 Hello everyone welcome to options with Doug streaming live daily on book map discord and the book map YouTube channel at 1 30 p.m. Eastern time before I get started I need to go through the disclosures general disclosure all book map 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 here's my contact information if you have questions after the webinar today the best way to get in touch with me is through discord my name at discord is Doug P and then a book map discord there's an options-doug chat channel that's a good place to post questions and comments or your own content if you have something that you want to show that you're utilizing options markets hedging flow that's great you know I welcome welcome any content discussions related to the topics of my webinar and of this channel and then I'm also on X formerly known as Twitter my name there is at Doug plus I do post occasionally not nearly as much as I used to this webinar takes so much of my time that I don't have time to create as much content as I used to the focus of my presentation is options order flow the impact of options markets on stocks and futures and the influence of market maker hedging flow on price action I have a two-step process for trading and the first is planning and I use positional analysis I look at how traders and market makers are positioned 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 a directional bias and the second step in my process is execution and I look at real-time order flow and book map 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 I will be talking about an underlying asset and setups can be taken with futures shares of stock or options questions and comments are welcome and I will be watching both the options dash Doug chat channel and discord as well as the chat and YouTube for your questions and comments so please feel free to post and while I'm at it let me ask how's my audio today I have a it's quite hot today I have a fan going in the background let me know if that if you can hear that if that if that's causing a problem if anyone would just let me know if you can can hear that fan so Truman says my audio is good all right thank you Truman so again I have a fan going in the backgrounds quite hot in here if that is causing a problem please let me know and I can turn it off otherwise I'm going to leave it on much more comfortable here with the with the fan all right my agenda for today I'm going to cover news news items for the week economic data events and earnings then I'll go through my positional analysis then I'll review some setups from this morning and then we'll take a look at 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 Edward thank you for your confirmation as well all right so first of all news news items so on Wednesday there is some economic data coming out at the morning 9.45 p.m. I data 10 a.m. home sales and then the big event for tomorrow is NVIDIA reports earnings after the market closes and the last time I checked spot gammos were looking for a nine and a half percent move plus or minus for NVIDIA after earnings and then on Thursday durable goods orders at 8 30 a.m. Eastern time and then the Jackson Hole symposium central bankers begins on Thursday and then on Friday drone power will be speaking at the symposium at 10 a.m. and then also Michigan consumer sentiment comes out at 10 a.m. so the day the week as far as events and earnings data events earnings and economic data really begins tomorrow with the NVIDIA earnings after the market closes all right let me get to my positional analysis now so I'm going to look at levels that are in play for today I'm going to start with the SAP 500 this is the ES futures in book map and before I take a closer look at this chart I'm going to take a look at a larger time frame this is SPX in a 30 day one-hour chart and what this chart is showing is the downtrend that began a couple weeks ago and then expiration Friday here in a negative gamma environment put Vanna rally began last Friday and continued yesterday and now it looks like that may be over so that the mechanism there was market makers position on the gamma curve was quite negative that means that traders with long puts market makers were short puts and they were short futures to hedge their delta exposure and then as those puts expired on Friday market makers could buy back their short futures and that helped to fuel the rally on Friday and yesterday and so far today it looks like that that may be over all right let me point out some levels on this chart first of all this is SPX again the dash purple lines are showing the lower and upper weekly expected move this is based on the options market and then the dash blue lines are showing the lower and upper daily expected move and so far SPX is trading in between the lower and upper daily expected move and that was a plus or minus just around 29 and a half points for today for the daily expected move plus or minus 29.5 points right let me excuse me let me point out some spot gamma levels on this chart these are proprietary levels from spot gamma available to spot gamma subscribers first of all here's the put wall that's the strike with the largest net negative gamma that can be expected to act as support that's at 4300 and then above that is the 4400 level that is the absolute gamma strike that's the strike with the largest absolute gamma and then just above that is the volatility trigger at 4410 and that is spot gammas proprietary gamma flip level below that level market makers position on the gamma curve is negative and 