 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. 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. 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 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 now 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 a 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 and spot gamma hero to confirm my thesis and for setups for entries and exits. And when I talk about setups today, I will be focusing on an underlying asset and setups in that asset can be taken any number of ways with, for example, the S&P 500 setups can be taken with ES futures, spy shares, spy options, SPX options, or even ES 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. Please feel free to post and I'll do my best to answer your questions. And hello, Z. Welcome. Glad you're here. All right. Here's my agenda for today. Wednesday, January 3rd. 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. Then I'll review some setups from earlier today and then we'll take a look at the live market. And note the F1C minutes do come out at 2 p.m. today and I will try to remember to stop whatever I'm doing and take a look at the S&P 500 at that time. All right. Let's start with news items, economic data, and events. There were a couple of data releases this morning at 10 a.m. ISM manufacturing, PMI data. That came out greater than expected, greater than previous the number, but also still less than 50, so still indicating contraction. And then there was the Joltz job opening data and that was less than expected and also the less than the previous number. And then for the rest of the week, tomorrow the ADP employment report comes out at 8.15 a.m. I guess that was pushback a day due to the holiday and then 8.30 a.m. jobless claims. There's also PMI data at 9.45 and then the big data release of the week is on Friday. That is the jobs report that comes out at 8.30 a.m. Eastern time. All right. So that is economic data and events for the week. All right. Let's start with the positional analysis. Now I want to start with the SB500. This is the ES Futures and Bookmap. And before I take a closer look at this chart, I do want to take a look at a larger time frame. I'm going to go to the SPX. This is the underlying asset for the SB500. This current rally began October 30th and has continued higher up until now for a variety of reasons. IV collapse, put banner rally, drop in treasury yields, benign CPI reports, somewhat dovish FOMC announcements and press conferences. And it looks like it may be coming under a little bit of pressure now, finding resistance around the 4800 level. So let's take a look at that now. So that's a one-day chart for SPX, the underlying asset. Now let's take a look at a one-hour chart. So this is SPX, a one-hour chart, 30-day one-hour chart. And note that SPX stopped just below the 4800 level. All right, on this chart, I want to focus on the levels. First of all, the lower and upper weekly expected move. This may be difficult to see the dash purple line. And there's a red line right on top of that. But that is the lower weekly expected move. And SPX did trade below that today. And here's the upper weekly expected move. This is based on the options market. And this changes once a week. I updated over the weekend. So SPX trading down below the lower weekly expected move. The dash blue lines are showing the lower and upper daily expected move. That changes once a day also based on the options market. And SPX did trade below that level today. All right, so those are the expected moves. Now let's take a look at the spot gamma levels. I'm going to point out the key daily levels. So the red lines are showing the spot gamma levels. These levels are proprietary to spot gamma available to spot gamma subscribers showing on a variety of trading platforms. This is think or swim. And I'm going to point out the key daily levels. So first of all, here's the put wall. That's a strike with the largest net negative gamma that can be expected to act as support. And the next level up is the volatility trigger at 4745. And that is spot gammas 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 edge their dealt exposure. And that tends to enhance or increase volatility. And note that SPX is trading below that level. Above that level, market makers position on the gamma curve is positive. In a positive gamma environment, market makers have to trade against price to edge their dealt exposure. And that tends to subdue or decrease volatility. And the next level up is the 4800 level. That is the call wall. That's a strike with the largest net positive gamma that can be expected to act as resistance. And that is also the absolute gamma strike. That's a strike with the largest absolute positive and negative gamma. So that is where most of the gamma weighted open interest is concentrated. Excuse me. So there I've got a couple of notes on this chart. So first of all, spot gamma did have an issue with one of their data vendors last night. And the SPX data was pretty difficult to interpret this morning. I'm not sure that I think they might have worked it out. These are, this is the best that I could tell were the correct levels. And so the key day levels, and I had to update these manually in this think script. And I cannot vouch for any of the other levels on this chart, just the levels that I pointed out. And note the levels that that I pointed out, the volatility trigger put wall and call wall all shifted lower. And that is bearish. When those levels shift higher, lower. This indicates to me that traders are looking for and expecting lower prices. And they're positioning themselves in the options market for lower prices. So three shifts lower hat trick for SPX bearish. All right, finally, let's take a look at a one minute chart, just to get a closer look at the levels that I'm playing for today. Let's zoom in just on the maybe last day and a half. So this dark shaded area on the right, that is the regular trading hours today. And the key levels here, lower daily expected move, lower weekly