 Hello everyone, welcome to Options with Doug, streaming live daily at 1.30pm Eastern Time on Bookmap Discord and the Bookmap YouTube channel. Before I go any further, I need to go through the Disclosures. General disclosure, all Bookmap limited materials, information and presentations are for educational purposes only and should not be considered specific investment advice nor recommendations. Risk disclosure, trading futures, equities and options involve substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. As a reminder, the focus of my presentation and the Options with Doug chatroom in Bookmap 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 first is planning and I use 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 the implied move and expected trading range 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 in Bookmap and real-time market maker hedging flow with SpotGamaHero to confirm my thesis and for setups and entries as well as exits. And on-topic questions and comments are welcome and I will be watching chat in Discord as well as the Bookmap YouTube channel. Okay, let's get started. All right, so the things that I want to go over today are first talk about some news items this week, economic data coming out and then I want to do a quick review of a couple of items from last week and I will... So that's one of the things I want to look at. So a quick review of a couple of items from last week and then go over our positional analysis for today and finally we'll look at some setups. So first of all, here is the economic calendar for the week and there are a couple of major items to be aware of and first is tomorrow, 9 a.m. Eastern time, Jerome Powell is speaking apparently in Sweden but anyway Powell speaking that will be important. So something to be aware of, keep track of and then the next item of course, that's on Tuesday and then the next item of course is the CPI data that comes out at 8.30 a.m. Eastern time again on Thursday and then on Friday there is University of Michigan Consumer Sentiment. So not a lot of numbers this week but they are very important. So I talk about that because that can impact how traders are positioned ahead of the data and then also how traders price action can react after the data. So it's important to keep that in mind. Alright I want to review a couple of items from last week. First of all, there's been a lot of discussion and discord about the put wall, call wall, what that means and I prefer to keep things simple. The put wall is the strike with the largest net negative gamma and it can often act as support and the way I use that is it gives me added confidence to, in this case I'll show these examples. Take a long entry. So this is Apple again this is from Friday and seeing price reverse down to the put wall and reverse higher gives me a lot of confidence to take a long and of course I'm looking at hero at the same time and I'm seeing that traders are buying calls and or selling puts and also there this nice high liquidity target at the 130 key gamma strike. So all that together the reversal at the put wall, hero rising, water flow is absolutely bullish here look at all the green dots and then the target above again gives me a lot of confidence and here's the next setup same day on Friday reversal into the put wall not as clean as Apple this is Microsoft but still a nice reversal and the order flow is not as quite as bullish but still bullish and again a 225 key gamma strike high liquidity target above and I show those two to compare to Amazon which you know just by looking at the chart looks pretty similar a reversal and they're really the targets are not as clear but there is the 85 key gamma strike just out of curiosity did anybody see that flashing circle as I was pointing to the 85 key gamma strike no response so anyway the first two setups with the reversal at the put wall would give me extra confidence to take either the Apple or Microsoft trade versus the Amazon trade even though they all three reversed okay JEC didn't see the circle yeah that's what I was afraid of I watched the recording of my session on Friday and I couldn't I was trying to use a larger mouse cursor and I couldn't tell the difference on the recording on YouTube so trying to find some way to highlight what I'm pointing at so anyway there is the there are three setups again that's how I use the put wall you know just gives me extra confidence that price will that level will act as support and price will reverse there as traders are taking positive delta positions and the next thing that I want to talk about reviewing from last week if for those of for those of you who are here last week I talked about the put banner rally as the negative gamma was pretty high in SPX and spy and this is the gamma notional that the position of market makers for SPX it was minus 584 and for spy it was minus 1449 again this is on Friday and this means that traders were long puts market makers were short puts and as price falls they have to sell futures to hedge their delta exposure and then what happened on Friday as price rises they can buy back those short futures and that is enhanced by a drop in implied volatility which is the VANA effect and that their delta exposure market makers delta exposure is decreasing not only because of the increase in price but also because of the drop in implied volatility so they were busy buying back futures on Friday and in addition to that traders were buying calls and this is for spy and this is hero for Friday again this is last Friday showing that traders were buying calls that is that shown by the rising orange line here oh that starts around actually it really starts around 11 a.m. traders are buying calls and that helps drive price higher for the rest of the afternoon alright that's spy and then here's SPX and it's actually even a little bit more clear that traders again I'm