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 then finally the call wall has moved back down to 4600 excuse me so if you recall from yesterday that call wall moved up to 5,000 somewhat of an anomaly really well out of range and I think what is happening here after expiration it takes several days maybe up to a week for open interest to build at new strikes and the new levels for the next expiration to start to fill in so the levels will move around a little bit this week until they settle in to certain levels all right so those the expected moves daily and weekly expected moves sbx trading within both the daily and weekly expected moves and then also the spot gamma key daily levels 4300 being the potential floor for price and 4600 the call wall being the potential ceiling and 4400 again being a very important level today and spot gamma was was actually looking for mean reversion around that level around 4400 and that was a very good play today all right let's take a look at one other chart another spx chart before we get to book map just to take a look at the levels and play for today so this is sbx you just zoom in for today so sbx gapped up and here's the 4400 level and initially in the morning there was some mean reversion around that level now as acting as resistance here's the volatility trigger acted as resistance and just a very nice steady downtrend continues in the sp500 right here's book map and I have spx levels shown on my cloud notes as well as other levels so there's the upper daily expected move and that purple line is the upper weekly expected move that label is obscured by the upper daily expected move but that is the upper daily and weekly expected move just right around the same level you just check on that and this is for ES not spx so a little bit different between ES and spx and note that again those levels acted as resistance this morning and price reverse lower at that level and that's also spy 442 level there right at around 8 30 a.m. Eastern time and then continues the move lower let me point out some other levels on this chart this is the spy 441 call wall and that level did shift lower as well from 460 yesterday to 441 today so a pretty significant shift lower for both the spx call wall and the spy call wall spx from 5,000 to 4600 and spy from 460 down to 441 so there's the spy call wall initially price was trading above that level and then right at the cash open moved down below the the call wall and then here is the this is the spx 44 10 level that was noted as resistance in the spot gamma am founders note acted as resistance as price continued moving on this downtrend here's the spy 440 absolute gamma strike and then here's the target for the for the morning the spx 40 4400 absolute gamma strike and note the point of control here it's this purple line stepping down to where it is right now just below the 44400 level so that's the volume point of control right then the next gamma level in play here is the spy 437 volatility trigger and note that level did move lower from yesterday from 443 to 437 excuse me so the SB 500 is trading below the spx volatility trigger and working its way potentially toward the spy 437 volatility trigger and we'll talk about setups in a few minutes so that's the SB 500 levels in play I've talked about the call wall shifting lower and for spy the volatility trigger shifted lower for spx the volatility trigger actually shifted slightly higher from 4400 to 44 10 so net slightly bearish given the shifts lower in the call walls for spx and particularly spy and again we'll talk about setups in a few minutes let's take a look at Nasdaq now so here here the NQ futures in book map let's take a quick look at QQ Q chart just to see the levels in play so for QQ Q the volatility trigger did shift lower from 367 to 363 and that looks like that level is acting as support and earlier in the day there was a lot of concentration price oscillating around this 365 level which is a large gamma 2 level let's take a look at NDX now so here is NDX 15,000 very important level today resistance there set up multiple shorts today in in Nasdaq whatever you wanted to trade in Q futures or QQ Q shares or puts this 15,000 level key level again multiple short setups from that level all right let's go back to book map take a look at NQ futures again I have my cloud notes I'm showing QQ Q levels the 367 acting as resistance before the cash open here's the upper daily expected move acting as resistance at the cash open there's the 15,000 level that label is obscured when one label is closer to close to another level sometimes the one of the labels is not displayed but that is the 15,000 level NDX 15,000 and note there is a difference in points between NQ and NDX and it's around 52 53 54 today I'm using 53 I believe 52 53 there's the 365 level just above the upper weekly expected move and note the oscillation around that level and now NQ is trading down to the QQ Q 363 volatility trigger all right shifts and levels for Nasdaq the NDX levels there were no shifts in levels all remained the same unchanged from yesterday and then again the QQ Q the only shift lower in levels was the volatility trigger moving down from 367 to 363 and again we'll talk about setups in in just a few minutes so let's take a look at a couple of other pieces of information that I look at to wrap up my positional analysis I like to look at gamma notional this is market makers position on the gamma curve at the beginning of the day for SPX spy NDX and QQ Q I really don't look at NDX that number is not significant