 Okay, welcome everyone. Welcome to Options with Doug. This is my live daily stream Excuse me. That begins at 1 30 p.m. Eastern time Before I go any further, let me go through the disclosures general disclosure All book map limited materials information and presentations are for educational purposes only and should not be considered specific Investment advice nor recommendations risk disclosure trading futures equities and options involves substantial risk of loss and is not suitable for all investors past performance is not necessarily indicative of future results and For those of you who have been here before please bear with me while I go through this introduction, this is a very focused channel and Here for the YouTube Viewers, I'm referring to the discord channel in the book map Options with Doug. So the focus of this channel and my presentation is options order flow The impact of the options markets on stocks and futures and the influence of market maker hedging flow on price action I have a two-step process for trading and the first is preparation and that's based on position analysis And I look at how traders and market makers are Positioned in the options market and then how those positions shift from day to day to help me develop a thesis regarding Volatility expected volatility or expected range for the day as well as a directional bias and That happens. I do that before the market opens and then the second step in my process is execution and I look at real-time order flow in book map and Real-time market maker hedging flow and spot gamma hero to help confirm my thesis and make trading decisions and on topic questions and comments are welcome and for folks in Bookmap discord, please please post your questions and options with Doug and Again, this is my first day Streaming on YouTube I may be a little bit slow at getting to questions and comments, but again, please keep your Wherever you are, please keep your questions and comments on topic Okay So now let's let's get started first of all a Couple of news items again, I'm trying this out on on YouTube for the first time today and We'll see how that goes There's some economic news That could potentially move the market and also impact how traders are positioned in the options market ahead of the data and the first Data to be aware of the economic data is tomorrow Friday, and that is the PPI coming out at 8 30 a.m. and Consumer sentiment coming out at 10 a.m. And then next week the data and the and the fund begins on on the 13th on Tuesday, and that is the CPI report at 8 30 a.m. Eastern Time So next week is a very big week. There are some major events. That's the first one and the next is the FOMC meeting on Tuesday and Wednesday and then the announcement and the press conference at 2 p.m. And 2 30 p.m. Wednesday So there that is and again, we're looking at this because that will most likely or you know Certainly have an impact on not only how traders are positioned, but how the market You know that how the market will move after that and then finally Options expiration is on Friday. So this is the big December monthly and quarterly options expiration and One thing that I want to take a look at here is I'm gonna look in options chain and think or swim and Let's look at SPX and just note the the backwardation in Implied volatility so typically implied volatility increases as As These dates go further out in time because there's more Uncertainty, but given all the data that's that's coming up You know the so this is Monday and then starting Monday starting Tuesday and Wednesday all the way to next Friday and the the monthly expiration on the 16th note the Somewhat heightened implied volatility Compared to You know out further out in time So that's just an indication that the market is Anticipating higher volatility at that time On those dates Okay, let's take a look at book map now And it's been a pretty interesting day both in the S&P 500 and in and stocks and So I'm going to start with my position analysis now and As usual I mark the support and resistance levels that that are provided in the spot gamma am founders note on my chart and Those levels are noted here and these are SPX levels Converted to equivalent ES levels on the ES chart here So two levels are in play, but the primary level that has been in play is the spy 397 volatility trigger and That is the level where that's the gamma flip level. So Below this level Market makers or this is a negative gamma Regime below this level and market makers are short puts traders long puts. So Market makers have to hedge in the direction or price section below this level So those are the the primary levels in play on the ES chart And Let's look at the data now There were no shifts and major levels in the In the spot gamma key levels for the S&P 500 But there were a couple of shifts Lower for a QQQ And that is both the put wall for QQQ and the key gamma strike or the absolute gamma strike So the put wall shifted lower from 280 yesterday to 265 today and The key gamma strike shifted lower from 290 to 280 So no shifts lower or higher no shifts at all in the S&P 500, but the QQQ did Those shifts did happen. So put wall moving lower and the key gamma strike moving lower and there were some slight changes in gamma notional and Let's take a look at that for the S&P 500 so this is the Gamma notional for SPX and this is the previous day, but this is comparing the number in the In the afternoon the PM founders note and I compare levels are the gamma notional from One morning to the next So yesterday Gamma notional for SPX was minus 418 and today it's shifted slightly lower to minus 489 and for