 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 go any further, let me go through the Disclosures. General disclosure, all Bookmap limited materials, information, and presentations are for educational purposes only and should not be considered specific investment advice nor recommendations. Risk Disclosure, creating 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 as a reminder, my presentation and the Options with Doug channel and Bookmap Discord is very focused and the focus 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 step is planning and I use positional analysis for my planning to help me develop a thesis for the day regarding the training range, expected volatility, and directional bias. And positional analysis is looking at how traders and market makers are positioned in the options market and then how those positions change from day to day. And I think this provides a significant edge over traditional forms of analysis such as technical analysis and fundamental analysis and it can certainly be combined with those as well. But this is primarily how I look at the market. And the second step in my process is execution. That happens when the market opens and I'm looking at real-time order flow in Bookmap and market maker hedging flow in SpotGamma Hero to confirm my thesis and to find setups. And finally on topic questions and comments are welcome and I will be watching Bookmap Discord, the Options with Doug channel as well as YouTube for questions and comments. So again questions and comments are welcome. All right, let's go ahead and get started now and my agenda today. What I want to talk about is first of all news upcoming news items for the week and then go over position analysis and then finally talk about some setups. All right, so first of all news and there's not really much significant news economic data coming out this week. So this is the daily FX website showing the economic calendar for the United States for the next seven days. So tomorrow there's according to this not much of anything well except for the pending home sales at 10 a.m. I don't know how much of a market mover that will be and then on the 29th that's Thursday the jobless claims and then on Friday there is some PMI data that comes out at 9.45 a.m. Eastern time. So that's very light news week especially compared to the last couple weeks. All right, so let's get started with position analysis now and let's take a look at this is the S&P 500 futures and I see a question at bookmap discord is there something wrong with audio and can anybody else hear me? Okay, I'm getting an indication that audio is good on discord. Thank you. Thank you, Moon Walker Frosty and Unilink. Let me just check on YouTube and Mike says I can hear Roomba says yes. Okay, so I think my audio is good. Okay, so this is this is really interesting. I don't know. Can anybody identify what's going on now? Just a quick question. So let me let me go over what I'm looking at on the chart here. So this is the S&P 500 futures ES and Moon Walker is close and need to know as close as well. There's a significance to that that strike at 3835. Okay, so I'm looking at two columns here with levels. This first column this SG column is spot gamma cloud notes and these come these are updated daily from spot gamma and they're marking key levels based on either SPX levels or SPX and spy combo levels. And so we see both SPX levels converted to ES prices. So spot gamma is adding 25 points to ES to come up with an equivalent number. So the for example here this ES SPX 3850 is equivalent to ES 3875. And then this column the C levels column is my cloud notes and I am marking the key um spy levels here. So this is the spy 380 key gamma strike and then also spot gamma notes support and resistance levels and the the AM founders note that the note that comes out about 7 7 30 a.m eastern time and so for example these two levels were indicated as support. And so let's take a look at some important information here. First of all this 380 level spy 380 level acted as support this morning and that was a great setup that I'll go on go into more detail talk about it in just a moment or two. Um so there the setup was that traders were taking positive delta positions as price was dropping down to this 380 level and that's a classic hero divergence setup. So the other significant thing here is this 3835 level is the call strike of the JP Morgan collar and it is just acting as a magnet today. So um price was down below that level and it went back up price got above the level close to the 3850 level again that's SPX and move back down and price has been uh gravitating up and down around that level uh ever since then and we'll uh take a look at that in just a minute in more detail and why that is happening in just a minute. So um again that is that's very important information and this expires on um on Friday on 12 30 this is the the call strike in the JP Morgan collar and JP Morgan is short that strike so that means that market makers are long uh that strike. So um they bought the calls that JP Morgan was selling so the next thing that I want to talk about is the expected range for the week and there are several ways of looking at that and this is just a um a snippet of a comment from the AM founders note today noting that um they are expecting that the S&P 500 meaning the SPX will close inside the 3800 to 3900 range again this is SPX uh by the end of the week you know they're expecting um the SPX to be uh bound within that range during the week and the more complete analysis is uh is included in the AM founders note and I will I will leave that to spot gamma subscribers for the complete analysis and now let's take a look at let's go take a look at think or swim now let's go back to SPX let's go to charts so this is showing the um I'm going to zoom in on this so this is showing the expected move for the week for SPX and showing the lower edge of the expected move at uh around 37 72 so a little bit lower than the um than the spot gamma range and