 Hello everyone, welcome to Options with Doug. This is my live daily stream on Bookmap Discord and the Bookmap YouTube channel that begins at 1.30 p.m. Eastern time and 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 training 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 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 and futures and stocks I have a two-step process for trading and the first is planning and I use positional analysis And I look at how traders and market makers are positioned in the options market and How those positions change from day-to-day to develop a thesis regarding expected range and volatility for the day as well as a directional bias and I think that is a new different way of looking at the market as opposed to other approaches that many traders use like technical analysis and fundamental analysis and The second step in my process is execution and I look at real-time order flow and book map and Market maker hedging flow in spot Yamahiro and this is all also real-time to confirm my thesis and to find setups for the day and On-topic questions and comments are welcome and I will be watching chat in the options with Doug Channel and Bookmap discord as well as chat and YouTube Okay So that's out of the way and let's get started So today I want to my agenda the things that I want to cover is first go over position analysis And that's for the S&P 500 and then I'm gonna talk about the 38 35 strike. That is the currently the SPX call wall and that is also happens to be the Short strike of the JP Morgan collars. So that's the call short call strike That expires today The end of the quarter end of the year 1230 and I want to I've talked about that all week And we'll we'll wrap that up today and then I want to review the ES SPX price action yesterday and We'll take a look at what spot gamma projected in the Founders note yesterday and how the SPX levels came into play Influencing price action in the S&P 500 ES SPX and spy and then finally we'll take a look at some setups So let's go take a look at book map and This is the This is the S&P 500 futures ES The support and resistance levels that are in play are shown on this chart and I have two columns of Cloud notes The first is spot gamma cloud notes and these come directly from spot gamma. They're updated daily and There are Two let two types of levels here one is levels based on the SPX alone and Those levels are converted to equivalent ES prices So right now spot gamma is adding 25 points to the SPX to come up with an equivalent ES level and an example of that would be the The put wall here. That's the SPX 3800 put wall and that was noted as support in the AM Founders note and I marked that in my Cloud notes column so in that column I marked the support and resistance levels that are Noted in the AM Founders note as well as Spy key gamma levels And then also ES big round numbers the zeros in the fifties So that's what I'm showing here in these in these notes so the support and resistance levels are Again noted in the AM Founders note so the support level that was in play today was the put wall 3800 and Just By the way, does anybody know what and there's a question for me to turn up my volume. Is this better? Can anybody is anybody else having difficulty with volume and let me check on YouTube? Okay, David Hello, glad you're here and So I've got one okay for volume and Then another low sound so as far as I know nothing has changed on my end Let's see if there are any more comments Okay, so mostly on discord. I'm getting Volume is good. There's I don't know of any way to turn up my volume on the microphone. So I've got the the microphone right in front of my face so Okay, so I think it's it's okay. So just does anybody know what what happened here right at Right at 115 Eastern time this big drop Was that news the only thing that I could could see was This right here news about the Fed reverse repo so that's the only thing that I saw and There's a question did the UK session closed and the session UK session closed earlier That's my understanding the the last time I checked the 24-hour market clock European markets closed at 11 30 p.m. Eastern time. That's that's my understanding of when they're when they're closing So anyway, this is the only thing that I saw and it could be Low volume thin pre-holiday trade combined with Any news about the The Fed so again, this is all I saw But it looks like So it looks like ES went down just below the put wall 3800 put wall and the combo L2 level and that combo L2 level is a combination of SPX and spy levels so price dropped quickly to that level and then Reverse back up to the 380 spy 380 put wall and now it's dropping down again so it looks like this This 380 put wall has been in play today and then now the 3800 put wall so the spy put wall and the SPX put wall and most of the volume is concentrated so far today for the session between the Really this combo L5 level and the volatility trigger and that is the SPX volatility trigger at 3825 which lines up with the ES 3850 so pretty much a lackluster day in in the S&P 500 today More of a range day range day chopping back and forth Now regarding shifts and levels so those are the levels that are in play today and regarding shifts and levels the SPX put wall if you call recall yesterday he dropped down to 3700 and I think it jumped back up to 3800 and Then also the spy put wall As well as the key gamma strike both increased from 375 to 380 So that This 380 put wall and I forgot to change my Cursor size give me just a moment. I'll Make this a little bit easier to see Okay, so that should help so I'm talking about the the 380 put wall and the 3,800 put wall Being in play and especially the 380 put wall and all the volume is concentrated between that level again and the volatility trigger and shifts and levels So I talked about the S&P 500 the put walls SPX coming back up to 3,800 and spy coming back up to 380 and then the QQQ volatility trigger Drops slightly from 280 to 270 and the call wall drop pretty significantly from free 10 down to a more appropriate level at 274 so that is the That's what's in play today the playing field and let's take a look now at the S&P 500 charts and we'll see the levels and the absolute gamma levels So this is the SPX Absolute gamma levels and the black lines above the zero line or is call gamma and The teal lines below zero