 Hello, everyone. Welcome to Options with Doug, streaming live daily on Bookmap Discord and the Bookmap YouTube channel at 1.30pm Eastern Time. Before I get started, I need to go through the Disclosures. General Disclosure, all Bookmap limited materials, information, and presentation start 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. The best way to get in touch with me is through Discord. My name on Discord is Doug P. Also in Bookmap Discord, there's an Options-Doug chat channel. That's a great place to post questions, comments, and content related to the topics of my presentation and the topics of the channel that I'll go through in just a moment. I'm also on X, formerly known as at Twitter. My name there is at Doug Plus. The focus of my presentation today and the focus of the Options-Doug chat channel 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 of my process is execution. I look at real-time order flow in Bookmap and real-time market-maker hedging flow in SpotGammaHero to confirm my thesis and for setups for injuries and exits. And when I talk about setups today, I will be talking about an underlying asset, and setups in that asset can be taken any number of ways depending on the asset. For example, the SOB 500 futures, SOB 500 setups can be taken with ES futures, SPY shares, SPY options, SPX options, or even ES options. So quite a few choices there for the SOB 500. Questions and comments are welcome, and I will be watching both the options-dug chat channel and Discord, as well as the chat and YouTube for your questions and comments. So please feel free to post, and I'll do my best to answer your questions. And hello, Steve. Steven, welcome. Glad you're here. Hello, Dan P. Welcome. Glad you're here as well. All right. Here's my agenda for today, Wednesday, December 13th. First of all, I want to go over news items, economic data, and events for today, as well as the rest of the week. Then I'll go through my positional analysis, and then I will review some setups from this morning, and then look at the live market. So today, let's get right to the news and note that I will shift to the live market just before the FOMC announcement whether I've finished wherever I am in my presentation will pause and go to the live market and watch the SOB 500. And give me just a moment here getting my other computer set up so I can watch CNBC live. All right, so let's start with the news items for today. So first of all, there was some economic data this morning, PPI data that came out at 8.30 a.m. Eastern time. This is following the CPI data from yesterday. There was a positive reaction to that. This is the PPI data, and really mostly came in in line or less than expected, less than previous. So the initial response to the PPI data was positive. Oops. Then it moved lower, and then right around 10 a.m., the SOB 500 moved higher again. So we'll talk more about this in a few minutes, but the initial reaction to the PPI data was positive. All right, then of course the FOMC meeting, the announcement is at 2 p.m., and then the press conference begins at 2.30 p.m. as I will be wrapping up my presentation today. All right, so here's the CME FedWatch tool. And note the current target rate is at 525 to 550 basis points, and that is widely expected. Look, a little over a 98% chance according to this Fed Fund Futures that the Fed holds rates steady at that 525 to 550 level and less than a 2% chance that they raise to a quarter point. All right, so that's the FedWatch tool. So that is the data for today. Then tomorrow, retail sales data comes out at 8.30 a.m. Easter time. And then on Friday, PMI data comes out at 9.45 a.m. Easter time. And then really the most important thing is the options expiration. And this is the showing delta notional for options expirations for the S&P 500, NASDAQ, and Russell 2000. This is the December options expiration, very, very large expiration, typically around the largest of the year. The orange bars are showing call delta and the blue bars showing put delta. Note this is a very, very, very call dominated options expiration. These calls have been stabilizing the market and a lot will expire and that should release some volatility after options expiration on Friday. So coming up to a very call dominated options expiration and typically there is a pullback after a call dominated options expiration. Just the opposite of a rally after a put nominated options expiration. All right, so again, I'll talk more about this later on in the week. All right, so that is the news items for today as well as the rest of the week. Big events, of course, again, the FOMC and the options expiration. All right, let's take a look at the S&P 500. Start with positional analysis now. And so right now, the S&P 500 trading at a very narrow range and before I take a closer look at this chart, I want to take a look at a larger time frame. I'm going to go to the SPX. This is a 30 day one hour chart. And note the, I've pointed out the turning points every day for the last several weeks that October 30th this current rally began, and that is now off my chart. That was led to a huge IV collapse, put Vanna Rally and Market Makers. Gamma Notional shifted from very negative to positive. Let's zoom in a little bit on this chart. And this two week consolidation not unexpected in a positive gamma environment has, looks