the upper edge of the expected move at 39 18 so a little bit higher and this is just based on uh the options market implied volatility and the price last Friday and it is a one standard deviation uh 68 chance that price will close within this range uh by Friday so that is a I'd say a pretty much a confirmation of that 3800 to 3900 range and one interesting thing is the um let's go take a look at the founders note for today and note that they were showing the this five day range is a much much wider range 37 26 to 39 62 so that is really not in line with uh with the other information okay so let's um quickly talk about shifts and levels so the only shift there were the really the only shift in and levels was this key gamma strike oops I'm sorry clear that the key gamma strike or the absolute gamma strike for qqq dropped from 270 to 265 so otherwise there were no shifts in the uh in these key levels that uh actually the spy volatility trigger moved up two points so that's uh that's kind of a minor move uh otherwise the put wall call wall and key gamma strikes uh all remain the same as they were Friday for the s and p 500 and now let's go take a look at the s and p 500 charts and we'll take a look at those levels so first of all spx and um this shows the there's the 3,800 put wall and that is the uh level with the highest net negative gamma and that uh again spot gamma is looking for that level to act as support and here's the call wall and that is the level with the highest net positive gamma and again that's the short strike the call and the uh jp morgan collar and then uh the 4000 is 4000 level is still the key gamma strike or the absolute gamma strike and that is the strike with the largest absolute gamma and then spy starting with the 375 that's the put wall and 380 is the key gamma strike and 385 is shown there 384 is the volatility trigger and then 390 is the call wall all right let's take a look at at a couple of other things i'm going to go back to thinkorswim and now let's take a look let's uh let's take a closer look at that 3835 strike so this is the December 30th expiration and here is the the open interest at the 3835 strike and this is on the call side of the option chain and you can clearly see the that level of open interest dominates open interest at all the other strikes both on the on the call side and on the put side one other thing to take a look at now is the gamma at that level and one thing to keep in mind is gamma is highest at the money and at expiration this is a um this is also included in the am founders note and uh they have shown this chart several times and this is the this is the gamma curve for the 3835 call strike and the thing to note here is how that curve changes particularly with with time and this is the blue curve at an iv of 20 and let's just check what let's just check on the vix to see so that iv of 20 is is pretty close right now vix is trading at 2167 so uh 20 is is close enough so we'll compare the blue curve with the green curve so this is from last week showing that the the point here is the influence of that strike is wider further out in strikes but not quite as strong as at 3835 as it is uh now closer to expiration at at five days to expiration same volatility level showing that um now the influence at that strike is stronger but it diminishes as uh price moves away from that strike and also note the the red line is close to the green line and that just shows the effect of the change in implied volatility with a drop from 20 to 15 and um you know for those who trade options you may uh think of uh volatility as synthetic time so this is showing kind of the same effect as a change in time uh as an implied volatility drop an implied volatility having the same effect is a change in time okay so that is the you know i think this is just fascinating and you know seeing it play out uh in the live market okay so it'll be uh you know we'll keep an eye on it for the rest of the week and see how that see how that works out both the the magnet of the 3835 call and all that gamma and also the 3800 to 3900 range all right let's take a look at some other data that I that I always look at and that is gamma notional and this is showing the market makers position on the gamma curve and in a negative gamma environment this indicates that traders are long puts market makers are short puts and they have to sell futures as price drops to hedge their delta exposure and just the opposite they can buy back those uh short futures as price rises so they're trading in the direction of price and that tends to increase volatility and that's typical of a negative gamma environment and one thing to note is that this negative gamma has shifted slightly more positive or less negative than last week so gamma notional for spx shifted from minus 537 on friday and I compare morning to morning so on friday morning spx gamma notional was minus 537 and today it is minus 339 so a little bit less negative and spy shifted from minus 1688 on friday to minus 1552 today so still pretty significantly significantly negative especially for spy and let's take a look at uh the Vanna charts now and what this is showing how is how market makers delta notional or delta exposure changes with changes uh and price uh implied volatility and time and you can interpret this just by drawing a line that that makes sense through this curve and it's usually pretty closely parallel to this black line and this is showing the green line is showing how market makers delta exposure changes with changes in price and implied volatility and that's the Vanna effect and again this is confirming the uh negative gamma that was shown in the uh founder's note the data in the founder's note uh indicating that market makers delta exposure increases as price drops and they have to sell futures to hedge their delta exposure and they can buy back those futures as price increases and the black line shows how their delta exposure changes uh as time passes and that's the charm effect and we can look back and see