looking at the orange line rising orange line and traders were buying calls all day from the open until the close and one thing that I want to point out is the Spot Gamma AM founders note mentioned this talking about the sharp rally on Friday and zero DTE let me draw that again the zero DTE the options that expired on Friday call action was very heavy so traders you know that's confirming that traders were buying calls and of course that helped to drive price higher and the reason the way that works is when traders buy calls market makers are selling the calls and they have to buy futures to hedge their delta exposure so that was another force in the options market that was driving driving price higher on Friday the put banner rally and also the call buying both in the SPX and spy okay any questions so far okay another confirmation on YouTube cannot see the circle okay yeah I thought that would probably be the case so we won't I won't do that anymore try that anymore okay and this is just another indication again this is from the Spot Gamma AM founders note noting that there was not a shift higher in the spy call wall here they're saying that is not indicating that traders were not aggressively positioning and again most likely just selling or trading zero DTE options and with it was such a strong rally on Friday you would potentially expect that call wall to increase or move higher okay so that's a review of some items last week and you know I just again wanted to point out the what was driving the rally on Friday again the put banner rally as well as traders buying SPX and spy calls okay let's let's take a look at go to book map first actually I want to take a look at a chart and and think or swim and that's actually not what I wanted to look at here it is okay so I pointed out this chart last week is talking about this trading range from a little bit below 3800 this is SPX this is a 20 day one hour chart talking about SPX trading at this narrow range for almost three weeks from mid December until last Friday and the top of the range has been around 3900 and the bottom of the range around 3780 so again it looks like on Friday that SPX finally broke out of this range all right now let's go to go to book map and take a look at the the levels on the chart and the support and resistance levels and all the gamma levels that are in play are shown on this chart and I have two columns here of cloud notes this is the spot gamma cloud notes they're updated daily and populated automatically in book map cloud notes and they're showing typically SPX levels and there's 3950 and actually this what spot gamma is doing is adding 25 points to the SPX level to come up with an equivalent ES level and that's a little bit too much and I'll we can go back and look at the SPX chart but the SPX actually touched 3950 I think it was like 3950.5 so that was level that was expected to act as resistance did and it's showing a little bit higher on this chart than it actually was and then the other levels shown here are combo levels and that combines SPX and spy levels into a number that's converted to an equivalent SPX level and then converted to an equivalent ES number then this these are my own notes cloud notes and I'm showing the support and resistance that were noted in the AM founders note as well as the big round numbers and ES and then important spy levels okay so those are the levels that are in play for today and again I think the important thing to note was this 3950 level being a target initially and and then as resistance as it was noted in the AM founders note and now it looks like the 390 this is the spy 390 call wall level is is in play potentially acting as support alright let's talk about shifts and levels actually there's a let me get some questions alright YouTube Jose says I was able to see the circle yeah the circle flashes I I'm not sure it's the best thing I'll just continue to use this pen tool and put rectangles about what I'm what I'm pointing at and B-Smo desk in the founders note in the first sentence it talks about the starts talking about the level that futures is at and then talks about other levels in the second sentence and the other levels he states in the second sentence are they SPX levels yes most of the data other than that first mention of futures regards SPX and also a note well then yeah the macro and key levels above are in SPX levels as well and then finally what is the SPX to ES conversion and right now spot gamma is adding 25 points to SPX to come up with an equivalent equivalent ES number and there's an easy way to see that and I'll just go here to the portal you can click on this pop-up and see here the left column shows SPX and the right column shows ES 25 points although it's actually a little bit smaller than that today okay so it looks like the 390 call wall 390 level and spy did act as support so far alright shifts and levels and we'll look at the let's go look at the S&P 500 charts while we're talking about this so we'll look at the absolute gamma levels and these are the absolute gamma levels for SPX so first of note is the SPX and spy volatility triggers increased and right now price is still trading above those levels the vote then that is spot gamma is proprietary gamma flip level from negative below to positive above and SPX and spy are both trading above their volatility triggers at the moment I believe let's check what let's see what SPX is doing so yes SPX is still above the volatility trigger and spy is as well okay shifts and levels the other notable shifts were the SPX call wall actually shifted down from 4100 to 4,000 and I talked about that on Friday as being a kind of a technical move higher just based on the definition of the call wall which is a strike with the largest net positive gamma and it was really not in play it not a significant strike so that call wall has moved back down now to the 4,000 level