like the SP500 is finally trying to break out. Really, the rally began last Thursday. Just a very steady mechanical uptrend began last Thursday up to right around 4650. So this 4540 to 4600 range of consolidation looks like the, at least for now, the SPX has broken out of that range. Let me point out some levels on this chart, some key levels. So first of all, the dash purple lines are showing the lower and upper weekly expected move. And I update this once a week, over the weekend it remains, those levels remain during the entire week, remain at the same level. So that's once a week, the weekly expected move. And then the dash blue lines are showing the lower and upper daily expected move. And that's updated once a day. These levels are based on the options market. And this information is available, it should be available in any training platform in the options chain. And note that earlier today, SPX did trade above its upper weekly expected move. The next levels I want to point out are the spot gamma levels. These are proprietary spot gamma levels provided to spot gamma subscribers showing on a variety of platforms. Again, this is thinkorswim, and I'm going to point out the key daily levels. Levels that are based on gamma weighted open interest, spot gamma applies their proprietary algorithms to the open interest data to come up with these levels. The 4400 level, that's the put wall, that's the first key daily level that I want to point out. That's a strike with large net negative gamma that can be expected to act as support. Note that level did move lower from yesterday, it was up at kind of a strange level. Yesterday at 4570, moved back down to 4400. And the next level up is the volatility trigger at 4585 and that is spot gamma's proprietary gamma flip level. Below that level, market makers position on the gamma curve is negative. In a negative gamma environment, market makers have to trade with price to hedge their delta exposure and that tends to enhance or increase volatility. On the other hand, above that level, market makers position on the gamma curve is positive like it is now and in a positive gamma environment, market makers have to trade against price to hedge their delta exposure and that tends to subdue or decrease volatility. And the next level just above that is 4600. That's the absolute gamma strike. That's a strike with the largest absolute positive and negative gamma so that's where most of the gamma weighted open interest is concentrated at 4600. And then up above that at 4700, that's the call wall. That's a strike with the largest net positive gamma that can be expected to act as resistance. So that's the potential ceiling for price as it stands now at 4700. And the put wall at 4400, the potential floor. Although to get to 4400, SPX would have to do a lot of work to get through 4600, 4550, and 4500. Or let's take a look at a shorter time frame SPX chart just to get a sense for the levels in play for today. So this is the kind of the steady mechanical uptrend that began, I'm showing it from Monday. Showing Monday morning. Very steady mechanical uptrend. Now maybe finding resistance at the upper weekly expected move. Though there are also a couple of gamma levels here. Spot gamma levels 4650 and just below that the 4648. So 4650 is a large gamma 2 level. And then 4648 is a combo level combining SPX and SPY gamma weighted open interest into one combined level. Let's take a look at book map. So support resistance levels not really so far today the ES is not responding to directly to any of these levels. So I have my own cloud notes. So I'm showing SPX levels. They're the two levels that I just pointed out on the SPX chart. The 4650 level and the 4648 level. Note there's quite a large price difference between ES and SPX and that difference has increased substantially from the December contract last week to the March contract which is what I'm showing here the H contract H24, H4 So I'm using 54 points today. Let me just check what it is now. So it's somewhere between 53 and 54. I'm just using 54. And so I'm showing those levels on my cloud notes, my own cloud notes. Also there's the SPY 465 call wall. So today at least for now, no direct support and resistance levels but these are the levels in play for today. Let's take a look at NASDAQ now. NASDAQ here's the initial reaction to the PPI data. Note NQ is also trading above its upper weekly expected move. Let's take a look at QQQ chart first of all to see the QQQ levels in play for today. So here's the oh and I forgot to mention shifts in the, well actually I did mention shifts in levels for the SB500 the put wall did shift lower that was the only shift for SPX otherwise all key daily levels for SPX and SPY remain unchanged. So here's QQQ this is the 400 call wall and there's been at least in the morning session Christ was moving up and down around that level. That is also the absolute gamma strike and note that absolute gamma strike did move higher from yesterday from 390 yesterday up to 400. So 400 for QQQ is the call wall and the absolute gamma strike. Alright so you may be finding support at the 399 level just below that. Let's take a look at NDX now. NDX also a very mechanical uptrend beginning on Monday and this combo level in play at 16,403. So for QQQ the absolute gamma strike shifted higher to 400 and also for NDX the volatility