expected to move. And SPX did trade below those levels. And also there's a spot gamma level there, the zero gamma level that did act as resistance earlier today. So support, resistance, support again. Now SPX trying to move higher looks like it may be finding resistance again at the lower daily expected move. All right, let's take a look at book map now. And book map, I have my own cloud notes. So I can show SPX levels. There's that zero gamma level 4715 that did act as support, resistance, resistance, then support. So a key level today. And then I have the lower daily and weekly expected move shown on this chart. This is for ES. It's a little bit different. I also have spy levels on this chart. So I like to have one column of notes. So this is why I use my cloud, my own cloud notes so I can show spy levels and SPX levels and any other levels of interest. So for example, here's the ES 4750 along with the spy 469 that did act as support. And a good launching point for a long this afternoon. All right, now there is a difference in price between ES and SPX. It's right around 42 points today. So this 4715 level SPX is shown at ES 4757. So ES minus SPX is 42. And note that I do post the levels that I use, the index relationships. For my charts, I post those in discord every day. I was a little bit late this morning. I tried to get those out by around 10am when the relationships have settled All right, so those are the levels in play for today. This key 4750 level, 4715, sorry. And then this level acting as support. And then the spy 4710 gamma level somewhat acting as resistance. All right, so those are the levels in play for the SP500. I'll take a look at setups in a few minutes. All right, so I talked about shifts and levels for SPX, hat trick, volatility trigger, put wall and call wall all moving lower. So the potential floor and potential ceiling move both moving lower. For spy, the volatility trigger also moved lower. The put wall actually moved higher to 470. And then the absolute gamma strike moved lower to 470. So overall the shifts and levels for the SP500 were bearish. I interpreted those shifts lower as bearish. All right, let's take a look at NASDAQ now. This is the NQ futures in book now. And before I take a closer look at this chart, I do want to take a look first of all at the QQQ levels. And the primary level here in play is the 400 put wall. So typically that acts as support. And today it's acting as resistance. And the absolute gamma strike is just below that at 399. So here's the put wall at 400. And the absolute gamma strike for QQQ at 399. And both those levels did move lower from yesterday along with the volatility trigger. So a hat trick for QQQ all moving lower that's bearish as well. And finally, let's take a look at NDX. And the main level in play here for today is the volatility trigger at 16,425. All right, let's go back to book map NQ futures. So on the QQQ chart it looked like NASDAQ was trading in a pretty narrow range between 399 and 400. And that is the case here we can see on book map. I have my own cloud notes again. So I can show QQQ levels. There's the 400 put wall acting as resistance. There's a cluster of levels there. The 400 level, the lower daily expected move for NQ, and also this combo two level, which that should be correct. I think all my levels in book map are correct. And the thinkorswim levels only the key daily levels are correct. And then there's this 425 level volatility trigger, also a key level for today. And note the I'm also showing NQ levels on this chart, the 650 level acting as support for two long setups. And we'll talk about setups in a few minutes. All right, so those are the levels in play for NASDAQ today. Again, I have my own cloud notes so I can show QQQ levels, NDX levels, and NQ levels all on one chart. All right, 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. And this is a little bit different spot I'm looking at here. There was again an issue with primarily SPX data, I think, and the data was corrected, first of all, on this home page of the Spot Gamma dashboard. Same information typically that's shown at the bottom of the AM Founders note, but this was updated first. This is what I'm going to look at today. It's the same information. One of this showing is market makers position on the Gamma curve at the beginning of the day for the SMA 500, NASDAQ and Russell 2000. And these levels all shifted lower from yesterday, still slightly positive for SPX, slightly negative for SPI, that's pretty typical, that SPI will move more. So let's finish up. So NASDAQ QQQ is the main one I look at that shifted negative and then still positive for the Russell 2000. In a positive Gamma environment, market makers have to trade against price. So in a positive Gamma environment, Spot Gamma assumes for an index that traders are short calls, market makers are long calls, hence the positive Gamma. On the other hand, like SPI and QQQ and a negative Gamma environment, market makers assume that traders are long puts, market makers are short puts, and they have to trade with price to hedge their dealt exposure. All right, so these numbers shift a lower from yesterday and yesterday they shifted lower from the day before. So Gamma Notional is gradually shifting from positive to negative or less positive. All right, let's take a look at the Vana model now and we'll get a graphical representation of what that means and note this data was delayed also. It looks like it's updated today with January 3rd. So let's take a look at this. This is for SPX. This is the Vana model and what this chart is showing is market makers position their Delta Notional on the vertical axis 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 shows how market makers Delta Notional may change with changes in price and implied volatility. And that change in Delta with the change in implied volatility is the Vana effect. Vana is a second order Greek. And the purple curve is the one that we want to take a look at. All right, let's take a look at take a look at current price, $47.19 for