 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. 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. This 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-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 are positioned in the options market and how those positions change from day to day to develop a thesis regarding the expected trading range and volatility for the day as well as the directional bias. And the second step in my process is execution. And I look at real-time order flow in Bookmap and real-time market maker hedging flow in 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 like ES Futures or Apple Stock, 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-Doug chat channel and Discord as well as the chat and YouTube for your questions and comments, so please feel free to post. My agenda for today, what I want to talk about is economic data events and earnings for actually yesterday today and the rest of the week. Then I'll go through my positional analysis, then I want to review a few setups, and then we'll take a look at the live market. So when we get to the live market, if anyone has any stocks they want me to take a look at, I'll be glad to do that. All right, let's get started. Hello, Noah. Glad you're here. And hello, Karma FX. Glad you're here as well. All right, so let's get started with the economic data events news. So the big news I think for today, Netflix and Tesla both reported earnings after the close yesterday and are trading down substantially today. Let me just check. So right now, Tesla is down about 8.5% and the same for Netflix, also down just a little bit over 8.5%. So earnings disappointed traders and investors and Netflix and Tesla. The first of the larger cap tech stocks to report earnings were disappointing, trading down for the day and that is definitely driving, helping to drive NASDAQ down. All right, then today there were jobless claims and then tomorrow is the big monthly options expiration, the July monthly expiration. I've talked about that this week. Let's just take one quick look at that again. We'll go over here to dashboard and let's look at SPX and it's even more pronounced and spy and QQQ. What I'm looking at here is this expiration concentration. So we know that market makers position on the gamma curve is positive and also this is showing delta notional on the vertical axis here and expiration on the horizontal axis and this is the July expiration and the call delta is shown with the orange bars put delta shown with the blue bars so you can very easily see this is a call dominated expiration and typically what happens is at expiration all of these calls will expire. A lot of this positive gamma that's been supporting the market will be removed and that can lead to some weakness or consolidation after a call dominated expiration and that is just the opposite of last year where the market was put dominated and after expiration puts expired and that led to a put banner rally so just the opposite this year and technical 1810 hello glad you're here. All right so I've talked about this before and so looking for weakness somebody got spot gamma has actually been looking for some weakness after the VIX expiration which was which was yesterday and I think possibly the Netflix and Tesla earnings were the maybe a catalyst for the move lower so anyway call dominated expiration tomorrow looking for a little bit of consolidation or weakness next week. All right let's go to positional analysis now and I'm going to start with the ESP 500. This is the ES futures shown a book map and before I take a closer look at this chart I'm going to take a look at a larger time frame and this is SPX and a 30 day one hour chart and showing the uptrend that began Monday last week maybe finally slowing down SPX some weakness today let me point out some levels on this chart the dash purple lines or the lower and upper weekly expected move and yesterday SPX was trading above the upper weekly expected move and now has moved lower below that level and then also the dash blue lines are showing the lower and upper daily expected move and that lower daily expected move has been support for today so SPX trading down around its lower daily expected move let me point out some spot gamma levels on this chart these are all proprietary levels so first of all there's the put wall that's the strike with the largest negative gamma that can be expected to act as support and the next level up is the volatility trigger at 45 15 that a spot gamma's 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 through delta exposure and that tends to increase or enhance volatility and nanny o2 asked can you please zoom on zoom on levels uh cannot see exact text i will uh i'm going to look at another chart in just a moment a one-day chart that will show the levels um that are in play for today a little bit more clearly i'm showing the i want to show the entire range of levels here so that's why i'm showing this chart and i apologize that it may be difficult to uh to read so anyway SPX trading above its volatility trigger and then that's a positive gamma environment on the positive gamma environment market makers have to trade against price to hedge their delta exposure and that tends to subdue or decrease volatility and then finally the call wall is at 4600 that's the strike with the largest net positive gamma that can be expected to act as resistance so those are the uh the key levels and uh before i forget there's the 45 50 level and that is the absolute gamma strike that's a strike with the largest absolute gamma and that can often act as a pen especially around expiration that is the largest concentration of gamma all right karma fx uh it appear you're um okay you're you're uh fixed now so i'm i'm checking obs that's what i used to stream to youtube and it looks okay all right so uh let's take a closer look at the levels and play for today all right so nanny o2 i hope this hope this helps all right so this is uh for today again spx showing the levels on play for today here is the the upper weekly expected move acted as resistance