so what this is showing is as price decreases market and imply volatility increases market makers delta notional will increase and they'll have to sell futures and on the other hand if price increases and implied volatility drops market makers can buy back short futures and that is a put Vana rally and that can lead this when price is trading on this portion of the Vana model that can lead to large moves in either direction as again market makers are trading with price all right so that is and one of the keys to this is watch how implied volatility you can watch VIX for the S&B 500 or VIX N VXN for NASDAQ to see how implied volatility is is changing as well I showed that yesterday all right so that is the spy let's take a look at QQQ and both these curves are very typical of a negative gamma environment and for QQQ the low of the day so far was right around 366 so on this portion of the Vana model you know firmly in the negative gamma region as price decreases market makers have to sell futures as price increases they can buy back their short futures they're also always want to remain delta neutral all right so my thesis for the day was just looking for higher volatility wider wider trading range larger moves based on this gamma notional and Vana model all right let's take a look at some setups now I'm going to start with the S&B 500 what I'm looking at here is the hero signal this is from spot gamma this chart is showing price for SPX and then the hero signal this is hedging impact real-time options this showing options trades and market maker hedging activity for a combined signal of SPX spy XSP and ES futures all combined into one signal and this is what you want to look at if you trade any form of the S&B 500 whether it's ES futures spy shares spy options or SPX options this is what you want to take a look at to see how options traders are trading and how market makers are responding all right I'm going to zoom in on this chart I'm going to zoom in on the morning session so this is the right here this is the cash open our th open 9 30 a um eastern time and initially there was a divergence as options traders were taking positive delta positions as price was falling and then around 9 between 950 and 955 options traders started taking negative delta positions at the same time price was moving lower so not as easy a read today for hero as yesterday in the S&B 500 let's go take a look at book map now go back to ES and looking at order flow it wasn't easier read actually let me I'm going to zoom in a bit scroll over so here's the initial reaction to the retail sales that came out at 8 30 a.m eastern time initially bearish then bullish and then around 9 a.m aggressive buyer started to come in you can see by the large green volume dots those are buying minus sell market buy orders and note that larger traders were fading that move with iceberg orders that shown by this falling light blue line as well as these icons here these are quite large that is 1438 contracts this is 3603 contracts 840 contracts large traders selling that move here's another 830 contracts so even though options traders were initially taking positive delta positions larger traders with iceberg orders they used to hide their size were definitely fading this move selling strength and then eventually price test VWAP that this light blue line that light blue line that's VWAP test that three times and finally moves lower as options as as aggressive sellers shown by the magenta dots there start to move price lower so at this point cumulative volume delta shown by the dark blue to pink line rolls over and then sell stop orders start to fuel the move lower that's shown by the yellow line and the yellow line and the sub chart as well as these numbers here the red dots and then or around this time right here is when the negative delta options position started to come in and help to take price lower down to the 4450 level that's SPX 4450 all right so that's the short setup this morning let's take a look at go back to hero now there was a long setup and that's this divergence long right here create start again taking positive delta options positions and then price reverses higher finally around 1030 the 1030 reversal let's go back and take a look at book map and you can see around 1030 1035 the aggressive buyers start to come in again and there were some iceberg buys so aggressive buyers come in price does a retest of the spy 444 and SPX 4450 level and then moves higher up to 4460 and also the spy put wall before finding resistance there so a bit of a hero kick off there as options traders started taking positive delta positions as price was moving lower right so that's the SB 500 let's take a look at nasdaq now so nasdaq let's zoom in here so an initial reaction pretty similar to the SB 500 to the retail sales initial move lower and then move higher and that move higher continued just a few minutes after the cash open at 930 and price found resistance at the 370 level qqq 370 level and note that order flow is definitely bearish here in this case the dark blue to pink line is showing cumulative volume delta falling and the shift from blue to magenta is showing the shift from positive to negative and then also after an initial burst of iceberg buying shown by the rising light blue line large traders start selling and then also the fuel the low move lower is fueled by sell stop orders as well all right so let's go take a look and see what options traders were doing around that time let's go to nasdaq and just like the SB 500 this is a combined signal combined showing ndx and qqq i'm not not sure why that's not indicated oh i'm looking at ndx sorry so there's nasdaq there's