compared to the other numbers so note all still negative and spy still pretty extremely negative but on Friday for spy that was 2.7 billion negative so it has become less negative but still negative for spy and on Friday gamma notional for SPX was about minus 1300 so that has dropped in half or become less negative in half for SPX and then also negative for QQ Q so these numbers became compared to the last couple of days Friday Monday became or becoming less negative but still very negative so this means that market makers that traders at the beginning of the day their position they were long puts market makers are short puts and they have to sell futures as price drops and applied volatility increases to hedge their delta exposure then on the other hand if price increases and applied volatility drops they can buy back their short futures and that is typical of a negative gamma environment let's just take a quick look at an illustration of that so first of all let's go to the Vana model then I want to take a look at something else on the chart so this is SPX and we're going to illustrate how this works what I was just talking about this chart is showing market makers delta notional this is their delta exposure and how that changes with the price there are two curves on this chart the first like recurve shows how market makers delta notional changes with changes in price only and then the purple curve is showing how market makers delta notional changes with changes in price and implied volatility and that change in delta with a change in implied volatility is the Vana effect Vana is a second-order Greek let's see where SPX is trading right now so I've got SPX at around 43 86 so right around here 43 85 so what this is showing is if price increases implied volatility drops market makers can buy back short futures so that is what was happening Friday and Monday after that reversal hire on Monday and then on the other hand if implied volatility increases and price drops market makers have to sell futures to hedge their delta exposure so this is typical in a negative gamma environment market makers trading with price to hedge their delta exposure remember they always want to remain delta neutral right just to point out one other thing this is the absolute gamma for SPX and this is the 4400 level orange bar showing positive gamma or call gamma blue bar showing negative gamma or put gamma and that is the 4400 strike the strike with the largest absolute negative and positive gamma and again spike gamma was looking for mean reversion around that level today and that in actually into the Jackson Hole symposium on Friday alright so that is the information that I typically look at for my to develop a thesis for the day so my thesis really first of all looking for higher volatility based on the negative gamma position and then based on the shifts in levels I was looking for particularly the call walls and the SPX and spy somewhat of a bearish thesis and then really watching out for a continuation of put Vanna rally to see whether that played out or not so that was just watching price action and and Vicks alright let's take a look at some setups now I'm going to start with the SB 500 and this is the hero signal this chart is showing price with a white line for SPX and the hero signal hedging impact real-time options for a combined signal for SPX spy XSP and ES futures and to be honest the signal was was not not much of a help today much better clues from just reading water flow when watching reactions at the levels that I showed on my chart we can we can zoom in and take a look at this chart so this is showing the cash open here right at 9 30 a.m. Eastern time the separate outputs and calls so today traders are buying calls that shown by the rising orange line and the positive notional value they're also buying puts it's shown by the falling blue line and the negative notional value there and so far it looks like the the notional value for calls is higher than puts call buyers a little bit more aggressive today but overall maybe the primary clue is the total notional value is pretty low today at one billion you know sometimes this can be two three four five six billion so overall somewhat of a neutral hedging flow here in and hero for the SB 500 but not not providing at least for me very good signals since the SB 500 is trading down for the day and this is positive alright so let's go take a look at book map again now I found much better clues just from reading order flow and watching reactions at levels right so first of all I talked about the upper daily and weekly expected moves levels acting as resistance they did their job note the bearish order flow coming in this is right around 8 30 a.m. Eastern time before the cash open just the size of the volume dots so you can see the aggressive sellers come in here shown by the magenta volume dots the volume dots are showing market buy minus sell orders and then price just continues down this downtrend moves below the 441 call wall then a pullback to the 4410 level moves lower price continues now moves below VWAP continues this downtrend continues on this downtrend so let's take a look closer look at order flow and note for today whoops wrong tool first of all iceberg orders negative large traders selling this move down with iceberg orders they use to hide their size also stops sell stops helping to fuel the move lower so iceberg orders shown on the sub chart with a slight blue line note the large iceberg orders coming in right around 1135 1130 1145 note the steady downtrend