earlier lower daily expected move acted as support and price has really uh seems to have concentrated around the 45 50 absolute gamma strike there all right so nanny o2 i hope that helps all right so those are the levels in play for today for spx now let's go to the uh es chart and i have my cloud notes here so i have spx levels also spy levels and that is a key level today the spy 455 absolute gamma strike there's the upper weekly expected move for es so this spy 455 level the absolute gamma strike and that was noted as resistance and the spot gamma am founders note uh that set up a great short this morning i'll talk about that in a few minutes and then the spy 453 volatility trigger as well as the lower daily expected move acted as support so it's nice to see uh the uh smb 500 somewhat normalizing here and levels acting as support and resistance as expected and we'll see that uh also more normal behavior with uh with hero and auctions traders as well um in a few minutes when we take a look at setups all right so those are levels in play for today spy levels crucial also uh the spx levels there's the 45 50 absolute gamma strike and note there is a difference between the price of es and the price of spx and this this morning when i uh updated my spreadsheet that drives these labels there was a 29 and a half point difference between es and spx so that's why the spx 45 50 is actually shown at es 49 45 79 50 all right so that is the sp 500 levels in play again we'll talk about setups in in just a minute all right simon ng ask how can we change spy level to es level um i'll show you how i do it let's go back to go back to this chart right here and i have a series of scripts i've post posted these in discord look for the pin icon in the upper right these are for think or swim just little scripts that display these badges and right now i'm pointing to the one that is showing the uh es to spy ratio and right now it's showing about uh 10.094 so that's how i do it that's how i calculate that ratio then i then i just calculate the um i show the spy levels of my spreadsheet and then i just calculate the correct es number all right let's take a look at nasdaq and again etf round number levels in play let's take a look at um qqq chart all right so this is qqq one day one minute chart showing the spot gamma levels and here's the first of all the call wall at 385 up above so nice to see qqq trading below its call wall note the 384 level acted as resistance and i calculate the in q to qqq ratio the same way i have another little think script and i've got the wrong ones on this chart i had some difficulty with with my think or swim charge yesterday i need to update this chart i'm showing all the spy spy stuff on this chart so there's the 384 acted as resistance that's not a spot gamma level but that is a key that is a round number level for qqq and here's the volatility trigger at 382 acted as support and then resistance and so now qqq is trading below its volatility trigger in a negative gamma environment and then 380 this was somewhat of a pivot level that spot gamma was talking about and i'll show you why so below that level notice the void there the next level down as at 370 all right so those are the levels in play for today for qqq and let's go back to book map now and again i've got the qqq levels on my chart so here is the qqq 384 acted as resistance again that's not a spot gamma level but a round number level there's the 382 volatility trigger and right now it looks like price has found some support at the 379 level and this morning i'm also showing the big round numbers for nq that's with the red lines the zeros and the fifties and it looks like there was a little bit of support at the nq 15700 level all right shifts in levels so for the sb 500 the spx volatility trigger did shift higher pretty substantially from 44 30 to 45 15 and then other levels remain the same and then for spy the call wall did shift higher from 455 to 460 so the spy wall shifted higher spy call wall shifted higher so that's the shifts higher shifts in levels for the sb 500 and then for the nasdaq the ndx volatility trigger shifted a little bit higher and then the volatility trigger for qqq shifted a little bit lower right so again qqq now trading below its uh volatility trigger right let's take a look at the um take a look at the uh a couple of other pieces of information so first of all i uh do want to go back to the vana model today and take a look at this we haven't looked at this in a couple of days and uh with a uh a down day now i would i do want to go back and revisit this so this is the vana model for spx and gamma notional for spx today at the beginning of the day uh was positive and as we saw in the spx chart spx is still trading above its volatility trigger right now right at about 4550 so let me just give you a brief quick explanation of this chart it's plotting delta notional so this is market makers delta notional on the vertical axis and they're uh plotted against price on the horizontal axis there are two lines on this chart the first is showing how market makers delta notional changes with changes in price only that's shown by the light gray curve and then the purple curve adds implied volatility to the equation so that's showing how market makers delta notional changes with changes in price and implied volatility and what this is showing is if price increases market makers will have to sell futures to hedge their delta exposure remember they want to remain delta neutral and that's typical of a positive gamma environment and then on the other hand as price decreases the purple curve is showing market makers will have significantly more delta notional to hedge they'll have to sell futures as price decreases and that's typical of a negative gamma environment all right let's see where spx is trading right now oh it's 4550 so that's right about here right about the bottom of the curve so this is showing there's no tailwind no van a tailwind if price increases up to a certain point up to about 4600 the market makers will have to start to sell futures on the other