 Hello everyone, welcome to Options with Doug, streaming live daily on Bookmap Discord and the Bookmap YouTube channel at 1.30pm Eastern Time. And before I go any further, let me 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 recommendation. Risk disclosure, trading futures, equities and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. And as a reminder, my presentation and the Options with Doug channel in Bookmap Discord is very focused and the focus is options, order flow, the impact of the 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 that is based on positional analysis. And I look at how traders and market makers are positioned in the options market and how those positions shift from day to day to help develop a thesis regarding implied volatility or implied volatility to be expected for the day as well as trading range and also a directional bias. And again, I use positional analysis. This is a new way of looking at the market and other traders may use technical analysis or fundamental analysis and I think positional analysis provides a significant edge. And the second part of my process is execution and I look at real time order flow in Bookmap and market maker hedging flow in Spot Gamma Hero to confirm my thesis and find and execute setups. And on topic questions and comments are welcome, very welcome. Please post your questions and comments in the options with Doug Channel and Bookmap Discord as well as in the chat in Bookmap YouTube. And I will watch both but I tend to watch the Bookmap Discord a little bit more than YouTube. So again questions and comments are welcome. Okay, let's get started. And my agenda for the day, what I want to talk about is first of all position analysis. Go over what I saw in the market this morning and this is primarily based on information from Spot Gamma and then we'll talk about some setups. And please forgive me, I have not had any running water in two days. The city where I live had a substantial problem this past weekend with freezing cold weather pipes and distribution facilities were severely damaged with the cold weather, the freezing and then the thawing. So again I have not had any running water for two days so I had to travel to a gym that was out of my area to take a shower this morning and also find a grocery store that was open. So anyway with that let's go ahead and get started and let's take a look at the S&P 500. This is the ES Futures. And thank you Trader HE and I keep expecting water any moment now and I get news that it's going to be another day or something. So anyway, I'm hanging in there. So anyway here's the ES Futures and the support and resistance levels that are in play are marked on the chart, on this chart. And I have two columns here of levels. And the first is the SG and that's the Spot Gamma cloud notes that are provided by Spot Gamma. And these are based on SPX levels. And that's shown here like this L3 3850, that's SPX 3850. And Trader HE indicates that the microphone is choppy. Is anybody else, how does my, how's my audio? Anybody else having a problem? Okay, thank you Bert, thank you Move Walker. Okay, so the other levels that are shown here are combo levels. And let's just take a look at this one right here. And that is a combination of SPX and SPY converted to an SPX level and then converted to an equivalent ES level. So right now Spot Gamma is adding 25 points to SPX to come up with the equivalent ES level. And then the second column is the C levels column and that's my own cloud notes. And what I'm doing is marking the key Gamma levels for SPY like the 384 volatility trigger and also the big round numbers in ES. And then finally the support and resistance levels that are shown in the Spot Gamma AM Founders note. So that is what I'm looking at for ES. And a couple things of note is first of all before the regular trading hours RTH open ES tested the SPX 3800 level and then moved higher. And now it's chopping around the 3850 level which was, and that's right here, which was resistance yesterday and also there was a test of the 3835 call wall that's the JP Morgan caller and before price moved on up to the 3850 level and above. So the SPX levels that 3800, 3835, and 3850 are definitely in play today. And Tom asked Audio Discord, there was a trader Ichi commented on my audio. Other people confirmed that it's fine. Okay, so that is the S&P 500 and those are the levels that are in play today. And just to note that the 3850, as you recall from yesterday, this is the ES from yesterday, the 3850 level was acted as resistance in the morning just at the open and then price traded lower after that. So that is ES from yesterday. Okay, and the next thing that I want to talk about is the shifts in levels. And there were just a couple but they were significant. And the first is the SPX put wall shifted down from 3800 to 3700. And then the SBY spy key gamma strike dropped down from 380 yesterday to 375 today. And let's take a look at that. Let's go to the S&P 500 charts. Let's take a look at SPX first. And these are the absolute gamma levels. And the put gamma is shown in the teal color below zero. And call gamma is shown in the black lines above zero. So the levels that are in play, there's the put wall, the 3700 put wall that is shifted down from 3800. And again, as a reminder, the put wall is the level with the largest net negative gamma. Then here, let's go up. The next level, well, here's the 3825 and that is the volatility trigger. And the next level, that is the call wall. That's the 3835 level. And that has been the call wall all week. And again, as a reminder, that's the short call of the JP Morgan collar. And I'll talk about that a little bit more and how the influence of that level is changing from day to day. And then this has been the case for some time. I will talk about that when the JP Morgan collar expires tomorrow. I'll talk about that and we'll spot gamma. Talked about that. So that's the playing field. And really, it's more the 3800 to 3850 and really the 3900 that's in play. And spot gamma has talked about that all week. That's the range that they were expecting for the week. So that's the SPX levels. And spy, again, put gamma below and teal, call gamma above. So you can see the dominance of put gamma. And we'll take a look at the gamma notional in just a moment and see how dominant that put gamma is. So here's the 375 put wall. That's a put wall and the key gamma strike. So that is also the strike with the largest absolute gamma. 