which is which is more reasonable that 4,000 level is certainly way more important and it's in play and it's also the absolute gamma strike or the key gamma strike and the other notable thing is for spy the key gamma strike has increased from let's see from 380 to 390 and that's shown here so again that's the strike with the largest absolute gamma and then also the put wall for spy increased from 370 to 380 so there is the spy put wall and that's pretty obvious that is the strike with the largest net negative gamma and then one other thing to note also the QQQ key gamma strike increased from 265 to 270 so there's the playing field there again 380 the put wall and then there's some significant level of support down below at 375 and 370 and then the 390 absolute gamma strike and that is also the call wall so that's probably the range of so that's probably the range for spy today okay go back to SBX and again absolute gamma strike also the call wall and then the put wall remains at 3700 which is really not in play and alright so let's take a look at data now and we'll take a look at gamma notional and again this indicates how market makers are positioned on the gamma curve and when gamma their gamma notional is negative that indicates that traders are long puts market makers are short puts and they have to trade in the direction of price to hedge your delta exposure and as can be expected gamma notional became less negative today compared to Friday given the strong rally on Friday so on Friday SPX gamma notional was minus 584 and now it is minus 555 so that's a pretty substantial shift higher towards less negative or more positive than it was on Friday and then spy gamma notional also shifted but not as dramatically from minus 1449 to minus 869 today so again that is indicating market makers position on the gamma curve and as I pointed out on Friday it's very important to keep track of that information knowing that especially when there's a big economic announcement or news or you know this could be a factor tomorrow when Paul is speaking or it has been a factor in the past with past CPI reports for example when gamma notional is very negative and price starts to increase those again the van rally takes place price increases and implied volatility drops market makers delta exposure decreases and they can buy back their short hedges okay so that's gamma notional and again as expected it became less negative today given the strong rally on Friday and that concept is illustrated with these Vanna charts and note note this kind of the strong difference between SPX that's what's shown here and spy so we'll look at SPX first and the way to interpret this is to just draw a line through here that that makes sense and the green curve shows how market makers delta notional or delta exposure changes with changes in price and implied volatility and that's shown by the green line and that's the again the Vanna effect and that also changes as time passes and that is shown by the black line which is the next expiration so this is a pretty neutral position for SPX not necessarily indicating that market makers are going to have to hedge very aggressively in either direction and let's take a look and just see how that how dramatically that shifted from Friday to today so that is SPX and again remember that the pretty sharp increase or in the sharp change in gamma notional for SPX from minus 584 to minus 55 and there's spy and this is for today and that is for Friday so there is a change again gamma notional became less negative for spy as well okay so that's just a kind of a visual representation of this concept and let me check for questions and Sam Pan has a couple questions on YouTube why focusing only on gamma I think focusing on gamma gives for trading the way I trade gives the greatest edge and let's us you know that's I guess that's kind of a loaded question you know I would say just you know if you if this is something new to you I suggest taking a look at some of the videos on the book map the spot gamma YouTube channel and maybe it'll make sense and Sam this session is being recorded so you can go back and and watch it as many times as you want and I cover pretty much kind of the same things every day just updated to the current market okay and Jack at JEC gamma so important and that's right you know what's going on with larger lead bridge entities the gamma levels are the important levels with you know you look at gamma weighted options open interest basically and gamma levels mark the important levels that market makers may have to change where they where they're hedging and how they're hedging okay alright so let's take a look at some setups and I seem to a lost hero here alright so before I go over setups I want to take a look at one other thing here and this is a spreadsheet that I track every day and this is just something that I keep from the stocks in my watch list and I track the key key gamma strike for today and the previous day and I color code these numbers to indicate whether the number increased or decreased from the previous day so here I'm showing that the key gamma strike for Amazon increased from 85 on Friday to 90 today and notice there were mostly green numbers here and most notable I think are the increase the key gamma strike for spy and QQQ both increase from the previous day as I mentioned earlier so that given all this information the mainly the increase in levels the key gamma strike for all these stocks as well as spine QQQ my directional bias for today was bullish and I was looking for long entries in the morning alright so let's go take a look at go back to hero now I'm going to go to my watch list let's go to yes first to zoom in and what this is showing again I'm separating out calls and puts and showing that traders have been lightly buying calls not as aggressively as they're buying puts and that was it was a little bit