hand if price decreases market makers delta notional increase and they'll have to sell futures all right so a little bit more informative let's take a look at qqq here and qqq at the beginning of the day was still in a positive was positive gamma but now as we saw on the qqq chart trading below the 382 volatility trigger right now qqq is at about 37950 we'll just zoom in on this chart some are between these two points right here so definitely on the negative gamma portion of this on the negative gamma portion of this curve so what this is showing as price continues to decrease market makers will have to continue to sell futures they'll have to sell in q futures to hedge their delta exposure then on the other hand if price increases market makers can buy back their short futures to hedge their delta exposure and adam scott your comment is not appreciated all right so that is the the difference between spx and qqq positive gamma environment versus negative gamma environment all right let's take one last look at some information here in our positional analysis and this is the gamma notional for spx spy ndx and qqq all positive at the beginning of the day this is market makers position on the gamma curve and these numbers did change a little bit from yesterday so for there was mixed mixed picture for spx gamma notional dropped as well as qqq but again still positive and then increased for spy and ndx all right so that is the positional analysis for the day so note that this was all set at the close yesterday this number is based on open interest so the options markets close before tesla and netflix reported so that changes the dynamic a little bit so again based on the uh based on the close yesterday before the earnings reports all right so let's take a look at um at some setups now let's go back to the sab 500 i'm going to go to spot gamma hero and this chart is showing options trades and market maker hedging activity for a combined signal for the s and b 500 so price for spx shown with a white line and this is the combined hero signal for again spx spy xsp and es a combined signal for the s and b 500 and before i take a closer look at this chart and look at setups for today i do want to go take a look back in time a little bit to see how this week is playing out so this hero will allow us to look up to five days back i'm looking at data for today and let's go back to monday so this is the 17th and beginning when spx options start to trade so this is pre-market and then here right here where i'm holding my cursors around the the cash open on monday so what this is showing is the the wild enthusiasm for s and b 500 calls on tuesday and i posted this in uh and discord at the end of the day the call notional value for the s and b 500 uh was eight billion and that is huge and again i posted that in discord on tuesday and notice how it levels off on wednesday and this is showing overnight hours as well and then turns back down today so the call buyers at least for today are gone and that helped to set up a great short today all right so let's let's take a look at today now and that so that gives us a picture of the week the the wild exuberance on tuesday call buyers flattened out on wednesday and now uh put buyers are in charge today so let's go back and take a look at data just for today at least put buyers were in charge when i looked looked earlier this morning all right so what this is showing and that we'll talk about setup first so remember i talked about the spy 455 level being a resistance level let's zoom in on this a little bit and hero was a great confirmation of that notice the falling hero signal price chopped around that 455 level a little bit and then followed lower and let's get a closer look and see what traders were doing i'm going to zoom in a little bit more up to about 1040 so call buyers were there but the put buyers were definitely in charge note the notional value here three billion negative three billion so that's traders are buying puts and this but number is positive but pretty flat that's showing that they bought calls initially and then that quickly leveled off and as traders continued to buy puts the smb 500 started to move lower so traders stopped buying calls that leveled off continue to buy puts and price reversed at the 455 level that acted as resistance as expected let's zoom in on this so it took a little while for this to play out um really honored 20 25 minutes of chop around that 455 level until traders finally gave up on buying calls and price started to move lower and note that cvd cumulative volume delta was slowly creeping down so reversal at this 455 level again as expected acted as resistance again good to see levels that you expect to act as resistance actually act as resistance and then price moves down to the spy 453 volatility trigger as well as the lower daily expected move so there was a very clearly telegraphed short for the uh es today all right let's take a look at nasdaq and there was a long as well let's just go take a look at hero and see um let's go back to the total signal so notice that options traders came in as price hit those levels the 453 level as well as the lower daily expected move traders started taking positive delta positions but then that reverse lower and i think that was up about the uh level of the upper weekly expected move let's just take a look actually let me look at the entire day so so far comparing these numbers put number is minus 4.5 billion versus calls at positive 2.6 billion so put buyers in start contrast to the last few days are definitely in charge today and just looking at the call line you can see that every time it levels off price starts to move lower as traders continue to buy puts all right let's take a look at nasdaq now and nasdaq was not nearly as clear to me and it has really not been this week as the s and b 500 signal so this is a combined signal for ndx and qqq let's zoom in on this i'm going to zoom in on the morning so this was not not nearly for me as easy to read as the s and b 500 but traders started taking negative delta positions around 950 952 