are put gamma So there's the first significant level at 3,800 and that is the put wall for SPX and then here is that 3,835 call wall strike that we've been talking about all week again That's the short strike short call of the JP Morgan collar then there's the Where's that here the 3,850 level which has been important resistance this week And you can also you can see that's a pretty significant level as well 3,900 and then 4,000 remains the absolute key game or key gamma strike or absolute gamma strike And that's the strike with the largest Absolute gamma so that is the playing field for SPX and for spy 375 Yesterday that was the put wall and now the put wall has jumped up to 380 and that is the That is also the key gamma strike So the put wall is the strike with the largest net negative gamma and the again The key gamma strike is the strike with the largest absolute gamma So that's a very significant level and there's 385 the volatility triggers just below that at 384 And then the call wall at 390. So there's the playing field in the S&P 500 Now let's take a look at at some of the data This is from today as usual. I'm going to take a look at Gamma notional and this shows market makers position on the gamma curve and Today gamma notional for both Spy and SPX became less negative So yesterday SPX gamma notional was minus 651 and today it has moved up to minus 304 and yesterday spy was a pretty significant minus 23 26 and Today it's minus 1594 And there's a question. How do I use that info? Okay, so Gamma notional does not have any implication for directional bias It has an implication for Volatility and expected range for the day Again, this is showing market makers position on the on the gamma curve now it could in certain instances have a Bearing on directional bias like at at an expiration or ahead of a key event like a an FOMC announcement or Or an economic data report an important one like CPI and I've talked about that in the in the past how that can lead to a Put Vanna rally, so let's just talk about time or an instance other than that just every day and this is indicating that when Traders are long puts Market makers are short puts and that is in the negative gamma environment and There and we'll look at the Vanna charts and the Vanna chart shows this graphically In a negative gamma environment Market makers have to hedge in the direction of price so since their short puts if SPX and spy drop Market makers delta exposure increases they want to remain delta neutral so they have to sell futures to hedge their delta exposure So they're trading in the direction of price and as price increases they can buy back their Short futures, so they're trading in the direction of price again Both up and down and that tends to increase volatility with market makers Enhancing the the price action in either direction So that is it's important to know how market makers are positioned on the gamma curve and again right now They are negative gamma and it's a negative gamma environment And they are trading they will have to trade in the direction of price to hedge their delta exposure So the implication is just for Expected range and and volatility for the day and We can just to illustrate that let's take a quick look at the Let's go back and this so I was looking at gamma notional and this Spot gamma gamma index is related to that so as Gamma notional moves so does the spot gamma gamma index and We can look at This chart right here. I I think we looked at this yesterday, but this helps to explain This is This is the zero line and what this is showing is the one-day return It's actually the one-day forward return positive above and negative below and then this That's the vertical axis the horizontal axis is showing the spot gamma gamma index and you can Substitute gamma notional in here. So what this is showing is in a in a negative gamma environment notice that the Expected range for the day plus or minus increases Becomes more volatile So it doesn't apply imply direction. It just implies volatility, okay, and Another way to look at that Is the Vanna charts and this shows market makers Delta notional or Delta exposure with changes in price and that's shown on the horizontal axis and Implied volatility and that's shown by the green curve. That's the current expiration and That is showing the Vanna effect and Then the black line shows the changes in Delta exposure as time passes and that's the next expiration and that's a charm effect So I think this is a very easy to look at visual Representation of what I was just talking about and what this is showing is That as price Decreases Market makers Delta notional Delta exposure Increases and they have to sell futures to hedge their Delta exposure and I just drew a line Kind of an approximate line through this green curve It's usually parallel to the black curve and that is showing again market makers Delta notional Delta exposure so this a Curve sloping up from right to left is typical and a negative gamma environment and we can look back and see how that has changed Over the last couple of days So just looking at yesterday you can see how That has shifted down that curve and I just look at the slope of the line and the same for spy yesterday and today Okay, let's take a look at That's my positional analysis so based on this I'm looking at a looking for a A Volatile day wider trading range, but less than yesterday because of the decrease or Geminotional becoming more positive and let me just check for questions on YouTube Okay, David said something about I guess bond market related to the news No, I don't know the only thing that I saw was Was related to that the Fed repo market Okay, so let's talk about the 38 35 strike Now I said Truman asked When traders are short puts Market makers need to hedge with long puts So what I think I said what I meant to say is that traders are long puts and Market makers are short puts So traders are buying Puts from market makers market makers are selling the puts. That's a positive delta position and Their delta exposure increases as price drops. So they have to sell futures to hedge their delta exposure All right, so what I want to look at Now is Let's take a look at a note first. This is from the This is from the AM founders note today spot gamma AM founders note noting that So they've been talking about this JP Morgan caller Related flows all week