380, that was the key gamma strike yesterday. And then 390 is still the put wall. All right, so speaking of data now, let's go take a look at the founder's note. And this is something that I look at every day. And this is gamma notional. And gamma notional for both SPX and spy have become more negative than yesterday. So yesterday SPX, the gamma notional was minus 408. Today it's minus 651. And yesterday gamma notional was minus 1776. And today it's minus 2326. So that, a couple of things to note there. First, that minus 2326 is a significant number. That's quite a large negative gamma. And also notice how much larger it is than the SPX gamma. And what this means is that traders are long puts, market makers are short puts, and they have to sell futures as price decreases to hedge their delta exposure. And the opposite as price increases, they can buy back those short futures. And that, so trader, market makers are trading in the direction of price action. And that tends to increase volatility. And now that does not imply a directional bias. It just, it's an implication for volatility. Meaning to expect a wider trading range today and more volatility. And for those who are new, we can take a look at, let's just take a look at this chart right here. And this is the SG index, which is related to the gamma notional. So as the SG index moves, or as gamma notional moves, so does the SG index. And what this is showing, here's the zero line. And this on the horizontal axis is the SG index. And then on the vertical axis is the one day return. And this is a scatter plot showing the, again, one day forward return, can be plus or minus. And notice that it tends to widen out as the SG index decreases, or becomes more negative. And again, it moves the same as gamma notional. So all the gamma notional is applying is a wider trading range and more volatility for the day. And let's take a look at the Vantage charts. And this is a graphical representation of pretty much the same thing. And this is showing how market makers delta notional or delta exposure changes as price and implied volatility change. And that is shown by this green line here. And that is the current expiration. And the way to interpret this is just to draw a line through here. And I'm just using a screen pen tool that makes sense through this line. And this is showing, again, how market makers delta exposure changes in price and implied volatility. And that's the VANA effect. So what this is showing is that market makers delta exposure increases as price falls. And again, they have to sell futures to hedge their delta exposure as price decreases. And then they can buy back those futures as price increases. So they're trading in the direction of price. And there was a question this morning about delta neutral. And what this is showing, this data is generated once daily from information like open interest that is available overnight. And it's showing a starting point. So this spot gamma is assuming a starting point of delta neutral. But that's going to change constantly during the day. So that, again, market makers have to constantly hedge their delta exposure with changes in price and volatility. And then the black line is showing changes as time passes. And that's the next expiration. And that's the charm effect. So we can take a look back a couple of days and see how that has shifted to more negative gamma. And we can also take a look at SPY and see the steepness of the line. It's even steeper. Again, there's a lot more negative gamma in SPY than SPX. And you can see how that has shifted over time. Okay, let's talk about the J.P. Morgan collar. And first of all, there were a couple of notes this morning in the AM Founders note that I wanted to point out. And there was a much more in-depth or thorough analysis. And I'll leave that to SPY gamma subscribers. And talking about the gamma tied to the J.P. Morgan collar has strengthened at the money and weakened at the wings. And we'll take a look at the gamma curve, the call gamma curve in SPX and thinkorswim. And this will illustrate that effect. And let me check for questions. And Truman, I'm not sure I understand your question. Gamma Greeks, I don't know what that is. Gamma Greeks for options. Well, yeah, SPY gamma does have proprietary algorithms. So SPY gamma is what I use. And I don't, algorithmist ask about trading view API. I don't use trading view. I use book map and SPY gamma and then thinkorswim. And that's it. So I suggest you contact, you know, if you have any questions about API, contact SPOT gamma. I think they do have cloud notes for, or something similar for trading view. But I use book map, thinkorswim and SPOT gamma. Okay, so let's take a look at, and let me check YouTube. And the same question about gamma Greeks for options. I don't know what that is. But SPY gamma is what I use. And they do have proprietary algorithms. And we'll take a look at SPY in just a moment. And do I offer a contact email? No, I don't. But I am available on book map discord and SPY gamma discord, or