and it took a while but then price reversed lower just right around 10 10 a.m so let's go take a look at book map nasdaq so here's the reversal lower again at the qqq 384 level i'm going to zoom in sorry i don't know what happened try that again sorry about this get book map just a moment to catch up let's try that again hero was a little bit difficult to read compared to the s and b 500 but i thought order flow here and book map was pretty easy to read note the this pink line here is cumulative volume of delta trending down and then as price starts to move lower sell stop orders help to fuel the move lower and at the same time you could just easily see what was driving the market here's a heat map for the s and b 500 large cap tech all week today this is the s and b 500 again so information technology semiconductors amazon tesla all week let's take a look at the nasdaq so this is what is definitely driving the nasdaq lower today large cap tech software semiconductors all right so there's a question and you too look at so here's the entire signal abu hope i'm pronouncing that correctly so this is the hero signal for nasdaq for the entire entire day so for nq we look at ndx and qqq and this is the combined signal so choppy up and down and the number is negative this notion of value of minus 335 billion and abu says it's not as clear as es that that is i agree with that i thought it was easier to trade es today and it really has been for a good bit of this week there's been a very strong correlation between options trades hedging flow and price action in es and not so much in nasdaq let's just see so we're looking at the entire day here let's just see what traders are doing and also the put call line is very choppy as well but again order flow looking at book map for for nasdaq i thought was very clear all right let's take a look at some stocks and then we'll take a look at the live market all right let's start with apple we'll zoom in on this so apple very weak in the morning this divergence set up note that hero starts falling just a couple minutes after the cash open and then price follows a few minutes later setting up a nice nice divergent short let's go take a look at book map go to apple so here's the short at around 196 19650 and then a test of vwap just a little bit above good for a couple of points in apple all right the next amd and note 114 is the call wall for amd that's a level that should act as resistance and it did its job here finally let's go take a look at hero for amd so hero was more of a confirmation for amd price reaches the call wall and then just maybe a minute or two later traders start taking negative delta positions let's see what they were doing so they were mostly selling calls that's shown by the falling orange line one thing to remember and I pointed this out earlier in the week is there is a lot of gamma expiring so traders have been really piling into calls for these large cap tech stocks especially and and they've been paying high prices there's a lot of often in these stocks call skew so calls are and many of these stocks price higher than equivalent puts and if traders don't continue to buy calls the calls that that are on the on the books now that they that they own will quickly start to lose value so when traders buy calls market makers sell the calls and they have to buy stock to hedge their delta exposure as those calls approach expiration which is tomorrow those calls start to lose value due to time again there were traders buying overpriced calls as expiration approaches and price starts to fall those calls quickly lose value and market makers can sell their long hedges and that that is helping to drive price lower so what is happening here for AMD traders were selling calls the calls that were already that traders owned were losing value market makers short calls losing value their delta notional is falling so they can again sell stock their long stock hedges so anytime you see you know and then as this expiration approaches the call line is not rising call line falling that's a good good short signal and Floyd's garage says those large tech stocks have been getting concentrated as a percentage of market that's correct and just keep in mind there is a NASDAQ rebalance I believe that may be over the weekend I'm not sure on that but the the percentage of the large camp tech stocks in in NASDAQ will be reduced just a little bit and Truman also in discord says he's seen very large skew with Tesla is that because of gamma that's because of that's because of demand so when there's a demand for options price and implied volatility increases so that increase in implied volatility is a as a a function of demand so and he also asked could that be a clue to direction in the market possibly maybe some people may look at it as that I look at it as eventually if traders are buying calls the price of those calls continues to increase and implied volatility increases at a certain point traders want to sell that implied volatility the options traders want to sell high implied volatility so I think that's what happened if you remember a couple years ago with GameStop and AMC the implied volatility was up I don't know five or six hundred percent you know at a certain point traders just want to sell they don't want to buy that so that can put an end to to that kind of behavior all right the next and we can just go through almost any of these stocks they're all you know as we saw on the heat map week today so here's meta traders selling calls and buying puts both those numbers are negative and price continues to move lower we'll go take a look at book map and meta continues lower and meta has been a large recipient of the call buyers let's take a look at Nvidia up and down with Nvidia let's take a look at hero video and as usual there's very strong correlation between options trades hedging flow and price action and Nvidia so so far net today traders are selling calls and buying puts and for a little while they were buying calls helping to drive price higher and as soon as that stopped price leveled off and then started