and the yellow line showing stop orders sell stop orders helping to fuel the move lower and cumulative volume Delta is positive for the day but it looks like to me iceberg orders and stop orders are what is really driving price lower and one thing that I try to do every day is to figure out what what is the key driver price is it the options market is it large traders with iceberg orders smaller traders with stop orders aggressive buyers aggressive sellers and once I can figure that out then it then I try and trade in that direction all right so that's the SB 500 definitely bearish today and the keys to watch just watch the downtrend price made a very very organized move lower pullbacks to this downtrend line also watch the levels how price reacts at the levels that you expect to act as support and resistance and then finally watching order flow and one thing that I found is watching stop orders this yellow line is often almost always a very good directional indicator so during the day stop orders are almost always a key driver of price and again the operating in the morning the thesis was mean reversion to the 4400 level there's the 4400 level and really this reversal started just around after 8 30 a.m. eastern time just a very steady downtrend down to the 4400 level and now now moving lower all right handles ask could you quickly go over the SPX downside level for today I'm not quite not quite sure what you mean are you talking about the lower daily expected move if you are okay I posted that above in discord so today that was at 4370 for SPX let's just take a quick look at that so there it is for SPX the lower daily expected move at 4370 this is based on the options market I usually I get that when the market closes the previous day so I got that number I took the close from yesterday and then took the expected move at the close yesterday for today and added that and subtracted it from the closing price to get that expected move for today and that's available in any any platform that has an options chain that should be available alright so it looks like the 43 the spy 438 level and the ES 4400 level around that level maybe acting as support and a lot of buyers coming in note the heat map that shows the history of the order book a lot of limit by orders coming in there from 93 to 95 alright so that's the SB 500 let's take a look at NASDAQ so again in the morning the QQQ 367 level as well as the upper daily expected move acting as resistance great setups here with the NDX 15,000 level acting as resistance multiple short setups make those volume dots just a little bit smaller and just like the SB 500 sell stop orders shown by the falling yellow line helping to fuel the move lower unlike the SB 500 iceberg orders large traders are buying this move down and cumulative volume Delta has shifted lower from about 11 a.m. all right let's see what options traders are doing in NASDAQ so not again not much of a clue here in the SB 500 maybe there will be in NASDAQ and yeah more of a clue more more of a confirmation here so this is a combined signal for NDX and QQQ I'm going to zoom in so I'm going to mark the this is price for NDX I mean mark this 15,000 level and remember I talked about the three short setups here here and here and these were really confirmed by options trades so there was not really much of a lead indicator that is often the case with with either the NASDAQ or the SB 500 but definitely a confirmation of a short so that was the those were the setups reversal shorts at NDX 15,000 let's go back and take a look at book map take a closer look at that so order flow not necessarily an easy read like some days no clear shift from aggressive buyers to aggressive sellers but you can see the buyer exhaustion at that level and after seeing the first reversal at that level then this kind of double check definitely buyer exhaustion here you know these subsequent reads at this level become more clear and at the same time you know that at least for here sell stop orders definitely fielding the move lower as well as large traders with iceberg orders selling right so that is the SB 500 NASDAQ hero a little bit easier read for NASDAQ than the SB 500 let's take a look at some stocks gonna start with AMD and then we'll get to the the big driver for today so first of all AMD let's go take a look at hero see what options traders were doing for AMD all right so I'm going to separate out puts and calls so what this chart is showing is that put buyers we're really helping to drive price lower that's shown by the falling blue line negative notional value here note that 106 is the hedgewall and that was the target for the first move lower and now that appears to be acting as resistance we'll take a look at book map in just a moment so we know that traders were buying puts market makers sell the puts when they sell puts they have to sell futures to hedge their delta exposure they always again they always want to remain delta neutral all right let's go take a look at book man get AMD nice downtrend there's the 106 hedgewall acts of support then resistance and price trades on down to the high liquidity at the 105 level shown here all right here's Nvidia the next stock I want to take a look at and the call buyers have left the building they were in there yesterday I think there was an upgrade to Nvidia yesterday and the call buyers were quite aggressive and that is let's see if that was the case today so here's Nvidia separate out puts and calls so one thing to point out is first of all put at this point in the day put buyer