discord in general. And my name in discord is Doug P. Capital D, OUG, capital P. And I'm also on Twitter at Doug Plus. Okay, so let's take a look at this JP Morgan caller. And I'm going to go through a sequence of days. So this is from the 27th. So this is two days ago. So this is Tuesday showing the SPX call gamma for four different expirations. And that is the pink purple line is the expiration this Friday, the 30th, December 30th. And then the other lines are the next three Friday expirations. January 6th, January 13th. And then the monthly expiration on January 20th. So that is for the 27th. And notice that the, first of all, the peak here is right below .006. And notice how it is fairly wide. So that indicates the influence of this is larger two days ago than we'll see today. And what that means is JP Morgan is short this strike. So market makers are long this strike. So that's positive gamma. As opposed to what we, what the, as opposed to the negative gamut today, at least at this strike. Again, market makers are long, long the call. So they have to sell as price increases to hedge their delta exposure. And they have to buy futures to hedge their delta exposure as price decreases. So that's the opposite of a negative gamma environment. So this is from two days ago. And then let's take a look at the same graph from yesterday. So this is the 28th. And notice now that the gamma, and I'm looking at this pink purple curve, has increased to just above .007. And the wings have narrowed a bit. So the influence is greater at the money and then diminishes further away. And then finally let's take a look at the gamma curve for today. And notice now that the peak of this curve is even higher above .009. But again, it's becoming more narrow. And the influence of this strike that is causing market makers to basically pin this area trade against price above and below is diminishes as price gets further away from that 3835 strike. OK. So that's the JP Morgan collar. And let's take a look at one other. So again, Spot Gamma did a more thorough analysis in the AM report. And I just clipped off a couple of lines from that. And this is regarding the question about what will happen after tomorrow and after. And what Spot Gamma is calling for is the JP Morgan collar and Spy Gamma roll off. And they were calling for quite a bit of Gamma to expire tomorrow. That was a source of pinning. And now may become a source of volatility as large positions are rolled. And this is particularly true tomorrow as hedges is just to the new JP Morgan collar. So there was a question about the JP Morgan collar in general. And my understanding is they put it on once a quarter and expiring at the end of the quarter. And the expiration dates, I'm not quite sure. All right. Let me check for questions. Question about what broker I use. I use thinkorswim for options. And I use trade station for stocks since it's integrated with book map. And well, since market makers need to keep Truman, one, two, three ask because market makers need to keep Delta neutral. I'm watching Gamma as an indicator of, yes, which way they hedge. And again, in a negative Gamma environment, that implies that market makers are hedging in the direction or price. And so that tends to increase volatility and just the opposite for a positive Gamma environment. And Bert asks, what is the reason behind it growing and narrowing? And that's just the characteristic of options. So Gamma is greatest at the money at expiration. And think of it this way. So Gamma is simply the rate of change of Delta. And expiration, any strike above at the money, the Delta is going to be zero. And for any strike below at the money, the Delta is going to be one. And that is at expiration. So again, Gamma will increase and change very sharply at the money, but then further out from at the money, it's not going to change. So again, think about what happens at expiration. Delta is either a one or a zero. Okay, Bert, I hope that answers your question. So this is just characteristic of options. Again, Gamma is highest at the money at expiration. Okay, let's take a look at some setups. Let me just check YouTube for questions. And RTRT asks, what does it mean to hedge in the direction of price? So let's take a look at the Vantage Art again. And this shows that market makers, Delta notional, Delta exposure increases as price decreases. They want to remain Delta neutral. So they have to sell futures as price decreases to hedge their Delta exposure. And then as price increases, they can buy back those short futures, again, as price is rising. So they're trading in the direction of price. And that tends to enhance volatility. Okay, and David is indicating options by are extremely active at 384 and 383. So we can, we'll take a look at spy in just a moment. So let's actually, let's go to back. First of all, let's go to Spot Gamma and go to ES. And I'm going to look at the total signal. So this is the, this is Spot Gamma Hero. And this is showing the hedging impact of real time options for ES. And it was combining, for ES, Spot Gamma is combining options trades in spy and SPX. And showing a combined view here for ES. So they are saying that options trades in spy and SPX are potentially driving price action. Again, market makers are hedging options trades in those two instruments with ES futures. So this separates out puts and calls. And this is showing initially traders were fading this move higher and they were selling calls and buying puts initially until about 10 a.m. And then they shifted and started buying calls. And there's been a strong correlation with price action and traders buying calls ever since then. Let's go look at spy. And spy looks just about identical to ES. And that's been the case recently is spy options