the combined signal showing combined signal ndx and qqq let's zoom in so i'm trying to show what what you would see early in the morning so this is what hero looks looked like in the morning and note in this case options traders after after about a minute of taking positive delta positions they start to take negative delta positions and that set that divergence sets up a short at that 370 resistance level so that is a level that you expect to act as resistance you see this divergence it becomes apparent say right around here so what i do once i see that divergence i go to bookman and i see these potential reversal levels at the qqq 370 level the nq 250 level and also the ndx 175 level and then i watch order flow for confirmation let's just zoom in on this so as i'm watching options traders start to take negative delta positions i see price reach this level aggressive sellers start to come in cumulative volume delta starts to quickly shift lower you can just see the all the pink or magenta volume dots those are again those are by minus sell and when buy is greater than sell they're green and when sell is greater than buy they are magenta so a reversal lower at the 370 level if you didn't get that there are a couple of tests of vwap and then price moves lower and then another test of 369 that's qqq 369 and price continues lower no reason to get long here with large trader selling with iceberg orders sell stop orders as well as aggressive sellers all moving price lower all right so dm ask uh please advise your cvd book map settings okay we can do that i don't think i've um so i can just right click and go to the cumulative volume delta settings so i pretty much have the defaults using session range my session starts at the start of the prior day so it starts at 6 p.m eastern time yesterday for today's session and then i do have positive values and negative values shown with these colors here right so there you go i again i think pretty much um default settings maybe accept the session start and the colors all right so nice short set up in uh in nasdaq i thought today yesterday i thought hero was an easier read for the uh smb 500 and today then uh hero was an easier read for nasdaq so that's why i watch both every day right let's take a look now let me just turn off this so we'll get back to looking at the entire day so there was that uh divergent short set up good for uh almost 150 points from 250 to 100 uh just a little bit above for nq nice move let's go back to hero and then options traders while price was still falling they falling here they started taking positive delta positions and that set up along right around the 10 30 uh 10 30 a.m reversal time so price started moving higher as options traders were taking positive delta positions let's go take a look at book map here's nq note the aggressive buyers coming in one big pink volume dot an aggressive buyers starting to come in and move price back up to vwap and the 200 level now it looks like nasdaq is uh is slowly grinding lower right so those are the setups in the sb 500 and nasdaq let's take a look at some stocks now and i'm going to go back to hero all right so let me rank my watch list by hero signal just to make sure that looks right all right so i did this yesterday and i ranked it instead yesterday by strongest to weakest today i'm way uh ranking by weakest to strongest so yesterday in the ranking uh nvidia was at the top of the list with the strongest signal and today when i rank nvidia this way uh or if i ranked it the same as yesterday it would be on the bottom of the list but ranking from weakest to strongest it is at the top of the list so with the weakest signal what this is showing this hero signal is showing the strength of the hero signal compared to the last 30 days and the last five days so the length of the slider in this case the entire length is colored is showing the comparing the strength of the hero signal shown by the white dot comparing that to the last 30 days and then the colored portion is showing the strength of the hero signal compared to the last five days so in this case hero is probably in about the i don't know 15 or 20 20th percentile for the last five and 30 days so what i'm talking about with a slider here for spx for example this colored portion does not take up the entire length of the slider and that is the that's the five comparing this current signal with the last five days so that's a starting point today so let's take a look at nvidia and fun expert you're welcome glad you find this helpful let me know if you have any questions right so here's nvidia assume it on this you can assume it on the morning session and note that 450 is the key gamma strike so that's an important level all right and as usual there's a very strong correlation between options trades hedging flow and price action in a stock like nvidia price action is largely driven in my opinion by options trades so when just as an example when traders buy calls like they were yesterday and i highlighted this yesterday when traders buy calls market makers sell calls and they have to buy stock to hedge their delta exposure let's see what they're doing today and today in the morning they were buying puts that shown the calls are shown with the orange line put shown with the blue line so a falling blue line that's negative delta and that means that traders are buying puts and we can also see the the total notional value there up to this point in time around 11 0 5 a.m and then the orange line is showing calls so they are buying up to this point in time 11 0 5 they were buying puts shown by the negative notional value in the falling blue line and they were also buying calls shown