that that has how that has shifted uh from thursday to friday to today so just a slight shift from friday to today and we can look at spy also so that's just confirming and uh the uh the gamma notional negative gamma notional and showing it in a visual form okay let's take a look at some setups here and the first setup well first of all let's take a look at um this is my key gamma strike spreadsheet and i um this is something that i do every morning in my uh planning and i look at all the stocks on my watch list i go to uh equity hub and spot gamma and take a look at the key gamma strike uh for each of the stocks in my watch list and i look at how those levels uh have changed from the previous day so this column on the far right is the previous gamma strike from the previous day key gamma strike and then this current key gamma strike is the key gamma strike uh for today and then i color code them and red indicates that the level dropped from the prior day and red indicates that the level uh or green indicates that the price increased from the previous day and red indicates that the level dropped from the previous day so a couple things of note here is the drop in moderna and we'll take that's one of the setups that i want to take a look at and also the drop here in qqq that's i talked about that before the shifts in the index levels and then tesla continues to drop and it has just been relentless uh on the downside so we'll take a look at uh take a look at all those setups all those uh instruments and setups all right i post this every day this is my spike gamma hero watch list and i'm going to open up this i post this in bookmap discord let me just check for for questions and mike asked can i change the color of my pointer yeah i'll look into that um i need to uh i need to i i need to make my pointer bigger figure out how to make that easier to see and that's why i'm using the pen tool so much to uh like put a rectangle or an arrow uh around what i'm talking about and oh boy ask how's the jp morgan collar level known and i i think that's pretty well published i i just uh i get my information primarily from spot gamma and spot gamma uh brett kujuba has talked about it uh for quite a while now um so you could probably just uh probably just google jp morgan collar and and find the information and anthony asked can i share a link to my uh bookmap cloud notes and uh well i again i have two sets of cloud notes and the answers no uh the first from spot gamma are available to spot gamma subscribers and the second setters my own and that's just something that i keep on a on a spreadsheet on my local computer so uh you know i encourage you if you think this is useful uh first of all to uh uh you know if you're not already a spot gamma subscriber you can um you can give them a try you know they offer a free trial and then i use the price lines add on uh from the bookmap marketplace and you can create your own you can create your own cloud notes without that price lines add on i use it because it draws lines at my levels so uh you know if you're a bookmap subscriber you can if you want to use your own cloud notes just search that search for that in the knowledge base and it'll show you how to make your own cloud notes so this is something this um this list of stocks here is my spot gamma hero watch list and i sort it by weakest to strongest or strongest the weakest uh depending on uh my bias for the today and um then i post that in um in bookmap discord so today i sorted it from weakest signal to strongest signal and what this is showing is this right here this hero signal is showing the current signal in relation to the last 30 days and that's shown by this light gray slider area and also the last five days and that's the colored section so right now uh for example the hero signal for nvidia is the weakest that it has been in the last 30 days and weaker than it has been in the last five days so we'll go through the uh i want to go through the s and p 500 first and then we'll go through the rest of the stocks in this order so again if you're if you're on uh youtube and not seeing this i encourage you to join bookmap discord it's free and open to all and this is where i i post things like this as well as uh uh trade analysis and and other things that i'm uh maybe seeing during the day okay and one other interesting thing that i want to point out is this is um this is the my watch list in my trading platform and i ranked it by uh the net change and interesting to thing note take note of here is this list pretty much closely corresponds with the list that i posted earlier um of the weakest to strongest hero signals so maderno was definitely on that list nvidia and tesla was actually at the other end end of the list uh but it was uh pretty weak as well and again i've talked about that before that tesla has been weak so for so long that a strong hero signal uh you just have to take that into context that it may be stronger than it has been in the last 30 days or five days but it still could be weak because tesla has been so weak so just an interesting note here all right so let's go take a look at some setups now and the first thing that i want to take a look at is spy and es is going to be the same and i'm going to zoom in here but too much okay and what i want to talk about i should have should have opened it up before i zoomed in all right so this is the full screen view and the thing that i want to talk about is this divergent setup and this is the purple line is the hero signal and this is the total signal showing calls and puts and this is showing that as price was dropping remember down towards that 380 level which was expected to act as support so as price dropped and started uh you know as price dropped to a certain level traders started taking positive delta positions as price continued to drop and that was a that had a lead effect and then price once it finally dropped to that 380 level began to move higher and let's just take a look and see let's separate put some calls here