SPX. Some were pretty close to the bottom of the curve here. Let me check the low of the day again. Low of the day right around $47.04 right around here. So this is showing a little bit of a Vana tailwind, meaning as price increases implied volatility drops, market makers can buy back short futures. On the other hand, if price had kept going lower, market makers Delta Notional would increase and they would have to sell futures to hedge their delta exposure. Remember, market makers always want to remain Delta neutral. So on this portion of the curve in this really this portion of the Vana model associated with a negative gamma environment, market makers have to trade with price to hedge their delta exposure, selling futures as price drops and buying back short futures as price increases. All right, let's take a look at SPI. SPI currently trading right around $470. Also on toward the bottom of the curve, it's still on this left portion. Remember SPI, Gamma Notional, slightly negative. Take a quick look at QQQ. Currently trading around $399. So a little bit further up on the Vana model here, on this left portion of the curve. All right, let's take a look at some setups now. And the first thing I want to do is take a look at what options traders are doing. I'm going to start with the SP500. What this chart is showing is price for SPX. This is from Spot Gamma available to Spot Gamma subscribers. The white line is price for SPX. The purple line is the hero signal, hedging impact real-time options. So everything that we've looked at so far has been based on, other than book map, has been based on static data that's updated once a day. Spot Gamma takes open interest data that's updated once a day, sometime during the night, applies their own proprietary algorithms to come up with the levels, the Gamma Notional Vana model, and that all remains the same until it's updated tomorrow. On the other hand, this is real-time data. It's showing hedging impact real-time options. And that means that what the purple line is showing is options trades and market maker hedging activity for a combined signal for SPX, SPY, XSP, and ES futures. A rising purple line indicates that traders are taking positive delta positions. That means they are buying calls and or selling puts. Market makers take the opposite side. So they have to buy futures to hedge their delta exposure. On the other hand, a falling purple line indicates traders are taking negative delta positions. And in that case, market makers have to sell futures to hedge their delta exposure. So whenever traders trade options in SPX, SPY, XSP, or ES futures, market makers hedge their positions with ES futures. All right, let's zoom in on this chart. And I'm just going to focus on one setup from this morning. And this is this short right here, right around 10.05. Note that price made a new high as the hero signal continued to move lower, setting up a good short. And that was right around VWAP. We'll take a look at that in a minute, just right around 10.05. Let me shift to puts and calls real quick. So what this is showing is that traders were buying puts. That was really driving price action. Traders buy puts, market makers sell the puts, and they have to sell futures to hedge their delta exposure. All right, it's almost two. Let's go to the book map, go to the SP500. All right, here's the short setup that I was talking about. And we'll watch current price as I focus on this short setup. So this line right here, that's VWAP. And note the volume dots, the volume dots show market buy, minus sell, green dots indicate more buyers than sellers, magenta dots indicate more sellers than buyers. All right, so it looks like quite a reaction to the minutes. Let me just wrap up this setup. So aggressive buyers on the way up, up to VWAP, and then aggressive sellers start to come in. That's shown by the magenta dots. So for green volume dots, that indicates more buyers than sellers. And magenta dots indicate more sellers than buyers. So we know traders were taking negative delta positions at that time. Price makes a sharp move up. It looks like in response to the 10 a.m. data and then reverses lower at VWAP. And this lower daily expected move, that is also a, I believe that's the 4724 SPX 4724 level. All right, let's zoom in and take a look and see what what ES is doing now. So so far just chopping up or up and down around the spy 470 level. All right, let's go back to hero and see what options traders are doing. And while I'm while I'm taking a look at book map here, we can focus on another couple of setups. Here's right around 1045. Note all of the aggressive sellers coming in. And that was fueled. That move lower was fueled by a stop run. That's shown by the following yellow line. Excuse me. And during this time, one of the keys high very good clues for looking for long was this rising light blue line indicating large traders were buying with iceberg orders. So they were buying weakness. That's also shown by the on chart indicator. So large traders buying all this move down with iceberg orders in this level of zoom. Book map is aggregating many orders. But these are pretty large numbers over 4000 over 3000 over 5000. Here's another one 2684. That's showing an aggregation of 21 different executions. So quite a bit of icebergs buying there. All right, let's go back to hero. Let's see what options traders are doing. All right, so starting right around one o'clock options traders started taking negative delta positions that shown right here and prices responding lower. Here's the setup that I was talking about just a minute ago this long right around 1040 1045 options traders wrong tool options traders started taking positive delta positions. So remember large traders were buying on the way down with iceberg orders options traders start taking positive delta positions price moves higher. Option traders take the foot off the gas. Then they put their foot on the gas again right around 1225 and price responds higher. And so far today it looks like traders don't like what they what's shown in the