by the positive notional value here and the rising orange line but up until about 10 30 the put buyers were definitely in charge so when traders buy puts market makers sell the puts and they have to sell stock in this case nvidia stock to hedge their delta exposure remember they always want to remain delta neutral all right so let's go take a look at book mount take a look at nvidia all right zoom out so we see the um so we can see the morning session all right so uh sorry about that so remember 450 is the key gamma strike important level right truben asked what does it mean if calls are flat at a high number and puts are flat at a very negative number i um i'm not sure the number uh is uh significant but the the shape of the line is significant so if uh the orange line is rising say in the morning of which is this is pretty typical in a uh in a rally the orange line rising traders are buying calls market maker selling calls and they have to uh buy stock to hedge their delta exposure and what happens very often is when traders um stop buying calls for whatever reason you know typically around uh midday around lunchtime they stop buying calls and that orange line will flatten and price will flatten or drop down slightly and that's pretty typical of a a rally day or a trend day where price in the morning is heavily driven by call buyers when call buyers take their foot off the gas price stops rising and so again when the line flattens that means that traders have stopped that activity whatever they were doing so the the numbers uh we would look at the uh the notional value to compare the numbers so uh truben asked are they just buying and selling same number of puts and calls uh keeping it flat uh again i i would i look at it as as they have stopped whatever they were doing and as the line reverses say they were buying calls in the morning they start taking profits and selling calls or or traders for whatever reason or selling calls that orange line starts to move down then um then they're taking the opposite side and i would expect price to move lower at that point so let's take a look at book map and then we'll go back and take a look at hero so let's zoom in and i may have to turn the absorption and sweeps indicator off and uh let me go ahead and do that that's all these let me let me just adjust it up and see if that helps so the absorption indicator is showing showing passive limit orders absorption buy and sell that shown by the the magenta and blue and then the sweeps indicator that's what appears to be uh showing here is shown with the dark red dots that's uh sell sweep and the bright green dots or buy sweeps there's just too much here so i'm gonna tone this down this multiplier i can change so i see less of that right so that helps so what i'm talking about these small bright green dots that's a buy sweep up to that level and these bright red dots that's a sell sweep all right so remember nvidia was very strong yesterday i think it was about at uh 405 at the the morning low traded all the way up uh to 452 today so quite a move in nvidia uh so call buyers were very active yesterday and i think they were responding to a uh a morgan stanley uh note an upgrade or something like that so anyway strong move higher up to 452 in nvidia and note the this buy sweep through the liquidity at the 450 level and there were some resorts in at that level let me just make the dots a little bigger typically for stocks the opening closing print are quite large and uh you have to change the size of the dots whether you have this opening print shown or not on your chart right so nvidia and then um with this final move up to 452 and the liquidity at that level you can see the aggressive sellers starting to come in shown by the shift from green dots green volume dots to magenta dots and that's uh right around 940 let's go and take a look at hero now and see what options traders were doing zoom in just a bit all right so we know that at 940 this is what i'm looking at 940 right here so we know that traders really were not doing much with puts that line was pretty flat then right around 940 as price approached that 952 level and aggressive sellers start to come in traders start selling calls that shown by the falling orange line and then they also buying they start buying puts so what we know up to uh this time that i have uh zoom now let me change this just a little bit zoom in just a little bit more so up until uh about 1040 here we know that put buyers were definitely in charge and i can just tell by the strong correlation between the blue line and price action i can also look at notional value so that is minus 202 million versus positive 600 61 million so put buyers more aggressive than the call buyers price moves lower again when traders buy puts market makers sell the puts and they have to sell stock to hedge their delta exposure all right let's zoom all the way out now for the day we're still looking at puts and calls so this call number has not changed a lot for the day let's go back to 1030 so 1030 1045 it's around positive 6 64 million puts minus 200 million then we'll zoom out show the entire day so a little bit of change in both but generally um this call line is dropping so there's they are net they are buying calls but since about noon they are selling calls and they also continue to buy puts let's go back to the total signal now and that that should give us a little bit more clear for you so here you can see the strong correlation and setting up setting up a long really confirmation long right around 1030 reversal time and then setting up a nice divergence short right around noon hero starts to drop and price starts to drop about 20 