to move lowers they started selling calls again all right let's take a look at the two stocks that reported earnings first netflix now I do not have netflix up in book map so we'll just look at the hero signal here and continuous up until about one o'clock just continuous negative delta positions so selling calls so traders are selling there's high those high price calls they're also buying puts and we'll take a look at tesla now the last time i checked tesla there was a problem with this chart there's something wrong with price but i believe the hero signal is correct so let's go take a look in book map it will take a look at tesla tesla still moving down maybe finding support of the 265 level definitely bearish order flow so from the cash open tesla down about 15 points 280 to 265 all right and karma FX wanted to look at baba so we'll do that now i don't have baba in book map but we can go take a look in hero and sorry for me not much of a clear signal in hero maybe a slight divergence here traders start taking positive delta positions and price starts to move higher a few minutes later so there you go karma FX there is baba so it looks like the options market pretty much set up a good good long let's go back to the s&p 500 so again in sharp contrast to the last few days traders continue to take negative delta positions and the put buying continues let's go take a look at book map so now price is trading below the spy 453 volatility trigger and the lower daily expected move and the best points were for shorts were the one that i talked about before the spy 455 level and it looks like the second point was around the upper weekly expected move and nice trend break there so if you missed that an entry point right at that trend break or around the 454 level below vwap would you show them with a light blue line there all right karma FX ask also with s&p's buying power dropping do you believe it will sell for long i'm not sure i understand your question so what i'm thinking in the so in the next few days again i've talked about this yesterday and today and really earlier this week the call dominated expiration and some consolidation and weakness into the expiration and and perhaps earlier early next week so karma FX asks does a reversal seem to be on the rise price got the highest it has ever been what's the likelihood of breaking this resistance and that's um so the way that spot gamma looks at this and the way i you know i i believe um they only consider an index or a stock overbought if it's trading above the call wall so um you know of course earlier in the week uh price was above call walls for uh nasdaq and s&p 500 and that is now trading below so the again the expectation was for um uh expectation was for uh well first of all spot gamma stats show the ford one day and five rate day returns after a as negative after a breach of the s&p 500 call wall they're looking at sbx so their expectation is for negative forward one day and five day returns and again looking at prices overbought only if above the call wall so if those call walls keep rising then from spot gammas point of view that's what traders are looking for they're expecting and that is not overbought but overall the expectation was for the uh call dominated expiration dynamic to come into play and i showed this yesterday and that i had some difficulty with my uh think or swim chart so i don't want to show that again but after the uh uh april may and april may and june expirations the monthly expirations there was some weakness in the uh spx for a few days so that's the expiration um call dominated cycle that that's the uh expectation right so the uh spx continues lower fueled by put buyers and also aggressive sellers and sell stop orders sell stop orders shown with the yellow line the following yellow line aggressive sellers shown by the following cumulative volume delta and up until just a few minutes ago larger traders were selling with iceberg orders all helping to fuel the move lower now down below the uh this 45 38 level that was noted as support and the next level down is the 452 level let's take a look at nasdaq so nasdaq has clearly broken below the 380 level and remember we looked at on the qq chart the void of gamma levels below that level down to down to uh 370 let me just take all right truman asks i'm looking at questions truman asks what is the lower daily expected move on book map let's go back to s and b500 i assume that's what you're talking about so for es that lower daily expected move is 45 71 so that is for es let's take a look at we'll take a look at spx oops wrong chart we're going to take a look at the the one day chart and that is at 45 43.17 so price now spx is clearly broken below that level all right so truman says could not figure out why es used that level of support now he knows all right so that is um what what price is doing now below that lower daily expected move and we're getting a well-deserved down day in the market some relief finally and note that larger traders are starting to come in and buying with iceberg orders that's what they use to hide their size that may not be enough to stop the market let's take a final look at hero and see what options traders are doing so they continue to buy puts let's take a look at the total signal and now as larger traders are starting to buy with iceberg orders it looks like some traders are coming in and starting to take positive delta positions here and here let's take a we'll leave it at this i don't think the um i was going to look at the nasdaq hero but it has not been as helpful today so we'll end it with us karma fx you're very welcome glad you're here glad you're asking questions i'm glad this is helping i want to thank everyone for watching thank you for your questions and comments remember tomorrow is the big monthly expiration spx has two expirations there's the am settlement and the pm settlement so we'll talk about that more tomorrow and we'll talk about uh call gamma unwind and uh and some stocks as well so again thank you for watching thanks for your questions comments and i will see you tomorrow