trigger shifted lower and the absolute gamma strike shifted up to 16,000 the level that has been in play recently. So here's this combo level and just above that the 365 level for QQQ showing them my own cloud notes again also there again there's the upper week the expected move it looks like I need to update my round number levels I typically I would have a round number level there for NASDAQ I'll get that updated. Alright so so far the only potential direct reaction with a level is the 399 QQQ potentially acting as support but that could all change in 10 minutes. Whoops. Alright so those are the levels in play for today let's talk about shifts and levels most important really for NDX and QQQ the absolute gamma strikes shifted higher. Alright let's take a look at gamma notional now to see how market makers were positioned on the gamma curve at the beginning of the day. Gamma notional this is market makers position on the gamma curve for the S&P 500, NASDAQ and also 2000. Note these numbers are quite positive somewhat of an extreme reading. I know Brent Kajuba the founder of spec gamma looks at this spot gamma gamma index and it ranges from minus 4 to 4 so 3.158 quite high also gamma notional for SPX at 1.365 billion also quite high. Note all these numbers are positive they all increased from yesterday so again quite positive gamma notional and this should diminish potentially starting today and will definitely drop lower after options expiration on Friday as some of that call delta expires. Alright let's take a look at the Vana model now to get a sense of what this means a graphical representation so this chart is showing market makers delta notional their delta exposure on the vertical axis spot price for SPX on the horizontal axis there are two curves on this chart the first the light gray curve shows how market makers delta notional may change with changes in price only and the purple curve adds implied volatility to the equation that's showing how market makers delta notional may change 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 or let's check on the current price current price for SPX right around 46 45 46 let's see if we can find that on the chart so right around here just above where I'm holding my cursor now this vertical line so what this is showing and this curve is very typical of a positive gamma environment really more skewed from the left to the right so what this is showing is his price increases market makers delta notional will increase and they will have to sell futures to hedge their delta exposure and that's why in a positive gamma environment the volatility is subdued or decreased so in this positive gamma environment SPOT gamma assumes that traders are short calls market makers are long calls and again they have to sell futures to hedge their delta exposure as price increases and then as price drops they can buy back their short futures as their delta notional decreases so they're trading against price in a positive gamma environment gamma notional was very negative I would be looking for a much larger reaction to data like CPI or PCE or FOMC announcement so we'll see we've got about 6 minutes so we'll see what happens so let's take a quick look at gamma notional for SPI FOMC so really toward the bottom of the curve here just under the 400 absolute gamma strike and call wall right around 399 near the bottom of the curve also alright so that's that's the setup positional analysis going into the FOMC announcement so really the only thing that I could say so far in my thesis is I'm looking for lower volatility due to the very high positive gamma notional also keeping in mind that many stocks are very extended not necessarily the magnificent 7 but many other stocks alright let's take a look at the options market see what options traders are doing and maybe look at some setups from this morning so this chart so everything that we've looked at so far other than book map is based on static data and that is updated once a day again based on open interest and now we're going to take a look at real-time data so this is the hero signal hedging impact real-time options and this is available to spot gamma subscribers this is the hero chart for the SP500 what this chart is showing is price for SPX and the hero signal hedging impact real-time options that is showing market maker options trades and market maker hedging activity for a combined signal for SPX SPY XSP and ES futures alright so let's take alright so let me take a look at questions real quick Armon OG yes I will take a look at the SP500 right at 2pm and Samir hello welcome ask me if I share my analysis and trades in real-time at a discord room not typically if I see something of interest I will share that I have been quite busy recently have not been able to share anything other than my index relationships alright so options traders this morning initially taking bullish options trades this is the cash open right here 9.30pm eastern time note the rising hero line indicates traders are taking positive delta positions and right around 10.45pm that turns around they start taking negative delta positions and price moves lower and note this timely flow alert helping to set up a long it took some time for that to play out price responded a few minutes later actually quite a bit probably 25 minutes later 30 minutes alright so