clear this out so this shows that traders were buying calls and that's shown by this orange line here all right let's go take a look at at book map now so there's es and let's just go take a look at spy and here's the setup this morning so there's the reversal at the 380 level again as traders were buying calls so when you see that in hero then you want to start looking at book map look for a level of a potential reversal and the 380 key gamma strike was that level and then just look for the confirmation and book map of the reversal and I believe this is looks like kind of an inverse head and shoulders pattern and price reverses higher makes a higher low here and then there are a couple of liquidity targets up above and price never made it up to that level and need to know ask about the hero chart for spy and no I did not set that to the 30 minute time frame I zoomed in on the morning session so I was looking at really looking at the looking at the first hour looking at this price maybe hour and 15 minutes there's so there was really no reason to to set it down to a shorter rolling window now if I was going to trade this afternoon yes I would I would set the rolling window down to 30 minutes but when I'm looking in the morning I just leave it to the default one day settings and that's what I was showing so there's the setup in and spy again traders taking positive delta positions primarily buying calls looking for the reverse level at at the 380 key gamma strike and then price makes a higher low and there's your you know if you didn't enter here you know there's your entry there and again looking at these price targets above so there's the setup in spy and then the next one was now we'll start at the top of the list and the next one was Nvidia and this was a great setup this morning for fast traders let's go take a look at Nvidia now I've got these so for us these sorted in alphabetical order and I'm going to go open this up I still have puts and calls transactions separated here and here you know it's pretty clear the blue line which is indicates traders are buying puts this morning was dropping and price was falling and again this was a pretty fast move down let's go back and take a look at go back and take a look at let's just zoom in on this setup for the morning and here the the target was the 145 put wall and that is shown here and it it initially acted as support and now it looks like prices continues to drop so there's the 145 put wall quick drop down to that level a reversal higher three points and then price continued lower to to the put wall again let's just go back so need to know ask hero cross the price I don't look at crosses the the leading indicator was that hero was rising before spy started to rise so that was indicating that again traders were taking positive delta positions you know as we saw traders were buying calls and that means that market makers are selling calls and they have to buy spy or most likely in this case buy es to hedge their delta exposure so es spx and spy are all just versions of the same product so they move together so sometimes there's a lag effect especially in spy so it is a very good very good to look for divergent setups and spy they occur more frequently in spy than than other stocks so again the steps first of all you recognize the divergence in hero then you look at book map for a potential reversal level you would be looking for for a key gamma level and also liquidity so a combination of key gamma level and that would be at a round number level and also liquidity at that level and so 380 was the natural reversal point and one other thing to note is let's just go to the I'm going to go look at the founders note again and note here key support and resistance strikes are given for spy and 380 is one of those levels all right so we're looking I hope that answered your question so again look at the divergence look for a reversal level expect market makers at some point to have to start to buy stock by futures to hedge their delta exposure and then price reverses at that level as expected and moves up towards the targets that you see in book map so here for Nvidia we see that traders are buying puts market makers are selling the puts and they have to sell stock and video stock to hedge their delta exposure so there was the there was the morning setup and then this afternoon setup and let's take a look at let's go back to hero now and I'm going to zoom all the way out and you see that traders are just continuing to buy puts so we look at the this dollar-weighted delta minus 42 versus minus 3.8 for calls so puts are clearly driving here and you can just see that from the graph and this is the one day rolling window I have not I have not tighten that to a shorter look back period all right let's take a look at qqq now just want to take a quick look at that it was on the list and this morning there was a very strong correlation between options trades and price action and qqq and the next one that I wanted to take a look at that was a good setup was apple let's zoom in on the morning and this is showing a very strong correlation between options trades and price action especially in the morning and let's take a look at book map now and here was the setup from this morning just this quick drop down to 129 and this one one thing that I really like about stock trading is the liquidity targets are just very clear price seeks liquidity and the first target if you caught the reversal at the 131 hedge wall was the 130 put wall and then liquidity down at 129 50 and at 129 and then on further on down at 128 all right the next stock that I want to take a look at is Moderna and let me check on questions in YouTube let's see did Q Napa 12 asked did qqq gamma level shifting down add conviction to the tesla bearish thesis or I would say probably vice versa so tesla used to be a larger component of qqq now it's now it's smaller but it is still extremely volatile so it has a strong influence on price action in qqq so taking a look at Moderna here and