FOMC minutes. Go back to book map. So after a bit of chop around the 470 level price is now starting to move lower. And in this case there are some large traders buying with iceberg orders but that is very small just 100 100 contracts to executions nothing like the nothing like the numbers that I just showed from earlier today. All right, so definitely a bearish response to the FOMC minutes. So maybe this 469 4750 level that had to act as support earlier today may be support today and net for the day. There are quite a few iceberg buys 13900 that's a cumulative number that's starting from when I opened book map right around 7 a.m. Let's go back and see what options traders are doing. Zoom in on this a little bit. I'm going to change the look back period just to get a see if we can get a little bit more information. So now instead of looking at the entire days worth of data I'm looking at just the last 30 minutes of data. Let's separate outputs and calls. So this orange line is showing calls the blue line showing puts. So starting right around 125 a lot of traders started selling calls. Total signal. Let's check next expiry. So a lot of this in the last half hour has been driven by next expiry options that shown by the green line all expiration shown with the purple line and for the SB 500 next expiry is zero DTE. So these are traders trading options that expire today at the end of the day and making up a large part of the actually according to the according to the notional value not not much of the total value. Let's go back and check the right. So graphically it looks looks pretty similar zero DTE trades making up a a pretty large component of the trade today options trades. Let's check NASDAQ now. Whoops. So just like the SB 500 this is a combined signal as well and this notice in the morning here we can go over this setup pretty similar to yesterday's from the open traders taking negative delta positions and that set up a great short right here notice the hero signal was dropping price was increasing that's price for NDX setting up a great short right around 10.05. Let's go take a look at book map go to NASDAQ. So here's the short setup that I was talking about just after 10 a.m. pretty similar to the SB 500 VWAP. So initial response to the 10 a.m. data reversal lower at NQ 650 retest of VWAP and aggressive sellers start to come in show them the magenta volume dots and just like the SB 500 large traders were buying that weakness helping to eventually set up a long right around 10.40. Let's zoom in on focus on this long notice this is a pattern that I talked about yesterday very very I showed it in the SB 500 very similar and NASDAQ today again aggressive sellers large magenta dots and large traders were buying the move down with iceberg orders that's a fairly large number for NQ also shown by the rising light blue line and then NQ makes a series of of higher lows shown in this continuation pattern the flag pattern that I talked about yesterday providing multiple entry points to join the long let's go to current market now and NQ chopping around the 3.99 level that's QQQ 3.99 let's go back and see what options traders are doing note the options trades and hedging flow really shifted to bullish right around 12.20 now it's leveled off let's check the mag 7 and after a very bearish morning this is a combined signal for the stocks known as the magnificent seven let's just take a look at that and the stocks in this signal include again the stocks known as the mag 7 magnificent 7 apple amazon google meta microsoft and vidya tesla so very bearish morning setting up a short confirming the short in NASDAQ so these stocks make up a very large component of the NASDAQ 100 again setting up the short oops wrong tool setting up the short divergence setup so neo here you go this is when the hero signal can be quite useful price making price moving up hero signal moving lower and then dropping sharply lower setting up a nice nice short so hero in this case was giving somewhat of a leading indicator of a potential short let's go back to NASDAQ and here as well even more of a acting is even more of a leading indicator so when I see this in hero I'm just looking for an entry point and book map a resistance level and an indication in order flow to to look for a short great divergent signal hero dropping and eventually price is going to drop let's take a look at puts and calls and in this case traders were buying puts and selling calls shown by the falling blue line showing by the shown by the orange falling orange line calls orange line puts blue line when both these lines are moving in the same direction that's a very powerful indicator and price responds lower at at vwap like I showed before let's go back to NASDAQ go back to book map so again there's that short that I talked about before all right let's take a look at a few stocks first I want to take a look at apple not a lot of range in apple but it was a good good short this morning take a look at apple traders were buying puts and selling calls and apple let me zoom in on this notice the sharp drop in the call line this is a very large block order of traders a large institution selling a big block of calls and that is a great great signal for a short entry point right there at just around 935 about a minute later go back to the total signal and also this flow alert very timely alert comes in just a couple of minutes before the short entry point let's go back to book map again have to go to another chart all right there we go let's zoom in on this morning session so remember that large block order selling calls aggressive sellers start to come in show them on the magenta volume dots and price reverses lower and a couple of additional entry points trend break there and then a reversal just above 185 all right the next is netflix and if anybody has any stocks they want me to take a look at please let me know and I'll be glad to do that and netflix bucking the bearish trend today good long entry let's take a look at hero go to netflix traders aggressively taking positive