long setup short setup in the morning let's go take a look at book map go back to the SP500 so remember from the open traders were taking positive delta positions and initially if you followed that that was good for a few points in the SP500 and if you waited you might have gotten stopped out go again at 10am good for long just watching order flow here in book map the volume dots are showing market buy minus sell magenta dots indicate there are more sellers than buyers there have been volume dots indicate more buyers than sellers you can see the aggressive buyers coming in right at the cash open and again just after 10am alright I've got about a minute left one thing I want to take a look at real quick is just what the this combined signal for magnificent 7 a pretty similar setup this is showing a combined signal for these socks known as the magnificent 7 Apple, Amazon, Google, Meta Microsoft, Nvidia, Tesla they make a big make up a large part of both the Nasdaq 100 and the SP500 so it's always important to watch watch those stocks and see what they're doing alright so I'm going to hold here for the SP500 zoom in just a little bit and I've got about 5 seconds to the announcement zoom in just a little bit the initial reaction is positive and the initial reaction or two can often be a head fake alright I'm watching CNBC so of course as expected FOMC holds the Fed funds at unchanged 525 to 550 basis points positive reaction zoom out so ES up to the highs of the day let's check Nasdaq so Nasdaq trading above the above the 400 level QQQ 400 level call wall up toward highs of the day let's see what options traders are doing now ES training up toward its upper weekly expected move we'll zoom in on this chart so really starting about 130 traders started taking positive delta positions note the hero flow shifted from negative to positive that negative flow that began around 1045 let's just see what they're doing so initially they started selling puts that's shown by the rising blue line so they stopped buying puts right around 130 started selling puts let's see what the zero TTE traders are doing so that's making up a little bit less than half actually the zero TTE number has been positive all those traders with options that expire today have been net taking positive delta positions let's just zoom out a bit so the the green line is showing um again trades that expire today for the S&P 500 uh the SPX by ES all have options that expire every day so this is showing next expiry so for the S&P 500 this is showing options that expire today uh that number has been positive all is still positive for the day whereas the gamma notional for the all expirations is slightly negative and note yesterday the number for um delta notional for the S&P 500 was extremely positive traders were buying calls hand over fist last couple days in the S&P 500 a good bit of that was zero TTE but they were buying buying calls let's take a look at this next expiry go to the all expirations again next week I'm going to take a look at a shorter time frame so now I'm only looking at the last 30 minutes of data so this will provide more sensitivity to the hero signal and again traders started taking positive delta positions as we saw a minute ago selling puts on 120 a little bit more sensitivity than the the whole total one day look back period and path to wealth uh sorry I don't whatever language you type that in I don't understand that and let's just see so initially they started actually this is showing they started selling puts and buying calls put shown by the blue line by the orange line both rising so they're buying calls and selling puts that's a very powerful directional signal when both lines are moving in the same direction let's go take a look at book map again wow very positive reaction the fed says inflation has eased but remains elevated alright supreme dream says and Q just went crazy let's check on NQ alright path to wealth if you don't um you know if you if this is something you disagree with or this doesn't work for you um you'll move on um I think there is a great value in this information I think options trades and market maker hedging activity are key driver price and both the ES and NQ as well as the many stocks that I look at and I trade mostly large cap tech here the magnificent seven and a few others and options trades market maker hedging activity are a key driver price and path to wealth ask could I provide my option deals I'm not sure what you mean and ship ships at the street of Gibraltar uh says I think you bring so much value every time I tune into your uh tune in do you I learn something new and valuable for my trading thank you thank you very much for kind words um I think this is at the heart of what is actually driving price I'm looking at um options trades market maker hedging activity and uh in spot gamma and also order flow and book map and I think those two combined get are getting to the heart of what is driving price I'm not looking at other indicators uh I'm looking at what is actually driving price aggressive buyers and sellers in a book map I'm also looking at so the volume dot showing me aggressive buyers and sellers so in book map I can see let me let me zoom in on this in book map I can see the volume dots green aggressive buyers here very few aggressive sellers I can also see cumulative volume