minutes later all right so there's the short end of morning uh divergence long actually let me clear my zoom here so we're looking at the entire day all right so here's the here's the long set up right right around 1035 and then a short end out for each move the range gets smaller and smaller right so that's Nvidia let's take a little quick look at AMD then we'll get to the live market and AMD was another one that was strong yesterday and let's just go take a quick look at hero actually let's let's take a quick look at Tesla so Tesla next one on the list of ranked by hero signal so traders are buying calls and also buying puts positive number notional value 37 million for calls negative number so put buyers are winning note the strong correlation between the blue line and price put buyers definitely in charge today helping to drive price lower let's go take a look at book map i'm just going to skip over AMD go to Tesla so there's to uh Tesla today definitely looking for shorts as traders were buying puts continue to buy puts all day and absorption at the 240 level a lot of aggressive sellers and all these pullbacks so a move from 240 to 235 let's go back and take a look at at hero see if there were any gamma levels in play so yesterday for Tesla 240 was the put wall and that was actually um price was trading below that level that acted as resistance yesterday so for today Tesla the hedge wall call wall and put wall all move lower let's just zoom in on this so that is definitely bearish so pre-market planning for um for Tesla definitely bearish and when you separate out puts and calls you might not have caught the the first move lower but i think being prepared knowing the the shifts lower and the again the call hedge wall call wall and put wall prepared you to look for short so really no confirmation of this move higher initially with hero and traders continue to buy puts as price moves lower back to book map and let me just show you let's go back let me just show you what i'm talking about for for Tesla and the an equity hub there's Tesla here is the this shows the 10 day history of all these key daily levels so there's a shift lower from yesterday to day in the hedge wall and then has gradually been shifting lower notice also the key gamma strike has shifted lower over the last 10 days from 260 to 250 and the call wall looks like it is isolated around 250 to 300 shifts lower yesterday from 300 and also the put wall has shifted lower and today shifted lower from 240 yesterday to 230 today so this tells me that traders are looking for and expecting lower prices lower levels in in Tesla this is how they are positioning themselves in the options market again expectations that's what i like about options options are forward looking this is about expectations traders are looking for and expecting lower prices based on the shifts lower in all these key daily levels right so there's Tesla let's just see if there's a let's go back one more time take a look at those gamma levels so 230 is the put wall so if Tesla continues lower 230 is the potential target know at all they high liquidity at that level pretty typical for the for the zeros and the fives in stock like Tesla and Nvidia high liquidity that comes in at the cash open at the zeros and fives so there is the 230 put wall potential floor but also a target for price if Tesla continues to move lower all right let's take a look let's go back to the sub 500 and nasdaq and i've got just a few more minutes if anyone has any questions now would be a good time to ask please let me know all right so sub 500 initial move lower divergence long and then price reverses lower right around noon and no no support today from large traders with iceberg orders it's a pretty negative number there also sell stop orders you can just see the the falling light blue line for iceberg orders and the falling light orange yellow line for stop orders no reason to look for long and kill it to volume delta after price reached the 445 and the 4460 level really leveled off let's just see what options traders are doing let's go back to hero go to the sub 500 let me go back to the total signal let's go to sub 500 and overall the hero signal is trending lower maybe flattened off a little bit but turning lower this total notion of value of around 100 million is very tiny that is that is pretty much a neutral signal the net notional value can often be in the billions you know up to five or six billion positive or negative so 120 million total notion of value puts and calls for sbx spy xsp and es is a again a neutral or flat number at this point of the day let's take a look at nasdaq so overall notion of value is for nasdaq slightly negative oh slightly positive i'm sorry so still positive but it has been trending lower moved up divergence long flattened off and now starting all around noon now definitely trending lower so starting around noon options traders started taking negative delta positions in nasdaq let's take a look at book map when nasdaq and then we'll wrap it up for the day so pretty similar picture to the sb 500 divergent short divergence long and now nasdaq is grinding lower all right my time is up i want to thank everyone for watching thank you very much for your questions and comments and remember tomorrow vixx expiration 9 a.m and then fomc minutes are released at 2 p.m and that will be in the middle of my session so i will stop uh whatever i'm doing at that point and we'll watch um we'll watch the sb 500 and nasdaq uh to see what is happening see if the fomc minutes have any impact on price action so i will see you tomorrow thanks again everyone thanks for watching and i will talk to you tomorrow bye