spy Yesterday gamma notional was minus 1161 and today it started out as minus 1218 So that indicates that market makers Again are in a negative gamma region of the of the gamma curve And that means that traders along puts market makers are short puts and they will have to hedge in the direction of price to hedge their delta exposure and So gamma notional has been Decreasing or getting more negative this week and The shifts from yesterday and today were just slight shifts lower And another thing to note both the The spot gamma index has shifted slightly lower as well as this CP Recall put gamma ratio or call put ratio that Spot gamma Adjust For gamma or weights weights with toward gamma So everything shifting a little bit more negative Now that does not mean that That price is going to go down or up. This is all indicating Higher levels of implied volatility because market makers Again, we'll be trading in the direction of price action or you know, at least that's the assumption and again, this this just has to do with expect expected volatility and One other thing to keep in mind is we know that there are significant Data reports economic reports coming up and events and this is potentially Providing fuel for a Vanna rally if that data is not as bad as expected or better than expected So the way that works is again Market makers are short puts and if the market starts to rally Those puts will quickly lose value and their delta exposure decreases and they can buy back their short futures hedges as price increases and that has incurred several times recently with the last CPI report as well as the The speech from Fed chair Powell and one other thing that I'm here just one other Thing that I have not looked at before but it's worth looking at is these gamma curves and this is a just a visual way of of Seeing these levels and how gamma shifts and here This line shows the zero level where and this is for SPX where gamma shifts from Negative down below the line to positive above so You know as of at the time that this was created both SPX and spy were in the negative gamma region. All right, let's take a look at The S&P 500 charts now and I like to look at these absolute gamma levels And this is for SPX and this shows that the 4000 strike is still definitely the the dominant Dominant strike for absolute gamma or the total Total net gamma So it dominates both calls above the zero line and puts below and then there's also been somewhat of an increase or a build in and puts below the 400 level at 3950 and at 3900 and 3900 is the put wall So that's the strike with the largest net negative gamma let's look at spy and The same thing has occurred at spy first of all 400 is still the The key gamma strike that's again the strike with the largest absolute gamma and See there's quite a bit of Put gamma at the 390 level and 380 is the strike that actually has the largest net Negative gamma and that is the put wall so You know the thing to pay attention to here is the You know all these large put positions Down here and that just coincides with the build in in negative gamma All right, let's look at the Take a quick look at the Vanna charts and for anyone who may not be new The way to interpret this is this chart is showing how market makers delta exposure Changes with changes in price And changes in implied volatility and that's shown by the green line and that's the Vanna effect and then also Changes in time and that's the black line showing How market makers delta exposure? Changes at the next expiration and that's the charm effect. So what this is showing here is that? Market makers delta exposure increases as price falls and again that means that market makers have to sell futures as Price falls to hedge their delta exposure in the same situation with spy so That we can just take a quick look at At equity hub for SPX Here's another another view of the put dominance for SPX and spy Okay, so that is the That's our position in analysis. So my thesis for the day was for high volatility You know looking for a wider trading range based on the negative gamma and I did not have a directional bias for the S&P 500 based on there were no shifts in the In the key gamma levels now I did have a bearish bias for QQQ based on the Shifts lower and the put wall and the key gamma strike and as we'll see that did not that did Thesis did not work out. So, you know thesis is like I said, it's just a thesis You know, it's what you think may happen and it doesn't necessarily happen have to happen And that's why I always confirm my thesis with price action in book map and also Market maker hedging flow with spot gamma hero. So let's let's go to spot gamma hero now and let's take a look at ES first and You know, we'll see here. There was a Divergence this morning With hero rising and leading price price follows So a good indication of an increase in price and then what's interesting to note here is how traders react at At highs and lows assume all the way out. So notice as Price is falling traders are taking advantage of that and entering positive delta positions and then as price is rising they are Starting to take negative delta positions and let's just see what they're doing with puts and calls and I have sent a support request to Spot gamma about this change in zoom level. So I'm going to Try to avoid doing that and you know probably just stick with the total signal For most everything so again notice as price is falling Traders are taking positive delta Positions and then as price reaches a higher level they start to take negative delta positions And then vice versa so and this is this behavior is pretty typical of the S&P 