delta increasing that shown by this rising pink to dark blue line and also my stop orders fueling the move higher my stop orders shown by the rising yellow line in the sub chart as well as the on chart indicators and uh large traders are selling this move higher with iceberg orders that's pretty typical they often sell strength and buy weakness and not having a much of an impact on price maybe starting to slow it down a little bit these are not large these iceberg orders if there was uh an iceberg order or an aggregate of iceberg orders uh and the four figures that would be more significant alright so now options traders are buying calls selling puts market makers take the opposite side of that so that's spx by es buying calls selling puts market makers take the opposite side of that so they have to buy futures to hedge their delta exposure and remember market makers options market makers always want to remain delta neutral so they're taking the opposite side of the bullish or positive delta trades and buying futures and remember in a positive gamma environment uh there's also that uh vana headwind as price increases and path wealth i'm talking about my trading system right now alright so very bullish reaction in um in the sb 500 no 4700 is the call wall so that's still uh up above but price is trading above the above the 465 call wall okay so i just gotta uh um a note here in text that the fed sees three rate cuts in 2024 and that is most likely what is uh driving this higher uh that kind of question about rate cuts in 24 2024 it looks like that has been answered now and stocks are rallying uh 10 year down uh at 4.05 uh 4 4.08 6 that's the 10 year note yields let's take a look at nasdaq so the fed leaves rates unchanged uh looking at uh three rate cuts in 2024 all very bullish let's take a look at some stocks now and i had um some stocks noted from this morning so he remains uh moving higher let's go back to the all day look back period so i'm now looking at entire days worth of data in that look back period let's take a look at some stocks so i had some stocks i wanted to take a look at uh from this morning very bullish day in netflix note a couple of things on this chart this is the hero chart first of all this flow alert comes in right around 940 very timely flow alert and netflix breaks above the 460 giga strike notice 470 is the call wall brief consolidation at that level price moves higher and notice as options traders take their foot off the gas uh right around 1050 price levels off very typical pattern aggressive options traders in the morning take their foot off the gas price consolidates let's see what traders are doing they were buying calls so net for the day they have been selling puts that's very minor um but that is positive positive uh delta notional been selling puts and buying calls shown by the rising orange line let's go take a look at book map go to netflix so there's that 470 call wall and I'm pretty zoomed out here but you can see the consolidation at that level just basically a small pullback there's this consolidation as options traders took their foot off the gas and now price resumes higher really starting before the announcement starting just after 330 so looking at what is price for netflix we saw the traders are buying calls when traders buy calls market makers sell the calls and they have to buy stock to hedge their delta exposure and that's a very powerful driver that can drive price higher and again I mentioned these are stocks the stocks that I look at the uh often the key drivers of price action in these stocks again traders buy calls market makers sell the calls and they have to buy stock to hedge their delta exposure also there are a lot of aggressive buyers shown by the volume dots here pullback to VWAP in the morning then aggressive buyers start to come in a little bit of brief consolidation at the 470 call wall some sellers there also note the liquidity in the order book showing resting limit orders they were consumed some aggressive sellers market sell orders and then aggressive buyers come in and take netflix right up to the next 5 level from the 470 to 475 the resting liquidity again a little bit of consolidation there and now netflix moves higher all right let's take a look at invidia that was another one that I had noted this morning sorry about that all right note all the aggressive buyers there's the opening print green volume dots magenta volume dots on the pullback to VWAP that shown by that blue line there up to 485 aggressive sellers start to come in again consolidation back to 479 and then before the announcement aggressive buyers start to come in you can also see all the green volume dots here in this consolidation let's see what options traders were doing let's go back to hero go over to invidia all right path to wealth as is it reasonable to enter the market on a test of limit orders on stocks not quite sure what you mean I'm talking about I've talked about setups here I look at for it trending stock I'm looking for setups on pullbacks could be to resting limit orders round number levels spot gamma levels or VWAP for day trading I'm looking for reactions at levels for reversals combined with hero often a divergence and trend increase again looking for pullbacks to resting limit orders round number levels spot gamma levels or VWAP and sure yeah that's