slightly more aggressive than call buyers let's just zoom in a little bit so up until about 1230 notion of value for puts ran around 284 million negative versus 145 million positive for call buyers so put buyers about twice the notion of value versus calls put buyers definitely in charge and again when traders buy puts market makers sell the puts and they have to sell stock to hedge their delta exposure let's go take a look at book map Nvidia up until about 1230 definitely moving down toward the liquidity at the the big zeros and the five levels looks like finally maybe found the bottom around 455 454 note aggressive sellers in here shown by the following cumulative volume delta and you can just see all the magenta volume dots again showing by minus cell when the dot is magenta that means that aggressive sellers they're more sellers than buyers so call buyers left the building put buyers are now in charge today moving in video lower as well as aggressive sellers shown by the following cumulative volume delta and all the pink or magenta volume dots let's go back and take a look at hero and I'm gonna zoom out and look at the entire day so notice that price levels off as call buyers start to come in and the orange line goes from flat to starts to rise and then price levels off and also the put line really kind of slows down so put buyers somewhat take their foot off the gas and then call buyers start buying again and price levels off so that's Nvidia quite a contrast from yesterday to take a look at Google let's take a look at Google and in the morning Google was definitely bucking the trend note the 130 call wall and let's just see what happens at the call wall so when price gets up to this level the hero signal levels off and starts to move lower so when price reaches the call wall the options traders take their foot off the gas and price starts to reverse lower and then right around one o'clock options traders started taking negative delta positions and Google is now moving lower let's go take a look at book now so here's the 130 call wall so aggressive so traders were taking positive delta positions during the morning buying calls when traders buy calls market makers sell the calls they have to buy stock to hedge for their delta exposure options traders then take their foot off the gas at the 130 call wall did its job acting as resistance and then they start taking negative delta positions and now prices moving lower so one thing to notice here is the stocks are often a much easier read than the than the end SMB 500 and Nasdaq the understanding what is driving price is often much simpler in stocks and it's often the options market especially for stock like Nvidia right so those stocks that I wanted to take a look at let's just take a quick look at Tesla I found Tesla on the other hand to be a little bit difficult to read recently let's just take a look at order flow alone actually a order flow pretty easy read aggressive sellers in here kill them falling cumulative volume Delta pretty deep pullbacks to the VWAP shown by this light blue line and you can just see the bearish order flow with the magenta volume dots alright so Truman asks how do you identify aggressive buyers and sellers when I make my thesis so the aggressive buyers and sellers that's part of the execution process so I'm you know I see that after you know after the market opens and I identify aggressive buyers and sellers with the volume dots the color of the volume dots as well as CVD cumulative volume Delta so let's just take a look at at hero for Tesla Tesla right so we've seen for AMD Nvidia and Google we pretty clearly identified the options trades that were helping to drive price and that's a very easy to understand mechanism traders buy calls market maker sell the calls they have to buy stock to hedge their delta exposure or when traders are buying puts market maker sell the puts and they have to sell stock edge their delta exposure and then we can take a look at book map and just look at the volume dots and cumulative volume Delta to see what aggressive buyers and sellers are doing let's take a look at Tesla and remember yesterday Tesla was a Tesla Nvidia we're really driving the market higher those stocks were up pretty substantially yesterday and not a clear read at least for me for Tesla today as far as options trades go really after about 1030 there was a pretty clear divergence in options trades and price up until then that was it was pretty clear very strong correlation between options trades and price action the stock like in Tesla and Nvidia market makers I think hedge pretty quickly let's go back to book map so the way I see this is that aggressive sellers shown by the falling cumulative volume Delta also all the magenta volume dots or are driving price lower and Truman says sweeps and market orders are aggressive but I think that book map just looks at limit orders that's well book map is looking at market orders with the volume dots that's what the volume dots are showing market buy minus market sell green dot means there are more buyers than sellers magenta dot and I have adjusted the default color to magenta to stand out on the screen showing more sellers than buyers and so that is aggressive buyers and sellers and I'll get to the sweeps and absorption in just a minute alright so then also so that's the market buy orders and sell orders and then book map is also showing the limit orders that's shown in the C O B current order book these are all limit buy and sell orders above their limit sell orders above the current price