more pronounced in the morning let's go back and now look at the entire signal and for the morning up until around 10 a.m. the hedging flow shown by the purple line was was bullish I thought let's go back to put some calls so I interpreted this as bullish so knowing that the key gamma strikes increased and traders were buying calls on on Friday and seeing this today I was bullish and look for a reversal here and spy and now let's go take a look at spy and book map and there was the the move higher and in this case it was at the call wall and the call wall acted as support in this case and remember it's the key gamma strike also so that was the long set up and spy and in yes as well you know actually let me use this tool and there's the reversal higher and I think the order flows a little bit more clear here all the green dots coming in and the reversal was a little bit lower than the the call wall let's just go back and confirm that on spy to make sure I have that number right yeah so price to go down below the call wall you can see the green dots coming in on spy as well and here the target was very clear or actually targets first at this 3925 level and then at the 3950 level both SPX levels then let's go take a look at hero again we'll take a look at spy and it should look pretty similar yeah so bullish in the morning traders continue to lightly buy calls compared to buying puts and that has actually leveled off a bit let's change the rolling window to a shorter time frame to get a better sense of what's going on now and it looks like hedging flow has actually shifted back to more bullish really starting really starting around 10 so when you change the rolling window or the look back period it gives a little bit more clarity and it's okay so that's spy all right so let's go through some stocks now and there were some really good setups and stocks first is apple and typically in single stocks the correlation between hedging flow and price action order flow is easier to see there's apple let's go take a look at book map look at apple and I set up here in apple in the morning strong trend higher there's the first first setup trend break again at the call wall just like spy and that level actually actually acted as support and liquidity targets above at 132 133 and didn't really have the strength to make it up to 134 but nice move higher in the morning and apple let's go back to hero so we can take a look at that in a little bit more detail going to zoom in on the morning session so mainly here trader selling puts right Jay you see I was reading your question your comment great work so that's apple Google another good setup this morning although there's not a rain not a lot not a lot of range in Google here but strong correlation between hedging flow and order flow let's go take a look at book map there's Google again Google really doesn't have much range much trading range but there's the reversal higher at VWAP and the 90 91 and potentially 92 put wall were in play well Jay see I mean taking it all in he's yeah I've taught with spot gamma of course spot gamma and book map both have great education as well so I'm glad this is working for you again great work keep it up okay the next setup and this was a very good setup I think one of the two two great setups of the day Microsoft and I'm going to zoom in on this let's take a look at the open until the till about 1131 price hit this 231 level and let's go take a look at hero and first first thing first thing to note is the strong correlation between hedging flow and order flow and up into the morning the range that we are looking at let's zoom in on this there's up until 1130 traders were buying calls and selling puts and they stopped selling puts let's say around 1040 1045 but they continue to buy calls and driving price up past the key gamma strike shown right here at 230 so let's go back and look at book map now so notice a couple things here first so we know that traders are buying calls and selling puts and market makers have to buy stock to hedge their delta exposure and then I marked up a couple of chart patterns here and this is not necessarily my thing but these are there are a couple of patterns that Jay trader pointed out a couple of weeks ago in his advanced webinar on Wednesday and one is this pattern with a and I don't even recall what he called it but a kind of a rising trend line then a break below kind of a final shakeout and then price increases and then this is a breakout of a consolidation area here and then a trend break and here's another of that rising trend line shakeout and then a move higher and all the while again keeping in mind traders are buying calls selling puts market makers are buying stocks here if you're long here you're trading in the direction that market makers are trading and I always want to be on their side and then there's the very obvious target at this 230 key gamma strike the high liquidity so that is a key gamma level it has high liquidity and it's a round number so great target there so I'll move up from 227 up to 230 so there's Microsoft let's take a look at Netflix all right let's let's go back and take a look at one thing go back to the key gamma strike list and Netflix has been pretty bullish for a while now I guess really ever since the last earnings report and know the note the shift higher first of all the key gamma strike on Friday was an increase shown in green and then another rise or increase in the key gamma strike today so that increasing key gamma strike is a bullish signal let's go to hero now go take a look at Netflix and strong correlation between hedging flow and price action although certainly not as clean as Microsoft and Netflix is a pretty volatile stock that can be difficult to trade sometime and it looks like really that calls are driving so traders are buying calls market makers are selling calls and they have to buy they have