delta positions note the timely flow alert indicating significant options activity price breaks above the 470 key gamma strike and this is very typical pattern aggressive traders taking positive delta positions in the morning and when they take their foot off the gas and they did it pretty early today just after 10 a.m hero signal levels off and price consolidates again as options traders take their foot off the gas let's go back to book map so there's the quick move up and price reverses lower just below 475 as options traders again take their foot off the gas all right the next one tesla and yesterday tesla was fairly bullish and today very bearish short set up from 245 right at the open let's go take a look at at hero see what options traders were doing go to tesla so initially in the morning traders were taking negative delta positions following purple line timely flow alert and tesla breaks below the put wall at 240 then right around 1015 traders started taking positive delta positions and price responded higher so the stock when traders let's see what traders are doing so the stock when traders sell calls market makers take the opposite side of that they have to they buy calls so they have to sell stock to hedge their delta exposure and that all shifted notice the call line shifts pretty sharply at 1015 traders started buying calls selling puts orange line blue line moving in the same direction so when traders buy calls and or sell puts market makers take the opposite side and they have to buy stock to hedge their delta exposure all right next wants to take a look at Palantir sure let's take a look at Palantir so right around 1215 traders started taking positive delta 1015 traders started taking positive delta positions and price is not really responding that much trading at a very narrow range today maybe a 25 30 cent range today let's see what traders are doing so net for the day they are selling puts that shown by the rising blue line positive notional value they also are buying calls shown by the positive notional values sorry about that but these numbers are very small compared to the stocks that I usually trade these large cap tech stocks the reason I follow these stocks is they are they're very liquid have a very active large options markets and they're very often driven by options trades and market maker hedging activity all right you're welcome nicks all right Ryan wants to take a look at AMD sure let's take a look at AMD this is kind of the opposite pattern of of Netflix just the same thing a mirror image of it initially traders taking negative delta positions price moves lower note the timely flow alert indicating significant options activity right around 1045 they take their foot off the gas and then price in this case moves higher a little bit then consolidates pretty much following the following the purple line let's go take a look at book map go to AMD and just like I need to add more lines here I use the price lines add on I need to add more lines so a little bit of range here in AMD traders taking negative delta positions initial entry point just after the open price makes a lower high and the remember traders options traders kind of shifted from negative delta to positive delta then took their foot off the gas all together so bearish set up as traders were taking negative delta positions move higher and then consolidation all right let's go back and see how the SB 500 is doing all right so now moving higher up toward the high of the day kind of a down up down and now up making looks like somewhat of a double bottom pattern with the second low being a little bit higher than the first low note the aggressive buyer start to come in shown by the green volume dots CVD rising that shown by the pink line and again large traders in here buying with iceberg orders not the same size as before but net for the day this is a pretty large number a lot of traders buying large traders buying with iceberg orders they used to hide their size all right so it looks like the response to the FOMC minutes is now resolving to the upside back toward the high of the day right now at the spy 471 zero gamma level let's check Nasdaq oh I forgot to look at Costco Ryan let's do a take a quick look at Costco go back to hero I doubt there's much of an option well I first of all I doubt Costco is even in here yeah it is all right so there is a somewhat of an action active options market for Costco I don't have it a book map but traders taking negative delta positions finding resistance at the 650 key gamma strike a couple of timely flow alerts here and traders continue to take negative delta positions and they are selling calls and buying puts and Z ask can you please explain what the negative and positive numbers in hero mean this is a a a notional value in in dollars so you can you know interpret this in in dollars so three 36 million dollars worth of options and negative all right Ryan says thanks Doug nice 200 on the put today you're welcome so great job there if you bought a Costco put all right let's go back SP 500 traders taking positive delta positions we're on the one day look back period total signal this notional value notice how large that is that well that is not large in terms of the SP 500 but compared to Costco for example so that is you know that is a dollar notional value so this hedging flow that was initially bearish has now shifted bullish after the everyone has had a chance to digest the FOMC minutes quick check on NASDAQ all right so also hero continuing to move higher to book map so now it looks like NASDAQ may be finding resistance at the again at this QQQ 400 level and the SME 500 finding resistance at the the high of the day the 471 level right I'm going to wrap it up my time is time is over I want to thank everyone for watching thank you very much for your questions and comments and remember tomorrow ADP at 815 jobless claims at 830 services PMI at 945 and we'll talk about it tomorrow afternoon if there's any reaction all right thanks again everyone and I will see you tomorrow bye