you know that's one of many things that I look at limit orders and book map all right here's invidia let's zoom in on this very similar to Netflix very strong in the morning traders taking positive delta positions very timely flow alert 480 the key gamma strike price moves above that level comes back and retest that so path to wealth there you go there's your pullback entry we'll take a look at that in book map in just a minute and in the case of invidia options traders take the foot off the gas right around 10 a.m price moves a little bit lower and now started to move higher again let's see what they're doing they're buying calls that's shown by the rising orange line blue line is basically flat so net they are slightly buying puts that notional value minus 3 million versus notional value for calls at 400 positive 400 million so the blue line puts are not significant so again when traders buy calls market makers sell the calls and they have to buy stock to hedge their delta exposure and I think this is a very good indication of the significance of looking at options trades as a driver of price for stocks traders buying calls they start to make selling calls they have to buy stock call buyers take the foot off the gas price moves lower and also they started buying puts right around the same time let's go take a look at book map so huge move up in invidia in the morning let's zoom in on this so there's the up move in the morning all right pathwell says indicator not one that matches the price sure you can always get that sometimes spot gamma does act as a leading indicator and sometimes as a confirmation so one of my favorite setups is a hero divergence that doesn't happen all the time I look for it let's go back go back and look at a hero again I'm going to zoom in on this all right so look at hero more of a confirmation look at this flow alert here this came in at let's check the time on that oh it looks like 932 something like that so if you were watching the alert you got long at 932 I'd say that was a pretty good entry a flow alert is a an alert from spot gamma indicating significant options activity they also show up here and I would have to scroll back there are a lot of alerts so flow alert again this is part of spot gamma hero indicating significant options flow and something to get your attention so if you were watching if you were specifically trading NVIDIA today saw that alert or just watching this stream of alerts here and got long at 932 let's go back take a look at book map now so got long at 932 right around here so you had a pretty good day let's say you got in right around 479 up to 86 alright so again sometimes spot gamma hero acts as a leaving indicator and sometimes not but not always so you just get you get what it shows you alright one other stock I wanted to take a look at is Tesla and let's see if Tesla has turned around so for Tesla the bad news continues looks like it is turning around let's go take a look at hero take a look at Tesla so this morning I think there was news news about recalls for Tesla on this chart note 230 is the put wall and price did move below that level but it pretty much acted as support did its job another flow alert again indicating significant or high options activity very timely and traders were buying puts when traders buy puts market makers sell the puts and they have to sell stock to hedge their delta exposure that's shown by the blue line let's go back and take a look at book map so now Tesla recovering and entries for a short there's a pullback to VWAP as traders were taking negative deltas of positions buying puts VWAP shown by the light blue line there let's go back and check the SB500 now right looks like some consolidation right around the upper daily expected move also that 4676 level noted as resistance in the spot gamma am founders note and NASDAQ did not at least so far the NQ did not quite make it up to its upper daily expected move and now may be finding resistance at the 16500 level let's see what options traders are doing in the SB500 and NASDAQ I'm going to shorten the time frame again so now I'm just looking at the last 30 minutes of data this gives a little bit more sensitivity to just again the last 30 minutes and so far the hero signal still continues to trend higher making higher lows so traders continue to take positive delta positions so they continue to buy calls and they have also started to buy puts sorry about that all right path to wealth asked do you think we should wait for a correction or should we just go ahead I'm not sure I understand your question are you looking for a long entry I would wait for a pullback I always wait for a pullback and it's 2.30 now the press conference begins a drone power will be speaking momentarily and that could have a significant impact on what happens for the rest of the afternoon but again just to summarize real quickly the FOMC has left the current Fed funds rate unchanged and then they are targeting three rate cuts next year 2024 let's go back to book map all right everyone it's 2.31 drone palace speaking I'm going to wrap it up here at this point and you can take it from there all right thanks for watching thanks for your questions and comments and I will see you tomorrow we'll take a look at the aftermath of the press conference right thanks again and I will see you tomorrow bye