to buy stock to hedge their delta exposure all right let's go take a look at Nvidia now so Nvidia let's let's take a look at the morning session and one thing that I want to point out is this hero signal and I posted a list of my top or the strongest stocks of my watch list with the strongest hero signals this morning and the with the current interface I can't I can't post all of them I can't post my entire list like I used to but Nvidia was on that list it was not at the top but it was definitely had a strong signal and that has changed in the afternoon and this is what I'm indicating here and there was a question about this in discord earlier what this is showing is and it's hard to see with this dark interface but there is a wider range here that showing the strength comparing the strength of the signal with the last 30 days and the dot is the current signal and it this is showing that the hero signal for Nvidia is at the strongest that it has been in the last 30 days it's in that top end of that range and also the the colored portion is the the strength of the hero signal in the last five days so this dot to the right of that range is indicating that the strength of the hero signal is stronger than it has been in the last five days this is looking at five days and thirty days and this is just indicating the strength of of the hero signal so this is zoomed in until hero starts to drop off and let's go take a look at book map now go to Nvidia and I thought this along with Microsoft with the two best signals of the day and let's zoom in and again remember that hero was very strong in the morning and notice the first trend break here just a few minutes after the open all the green dots coming in there and then the sharp jump higher up from 152 to 157 so about a just a straight shot up by points another pullback trend break green dots coming in and you've got another two points there and then another trend break and then hit the final target at the 160 call wall and again note all the liquidity there at that level the one so you've got the spot gamma level the call wall and the high liquidity shown in book map and at a round number of course so another great setup with hero pointing the way order flow showing the strength and the price action especially up until the up until price at the target and then the obvious target at the 160 call wall so again I thought Microsoft and Nvidia of the stocks that I track the stocks in my watch list were probably the two best setups of the day all right so we have looked at spy let's take a look at QQQ and while we're waiting on that let's go to go to hero for QQQ I'm going to zoom in on the morning so note the orange line the rising orange line traders were buying calls let me try that again traders were buying calls market makers are selling calls and they have to buy QQQ or NQ to hedge their delta exposure and let's go take a look at the book map and let's zoom in from about nine o'clock to 12 o'clock noon and with QQQ the price targets are not as obvious as stocks but nice strong uptrend here's the first entry with a test of 271 and then a couple of pullback setups here at 273 and price made it up to 275 and there's a little bit of liquidity in there let's just see if we can so that can become a little bit more clear and then finally let's we'll wrap it up with Tesla here's Tesla all right some pullback entries that I've noted here first at the 118 hedgewall the turn break move higher and next next large pullback back down to 12050 it looks like liquidity price targets at every at every round number level and price shot right through the 120 key gamma strike and kept going looks like it was resistance in the first couple of minutes of trade all right let's go take a look at hero to go to Tesla and it looks like hedging flow has been just continuous to be bullish all day both calls and puts so traders are buying calls and selling puts okay question in YouTube at what point in the morning are am I comfortable with hero I give it about 10 10 15 minutes so this morning my entry for spy was at 941 so I was comfortable enough with hero at that time to take a long entry on spy so 10 minutes is probably a minimum if you're like me looking at hero for a signal of confirmation and in this case it I thought the signal was a confirmation of trend or a confirmation of the move for spy so let me just bring this up so this is what I was looking at for spy in the morning let me just draw so trend right there heroes started rising so an entry somewhere in there and 4d rover yeah that that's something that that he says thanks I can't get there yet to trust it enough and at some point you just have to take a leap and trust it and I guess I've looked at it enough to trust it and especially in the morning I think it gives a very for everything that I look at every stock on my watch list often leads me in the right direction and you have to have a remember my directional bias for the day was bullish based on my positional analysis I was looking for long entries so just waited for this pullback and once I see that traders were buying calls especially hero rising that trend break and let's just we'll take a look at book map at spy one more time spy let's go to book map so this is not as obvious as the setups and in Microsoft or Nvidia but this is what I was watching and again seeing the trend break rising hero some green dots coming in there and this reversal at the 390 level and I'm showing that as the call wall but it is also the key gamma strike and again acted as support in this case so that was enough for a long entry for me okay let me just check I don't see any more questions so I'm gonna wrap it up at this point thank you for watching thanks for your questions and comments and I will see you tomorrow and remember Powell is speaking at 9 a.m. tomorrow so keep an eye out for that and thanks again I will see you tomorrow