500 and it can provide can provide good Leading signals for price action like it's doing today. So again Traders price is falling traders taking positive delta positions and Same thing here price Starts falling and they start taking positive delta positions again and here notice there as price has come back up to this this level here and This looks like it's showing Spy prices here at 397 and remember that's the spy volatility trigger Traders are starting to take negative delta positions again, and let's take a look at SPX now And it looks like an SPX traders have been taking negative delta positions for most of the day and Mostly selling calls as price is up at these these higher levels and let's look at spy now and This is what Has been occurring recently is The spy chart looks a lot like ES. So it looks like the options trades for spy are Mostly dominating or driving price action and In ES So the same divergences are shown here shows again how traders are reacting to To highs and lows and price Okay, any any questions about that so far. Let me check with YouTube and see if there are any questions or comments and no No questions in YouTube okay All right, so let's look at some stocks now and I posted my spot Gema hero watch list in in Bookmap discord this morning ranked from the weakest signal to the strongest signal and What I'm gonna do is go through those stocks According to that list and We'll see how how things worked out so one thing to keep in mind is this is just a good starting point and one other thing I want to point out is Before I do this is a Spreadsheet that I keep every day and I track the level of the key gamma strike for all the stocks in my watch list and I Here in this column this previous key gamma strike I show the key gamma strike for yesterday the previous day and then I show the key gamma strike for today and I will color code that level with red if it's falling from the previous day or Rising if it's rising if it rose from the previous day, it would be green so there weren't Weren't many changes in the key gamma strikes for the stocks of my watch list so not a lot of guidance there All right, so let's start with With Tesla now and as usual there's a very strong correlation with price action and options trades shown by By hero and there also is a divergence lower and that is Let's zoom in on this a bit and this shows that Actually, I'm getting a little bit ahead of myself, but that shows Hero making slightly lower highs While price is making slightly higher highs and then price reverses lower But let's go look at at book map now and the first Setup was really this reversal down here as price drops below the put wall and back up So we'll go to book map now Look at Tesla So there's the there's the reversal lower at the It price actually goes below the 170 put wall and the the high liquidity at that level and Then reverses higher and notice all the the green volume dots coming in there There's a buy sweep a sell sweep and then aggressive Traders start buying Tesla moves up, you know, just a very fast rally up to the 175 liquidity Let's just zoom in on that So the interesting thing to note here is the again my watch list was ranked by Weakest to strongest signal and here this is showing that you know that worked out for a for about 15 minutes and then Once price reached this 170 put wall liquidity Price reversed higher and headed straight up towards the 175 liquidity. So that watch list is just a starting point And that doesn't necessarily mean that the Stock is going to go down all day and now let's look at that divergence setup so this is You know I pointed out that price was making Was making higher highs while hero was making lower highs and then there's this You know the final test of 175 the absorption there and reversal lower the trend break and You can see watching hero at the same time in this trend break and then the The move lower so a couple of good setups there and Tesla right the next stock on the list Was AMD and we'll go take a look at That hero for AMD and there was a strong correlation of the morning for a for a move lower and Then not not much correlation at all after that so let's go back to book map so there's the move lower down to 69 liquidity so not much there and Let's go on to meta now and this was a much better setup And I posted this in chat You know I gave two examples of a hero confirmation setup for a qqq and then a hero divergence setup for meta So let's just zoom in here So now let's go back to So man go back to spot gamma hero We'll go take a look at meta now I have sorted these by alphabetical order now, but this morning. I sorted them by the weakest signal to the strongest signal and I am Going through the list in that order. So here was the Here was the divergence setup So in this case here this Weak hero signal did did work and did help so you know step one in my preparation or just after the market opens I notice the The weak hero signal And then step two I look here in spot gaming hero And I see the see this divergence And let's just take a look Hopefully this won't zoom on us. There we go. So I See that traders are Buying put so that's an even even better indication Let's let's get rid of this and see that so traders start buying puts They start selling calls and price moves lower Let's go back and take a look at book map So, you know right again steps, you know ranking the list by hero signal you know, I chose to rank from weakest to strongest and Then so I see that then I dig further I open up the chart For meta and I see the divergence and then I go to book map Watch price action of book map see the trend break the lower