their market buy their limit buy orders and then the heat map is showing a history of those limit orders so there that is showing a history of the limit buy orders at 230 they came in just a few seconds after the cash open at 930 and that is pretty typical of a stock that Lord that traders will come in at the cash open they will put their limit orders in and they will just sit there and wait until they get filled and these these large limit orders often act as a magnet for price right let's talk about absorption and sweeps now and there isn't it there are indicators for sweeps and absorption absorption is the passive orders the the limit orders and then and I show those with pink or magenta and blue like blue so this is showing buy absorption at that level and then the red and also these small red dots a little bit easier to see here are sweeps and those are aggressive orders and you can take a look and at the book map knowledge place to get a more clear definition of exactly what book map is looking for but this again blue number absorption buy absorption and then the red number those are sell sweeps aggressive sell orders shown by the small small green dots and the red number so all that's shown on this chart is multiple sell sweeps and some absorption with the with the blue light blue so absorption buy and sell those are limit orders passive and then aggressive orders are shown with the sweeps and so far there that there are no buy sweeps on this chart only sell sweeps so that could be another clue looking for a move lower all right let's take a look at the S&B 500 in Nasdaq I've just got a couple minutes left and so far the downtrend continues it looks like price may have found support for the day at around the 438 4400 level this red number is ES 4400 and note the all the limit buy orders in at 93 to 95 and looks like some traders were front running that let's see what options traders are doing let's go back to S&B 500 so it looks like these traders that have been taking positive delta positions since about 1 1 o'clock may may get their way right so slow to sorry as when I looked at Nvidia earlier you said put buyers were in control if I wanted to sell premium would you sell calls on Nvidia never you know that's something that I would just not do I think that is not a good idea I would buy a buy a put spread or sell a call spread if I wanted to or just ideally buy a put I think would be a much better much better trade for Nvidia than then selling calls so I would you know again Nvidia is just way too volatile it with the earnings coming up I would you know I would I would not sell a call on video especially short term now if I were looking at longer term position and I wanted to get long Nvidia I would would consider selling a put so let's just take a look at Nvidia let's take a look at this is Friday's expiration so we know that earnings and video reports earnings on Wednesday and then this is the Friday expiration so this is after earnings and you know certainly this is tempting to come in here and sell you know let's say a 30 delta 30 delta put again I would never sell a call in Nvidia just too much risk I when I sell premium I typically sell premium in the SP 500 I think that that's a much safer more steady income approach to selling premium but anyway I mean this is tempting you know sell this 430 put for you know 1270 1265 you know if you're right you make $1200 but I would only do that if I wanted to get long and I would probably if I wanted to sell a put in video I would go further out on time you know maybe go all the way to October expiration and sell sell something you know like around the 400 but you know Nvidia moves let's let me just check something here right now I have the ATR for Nvidia at over 18 so Nvidia moves up or down according to this over 18 points a day so Nvidia moves quite a bit so I would you know I would proceed with caution and and one thing that spot gamma has pointed out is the yeah Nvidia expected move for Friday plus or minus 52 points so this is for Friday so that is a very big move so proceed with caution let me just see if I can find one thing real quick then we'll wrap it up so one thing that spike down was pointing out this morning so this is not this is not that helpful in video of course in video reporting earnings this is IV rank very high for Tesla on the other hand very low so you know maybe if you wanted to sell an iron condor in in Nvidia but I would stay defined risk in Nvidia and then with this low IV rank for example in Tesla this really favors more of buying options than selling all right so one last question sorry I'm not sure how to pronounce your name at YouTube I apologize my fuzz Allahi which broker do you use to place trades I trade stocks and options on thinkorswim and options also on tasty trade and then futures with trade of eight so those the the brokers that I use all right my time is up let's just take one last look at the SB 500 and so looks like options traders may be getting their way now for 38 4400 acting as support let's take a look at NASDAQ also moving higher the 363 volatility trigger also may be support and large traders coming in with iceberg waters now starting to buy so the 2 p.m. rally looks like may have started all right that's all I have I want to thank everyone for watching thank you very much for your questions comments I love when when you ask questions I really like these interactive sessions so I hope this was helpful again thank you for watching thanks for your questions and comments and I will see you tomorrow thanks bye