I mark these in the morning and now they're now they're not really that that visible Moderna has continued to drop so let's take a look at at a couple things and first of all this looks a lot like Friday so what it looks like to me is Moderna was knocked out at the open and just can't get up off the mat and on Friday it kind of chopped around at the same level once it dropped quickly and today now it's continuing lower let's go take a look at hero now and this is for Moderna and this shows the extremely close correlation between options trades and price action and at least in the morning both puts and calls were driving price action so that was the morning session that initial drop showing that traders were both selling calls and buying puts and driving price action then they have continued to sell calls which makes sense in a stock like Moderna it's a higher volatility stock so let's go take a look at let's go back in the look at my list here and remember Moderna was one of the stocks with a drop in the key gamma strike so we looked at qqq briefly and there were better setups that's why I skipped over that pretty quickly but here's Moderna with the the drop in the key gamma strike and you know if you're building a case for a short in Moderna you could also look at in your preparation planning look at equity hub here and we'll do the same thing for Tesla in just a moment and it looks like all other the key delta strike dropped and then the so the key delta strike dropped and the key gamma strike dropped so there was one clue and then the next was the the weak hero signal and then finally confirming that with spot gamma hero and price action and book map all right let's take a look at Tesla now and kind of go through the same same steps and again like many stocks that the price targets this is liquidity orders that passive orders that come in the order book at 930 at the cash open and stacked up here at 190 185 and 180 so that gives you a good indication of where price is likely to go right now let's take a look at Tesla okay and notice Tesla has traded down to the lower edge the expected move for the week that's shown here and then it's chopping around that level notice the this is the session range volume profile and notice the liquidity at that level and also at the 115 level where Tesla spent some time and ancient the architect asked at open is it safe to buy puts to hide target high liquidity areas and I would I would confirm that with with a hero signal and price action and I'm confirming that with with book map so like I said I have a two-step process for trading and the first is planning so you know whatever I'm looking at if I have a bearish thesis then I would always confirm my thesis with both order flow and market maker hedging flow and book map and spot gamma hero apple has high liquidity we'll take a at 125 is it safe to target that area again I would confirm that with with order flow and market maker hedging flow but if you are bearish then if if there is high liquidity at that area you know that's most likely a good target so let's let's focus on Tesla now go back to hero first we're still on maternal let's go to go to Tesla and just briefly take a look notice that Tesla was on the strong end of this list in the morning but now it has shifted to the to a weak signal as prices continued to fall and recall the Tesla was on this list with falling key gamma strikes and notice here the two red so 130 was a decrease from the previous day and then 120 was another drop today so that's uh that's all bearish and let's take a look at equity hub here look at Tesla and this shows the we'll just take a look at the key gamma strike has been falling for the last five days from the 20th a week ago falling from 150 down down to 120 now quickly we can look at the other levels particularly the put wall also dropping so all bearish for Tesla in our planning and you know now that's shown with the hero signal and let's take a look at hero and in the morning both calls and puts were driving price action and it continues to be both let's go back to book map it's not really a gamma level target but uh plenty of liquidity targets at the round number levels and then also that lower edge of the expected move and let me take a look at questions and need to know also ask one clarification on the hero chart the blue line on the hero chart on spy pointing down has a negative value and the negative value just means there are puts no that's not correct the negative value indicates that it is a negative delta position and that could be that traders are buying puts or selling calls both are negative delta and that is shown in in a dollar terms so that negative number again is shown a dollar terms somehow corrected for delta i'd have to go back and look at the exact definition but that is a you know just assume that's negative delta so negative delta is buying puts and or selling calls and trader a g ask what would i look for here so let's take a look so if uh you know if you're looking for a break of this 112 to 113 range then 110 is the um the natural liquidity target and let's take a look at at hero now and i'm going to get a little bit closer here let's take a look at a a 30 minute rolling window so this will be more sensitive to uh trades in the last 30 minutes and here i i uh trader each year i don't have much clarity you know if i were looking for price to continue down to that 110 target uh i would look for hero the hero signal to turn down first and on youtube uh h h the architect yes you're welcome go back to discord okay um so trader h e i would uh you know if i were looking to trade tesla i would i would just keep an eye on it keep an eye on hero and see what happens but i i don't have any clarity here i would certainly uh well i you know i just don't know it's hard to say let's go back to book map okay uh my time is up i think i've answered all your questions thank you mary of much for watching uh thanks for your um questions and comments and i will see you tomorrow thanks again bye