highs and See the pink dots coming in and There wasn't much of a target here at 115 that Yeah, I guess I would have expected Liquidity to stay in the order book there, but that that's how that worked out. So good good setup for meta that went according to plan and Apple is the next one on the list and notice this is the This is the lower edge of the expected move and this is a calculation that I just get from from thinkorswim and any Any trading platform that has Options will will have this information. So here is Apple Let's take a look at spot gamma hero now for apple and Really a pretty Okay, thank you trader H. Yeah, I wonder what that what that was there is a Yeah a sharp drop so I'll Be sure to read about that Not as good a signal here, but you know, I think let's zoom in on this a bit And also I'm going to yeah, I said I wasn't going to do this But I have in my notes that the there was a divergence signal and it looks like puts are really driving here So in the morning, there was a divergence higher Traders selling puts not doing much with calls and price reverses higher around 945 and then this This divergence lower again puts driving Microsoft Let's go pay go and take a look at book map again So I you know, I think it's interesting that the reverse reversal happened Right at that 143 50 level Which also happens to be the lower edge the expected move and you can see of the absorption at that level then also the This liquidity comes in after Price touches that level and then some traders add their liquidity lowered around 143 30 But a lot of pink dots coming in there and it looks like these traders These sellers got filled at that level so pretty good pretty good correlation here With price action and and options trades Show my hero with with Apple today and the next stock That I want to look at and I'm skipping over some of the stocks on this list that are that are smaller stocks that are on my other computer If there's time at the end We'll take a look at those. So let's go back to spot game a hero now look at Google So I You know, I thought there were nice divergent setups both higher and lower and The first one is right at the open He was immediately falling price rises a little bit then follows and Traders start taking positive Delta options positions as price is Heading down to this, you know, that's toward this 94 level so price heads down Traders start taking Positive Delta positions and then price rises and then Same again Traders start taking negative Delta positions as price reaches up to the 95 level So not a lot of range in Google and that's pretty typical and then price follows and let's go back to book map now so overall from a You know just looking at book map looking at order flow nice downtrend To the 94 liquidity They came into the order book just just right at the open and next target down would be the 93 liquidity So again, not a lot of range in Google, but a pretty clear signal from from hero And let's let's just take a look at the at the watch list So here's my spot gamma hero watch list and here the the signals are starting to shift towards more neutral But still so, you know Google worked out with long-end short setups But you know looking at this the the short setup was the best in the morning next stock stock on the list is Amazon So again, keep in mind now that the list that the stocks on the list that we're looking at are shifting from a week hero signal to a To a neutral signal and then we'll we'll go progress on down to the to the bullish signals So Amazon nice long setup here a reversal at 88 and interesting that it stopped at the At the lower edge of the expected move So let's go take a look at spot gamma hero now Amazon and this morning Here's the setup from the morning showing the divergence and let's just take a look Calls and puts So this was definitely a call divergence. So traders started buying calls as price dropped down to that 88 level and price responded just a few minutes later and then as Price got up to the 90 91 level. They started selling those calls and buying puts So that was the that was the setup in Amazon Then really not much after that. Let's go back to book map Yeah, just chop after that Chop around the 90 key gamma strike and notice the You know the volume volume profile for the day for the session Confirming that let me redraw that so kind of a double distribution there Center just below the key gamma strike and then at that 9050 lower edge of the expected move and trader he I actually Skipped over Microsoft. We can I'll take a quick look at that I Didn't I didn't see much of interest so Let's go. We'll go take a look at Microsoft. That was a good Nice uptrend When I was looking when I was preparing for this, I didn't see much in terms of Spot game a hero to confirm the the price action at Microsoft. Maybe that's changed Let's take a look at it. See I later on there's There's a pretty strong correlation Yeah, I guess really starting about about 1045 strong correlation between price action and and options trades So mostly calls driving so Yeah, I guess, you know in this case, so I you know, I guess I really miss this this would be a You know, I would look at this as a You know somewhat of the divergence with calls So call buyers were definitely in there Yeah, that's right trader he You know people were buying calls Let's go back and look at spot gamma. I Mean book map. Sorry reversal hire kind of a grinding up trend to the liquidity at 248 and Also at the lower edge of the expected move All right, the next one that I wanted to look at is QQQ and remember again that My initial thesis was bearish based on the falling key gamma