trades having a larger influence than SPX. And again, around somewhere between 10 and 10, 10.15 a.m. traders started buying calls. And the way this works is when traders buy calls, market makers are selling the calls, and they have to buy futures to hedge their delta exposure. And if you're trading stocks and looking for a long entry, this is what you want to look for. And there was quite a bit of this going on today in the stocks of my watch list. And there was a question in Bookmap YouTube about the 384 and 383 and 384 level. And let's take a look at... Let's take a look at Bookmap. We'll take a look at spy. And there's the 384 level. And that is the volatility trigger. And let me just take a look at... So yesterday, 383 was a key spot gamma level and spy, but not today. That has gone away. So again, this 384 is the volatility trigger. And that was the volatility trigger yesterday for spy. So, nice trend up here in spy. And the first entry point was, unless you just caught the open, was this reversal back to 381. And that was before traders really started buying calls. Maybe we can zoom in and take a look at that closer. And then there were several pullback entries. And the primary target really would have been this... was this 384 volatility trigger level. And just as a reminder, the volatility trigger is spot gamma flip level and indicating market makers gamma position shifts to positive above that level and negative below. Okay, let's go take a look at some other setups here. And the next one was Apple. Kind of a choppy morning session. Let's take a look at Hero here. And really the clue was, or the first clue, traders started buying calls as price dropped down. So Hero made a higher high here while price was moving lower. So a divergence set up there. And then let's go look at Bookmap again. And so that was your first clue. The divergence set up. And then no clear reversal area here. No obvious reversal point. But there was a very obvious target. And that is the 130 key gamma strike and all the liquidity at that level. So nice long setup in Apple. And this will be a theme. You'll see the call buying and the nice key gamma strike or other spot gamma level strike and liquidity targets above. So that's the first setup. And an algorithmist, I'm not sure I understand. This is just for plotting the levels. I'm not sure I understand that. And Panamets ask, all those charts come with a spot gamma subscription. Yes, they come with a spot gamma alpha subscription. The next setup, AMD. And this is along the same line. Pullback, not as choppy morning session, more of a clear uptrend to the 65 key gamma strike and all the liquidity there. Let's go look at Hero. AMD, strong correlation. And again, traders are buying calls. That's shown by the rising orange line. Another divergence set up in the morning. Traders were buying calls from the open and price chopped around a bit and then started to move higher. And traders have not been doing much with puts and that's shown with the blue line. So there's the second setup, very similar to Apple. Traders buying calls and price targeted the key gamma strike and also liquidity at that level. Okay. And the next one, Google. And again, traders buying calls. And let's take a look at Bookmap. Okay. Again, similar theme except that Google has not made it to the 90 key gamma strike yet. But again, notice the high liquidity at that target. That's the obvious target. And pullback entries as traders buy calls. And again, as a stock trader, that's something that you want to look for if you're looking for a long entry. And the question about Spot Gamma website have explanation videos. The Spot Gamma website has an extensive support center on their website as well as a very good YouTube channel. And Spot Gamma, there's a lot of information there. It can be complex when you're first starting out. So if you're just getting familiar with Spot Gamma, it may take some time to become familiar and understand all of it. And I talk about it every day. And I try to provide simple explanations and show real live trading examples of how it works and how you can use it. And my videos are streaming live daily on Bookmap Discord and on Bookmap YouTube, and they're recorded. So you can go back and watch the recordings of my webinars on Bookmap YouTube. So here's the Google, the third stock with the same theme of traders buying calls and a high liquidity target above at a Spot Gamma key level. Let's take a look at Meta now. And this time the target was the 120 call wall, which actually, now this is from yesterday, for some reason Meta was not in equity hub today. So I couldn't confirm any changes in levels. But yesterday 120 was the call wall as well as the key Gamma strike. So that was the primary target today. And again, notice the high liquidity at that level. Let's go take a look at Hero. Meta and a very strong correlation, steady trend up as traders are buying calls. So not doing much with puts, but definitely buying calls and that is driving price higher. So, you know, in the past few days, traders have been selling big cap tech and today they're buying and they're buying calls and that is driving price action higher. Again, as traders buy calls, market makers sell the calls and they have to buy stock to hedge their delta exposure. So stocks are often much easier to understand. The mechanism driving price action in stocks is typically much simpler than the price action in the S&P 500. So again, very simple. Traders are buying calls. Market makers are selling the calls and buying stock to hedge their delta exposure and as price keeps increasing, they keep having to buy calls. And Microsoft, and here it was really puts in calls, driving price. So traders initially in the morning as they were selling calls, they were also selling puts and then they switched just around 10.15 to both selling puts and buying calls. And it looks like that has been driving price action since then. Let's go take a look at book map now and we'll see another, see this key gamma strike target. So the theme continues. Traders buying calls and large cap tech today and there's the price target again at the key gamma strike and also the high liquidity at that level. Let me check for questions on YouTube now and RTRT ask, can you explain how divergence is and how it can signal a change of price? Yes, that is. Let's go back and take a look at Apple. I believe that was one of the stocks that had a divergence and let's go take a look at Hero. Back to Apple. And this is not, they're better divergences but what that means is that traders are doing something in the options market and price responds sometime later and I think that is a, that's one of my favorite setups and this is, again this was not as clear but what I was looking at and again there are a lot better divergent setups and the best divergent setups occur in spy where it takes some time for traders, for market makers to start hedging in the direction of the options market and that doesn't always work but it seems to occur more often. So what I'm looking at here is Hero, the call line, traders are buying calls. Here they dip out a little bit but price makes a lower high and then traders continue to buy calls. That's not the best divergent setup but that's how that works. So you look at Hero going for in one direction and that is the first step in a divergent setup and the second step is to look for an area of reversal and typically that would be a level of a key gamma level or a level of high liquidity or a round number and watch, I suggest watching some of my previous videos and I usually point those divergent setups out and question about does Hero work for SPX and let's see, I did have a problem with it yesterday and I'm not getting anything today and there's a question about the dash yellow lines. That is on my book map chart and I use an add-on available in the book map marketplace called price lines and that's what I use for my cloud notes to fill out a spreadsheet and the yellow dash lines are just at the round numbers and typically at the zeros and fives I'll have a red line unless it is a spot gamma level and then those are white lines so the yellow lines are just the round numbers. So here's Netflix, Strong Correlation and here are traders in the morning were buying calls and selling puts. Let's go take a look at book map. Go to Netflix. Nice, nice strong uptrend in the morning. Let's go back to Hero. No gamma levels as targets but definitely liquidity targets at the fives and zeros, 285, 290 and 295 and it looks like the final target here this morning was this 295 liquidity. Let's go back to Hero now and again as usual very strong correlation between options trades and price action and notice how as traders start or stop buying calls and selling puts price it's that 295 target and then starts to drop down and I've just got a couple of minutes left and let's take a quick look we'll take a look at QQQ and just like a lot of other big cap tech traders are buying calls in QQQ which makes perfect sense. Let's take a look at book map. So long entries here it looks like the 265 key gamma strike price passed pretty quickly in the morning a little bit of chop around that level then a breakout above up to the 267 level so far and traders continue to buy calls and let's take a look now at Tesla and it looks like call traders were driving price action and Tesla as well and let's zoom in on the morning so regarding the question about a divergence before here's I think a little bit more clear example it's very fast it didn't last very long but notice that traders are buying calls starting about a minute after the open and price decreases and then you know that's very short and then price starts to increase and let's go take a look at book map and look at that set up so here's the morning set up in Tesla and you'd have to be pretty fast to catch this first reversal as traders started to buy calls and you could look at this two ways there's a reversal at VWAP and the only thing kind of disturbing about that is all the pink dots there and then probably the safer entry was to confirm the breakout above that trend line and the move higher to the liquidity at 123 and let's see what is above looks like the higher liquidity is at 125 is a potential price target in the afternoon if well Tesla's moved down quite a bit so probably not so back down to the key gamma strike let's go back and take a look at hero the entire day so on net this this dollar level 61.4 is still positive but but it has dropped off from earlier and pushing price back down to the key gamma strike okay let me do a final check for questions so the theme of the day today was traders looking to get long large cap tech stocks by buying calls and that was driving price action higher again traders buying calls market makers are selling the calls and they have to buy stock to hedge their delta exposure and we saw that in a lot of large cap tech Apple, AMD, Google, Meta, Microsoft Netflix as well as QQQ and spy as well and let me just do a final check for questions and David you're very welcome I'm glad it's helpful I spent a lot of time studying this and trying to understand it but I find again it provides a significant edge in understanding how the options market is driving price action okay alright so that is that's all I had for today thank you very much for watching and thanks for your questions and comments and hopefully I'll have some water tomorrow running water in my house anyway thanks again and I will see you tomorrow bye