strike and put wall and Price action and Options trading hero did not confirm that So here There's just a strong reversal Right at the 280 key gamma strike as aggressive traders start coming in and price goes straight up to this 284 Combo one level. So that's an important Important key gamma strike Anything where the one means it's a significant Key gamma level So let's go take a look at At spot gamma hero now Let's go to qqq and so the first indication that that My thesis was not was not right was notice the hero signal is On the strong side of the scale And that's shown over here. So now let's And there's another Another confirmation or a divergent setup here We'll zoom in a little bit more So price makes a lower high or A lower low while Hero makes a higher high So there's the There's the divergence And again, remember that's a that's the key gamma strike the 280 key gamma strike and You know, you should anticipate some some reaction at that level And here in this case it acted as support and that is That is behavior that can can be expected Okay, nice nice long setup in qqq again did not Did not conform with my thesis, but You know, that's that's how it played out and Again, a thesis is just a a thesis and You know, this shows how it actually did play out and maybe one other Way to look at this is Kind of a reversion to the mean trade And so one thing that I look at occasionally is I do occasionally look at a volume profile chart And so this is a 10-day composite volume profile chart and showing that qqq and s and p 500 spx and spy Or es and spy we're in the uh, you know, kind of the lower end of this 10-day volume profile So one way to look at this reversion to the mean again You know a nice reversal higher at the 280 key gamma strike and Let's take a look at nvidia now and now we're getting into the Other end of the list with Strong stocks So nvidia had a strong hero signal quickly reversed higher right at the 160 key gamma strike And now it looks like it's heading right up to the 170 call wall So nice nice move higher in nvidia and if you were Bullish and looking for a bullish setup and looking at this watch list nvidia would have been a good Good place to start and now let's go look at spot gamma hero So again remember in nvidia we've got a very strong signal strong hero signal meaning that this signal is In the high end of the range for the last five days and the last 30 days And here's the divergent signal and let's just check And it was calls driving and traders continue to So they I would say stopped buying calls and then they started Buying calls again and prices started rising again and there's a question does Strong signal mean closer to the right strong Strong green Yes, so the further to the right the stronger the signal and weak signal closer to the left So again, it's in a range of the the smaller Smaller lip shows the range And the last five days and the the entire range is for the last 30 days So notice traders are not doing much with puts, but they're buying calls And that is continuing to drive price higher So I think this was the best setup of the day You know just this very clear signal in the morning The reversal at the 160 key gamma strike And then the target I guess really at the 165 liquidity and then this target At the 170 Call wall liquidity so Of the stocks that I follow, I think this was the best setup of the day I guess the one of the problems with trading stocks is you can only do so much So, uh, you know, it's hard to Hard to find them all see them all in time Okay Last stock. Let's let's take a look at yeah one. I can follow one or two tickers and that's that's it So today I traded qqq and meta, but I am going to post a Posted analysis of nvidia, you know such a such a nice setup So again spy We talked about the response to highs and lows and You know one interesting thing that here that I saw it. I guess for those who Look at chart patterns. I think this I think this is a head and shoulders here at this is not Not showing clearly here, but this is the 397 volatility trigger so the reversal higher at 394 and Let's just go back and look at the spot gamma hero chart for spy spy the signal was also in the The high end I You know highest strong a strong signal And here's the screenshot of the watch list And you know depending on how you ranked this So if I'd ranked it from strongest to weakest spy would have been at the top And traders were were buying calls right from the open So that again that divergent signal there Okay That is All that I had Let me check with youtube and see if there are any questions or comments there And Alejandro ask um Why delete these live videos? So this is my um This is my first live video on youtube And I think this should be saved I'm working with book map to To do this So I I think this will be saved um So again, this is the first time that I've streamed live on on youtube and as far as I know will be Will be saved and They're all asked what time frame and hero have you failed best? I typically trade in the morning so I um, I just keep hero on the default setting For the morning, which is one day and For trading in the afternoon. I would um I would shift that down to a lower Lookback period like 30 minutes For more sensitivity, but since I trade early in the morning. I typically just keep it at the one day level Okay, let me go back to discord And I don't see any more questions. So, uh, I'm my time is up. I'm going to go ahead and stop it here I want to thank everyone for attending both in discord and on youtube and uh Again, thank you for attending. Thanks for your questions and comments and I will see you tomorrow. Thanks. Bye