talking about flows and other large year-end flows entering the market today and Further compounding that is holiday liquidity and that's certainly what it looks like to me and so indicating that the 38 35 pin which was definitely in play today is gone now. So let's take a look at that and just Just for follow-up through just because I've talked about this all week. I want to Want to kind of wrap it up today So That's not what I wanted to look at Let me just open up the correct one so I started looking at these on On the 27th so on Tuesday So this is the this is the spx Call gamma. This is taken from thinkorswim and showing the gamma curve for the next Four uh weekly expirations and the pink purple line at the top is the 12 30 this today this expiration and then the next three lines are the next Three Fridays after today. So that is the january 6 january 13th and then january 20th And this is emphasizing and this notice this peak is right at that 38 35 um spx level So this is from the 27th And what we'll see is how this the influence of this well just to point out that That jp morgan is short this strike. So market makers are long So this is in this area More of a Gamma dynamic comes into effect where as price increases Market makers delta exposure increases and they have to sell futures as price rises and the opposite as price Drops they have to buy back. So they're In this case, they're hedging against price action and that can tend to tend to cause a pinning at this level So that is from the 27th and we'll see how the influence Changes from day to day Becoming stronger at the peak and weaker at the wings and by the wings. I mean further out away from that strike So that's the 27th And there's the 28th the next day So notice how the peak went from around point zero six 2.007 So that's the 28th There's the 29th. So the peak is increasing while it's becoming more narrow So the influence of this strike is decreasing further away from the 38 35 level and then finally for for today and notice how narrow it is and I Each of these plots I plotted the same range from about spx 3300 to 4300 So notice how steep the peak is but the influence. So again spot gamma is saying they think the The pinning effect of this strike today is gone And it was certainly in play yesterday As we'll see so yesterday And let's go back to one thing I want to take a look at is This is the this is from yesterday. This is from 1229 the am founders note for spot gamma And they posted this chart So I just want to make sure everybody knows this is from yesterday and Now I've got a Well, this is about the same size we so we can go back We'll just look at it here And what this is showing this is the This is the 3,800 strike and that yesterday remember the put wall was down at at 3,700 yesterday for spx So further down, but this is the spy put wall And up here is the The 38 35 strike So this is the The area of interest and the reason I'm showing this is just to show how important it is To keep track of these levels In spx and spy And how they have such a strong influence on price action in the s&p 500 Including the es futures. So the point here is Showing above. Well, let's start with below. So Starting below at the 3,800 level up to 3,885. They're calling for pinning flows. That means they're looking for With price spx above that level. They're looking for price to pin at the Around the 38 35 level and again, this is all spx levels and then above that They're looking for selling pressure at that level down back To 38 35. So pinning flow or bullish buying pressure Below that level down to 3,800 And then selling pressure above that level Leading to a pinning effect. So that's what the spot gamma was calling for yesterday morning And then let's take a look at How the day played out yesterday And This is the That's the 38 35 level the call wall The 3,800 level and then this is the ES 38 spx 38 50 level So all those levels were definitely in play today and I pointed this out yesterday The reversal Drawings all over the place here. So I pointed this out Yesterday the reversal higher at the 3800 level and this happened before the rth open And notice the the bullish order flow up to 38 35 And above and then pretty much stops And is contained by the 38 30 38 50 level which was actually noted as a significant resistance level yesterday In the am founders note and then ultimately by the 38 384 spy volatility trigger so again, just an illustration of the importance of Keeping track of those spx levels and their significance on Price action of the sp500 You know whether that's spx spy or es, you know, whatever you whatever you trade These those levels and the influence of the market options markets on the sp500 was definitely Important yesterday All right, let me check for questions Let's go Let's go take a look at book map Let me check for questions in youtube Okay, no questions in youtube And panamats just just stick with it. It takes time to to understand You know the key point here so far is that The options market has a strong influence on on the sp500 most days And it certainly did yesterday and that was a clear illustration And you know, I think we're seeing it again today the significance of the the spx and spy levels for trades in nes Okay, and there's FTW trading group posted news about the jp morgan Roll their collar to the march 30th. So that is the march quarterly expiration So those are the strikes Okay, thank you. All right, so let's Let's take a look at some setups here. So let's go to spot gamma hero And this is the es So this is for today And what this is showing is and this is pretty typical of the s and p 500 as price drops Traders start taking bullish positions, so they actually started buying calls at the open and continued As price dropped and then all the way to price went up to You know, it looks like This is shown in terms of es or s spy prices here Up to this level. We'll take a look at book map In just a moment. So this is a divergent setup with calls. So traders were buying calls and this is Most likely all spy calls And initially they were buying puts and then started selling puts At least for a portion of the move higher So it looks like primarily calls. We're driving this price action. So For anybody looking for a divergent setup There it is So that is the the morning setup. Let's go take a look at at book map again and there's that There's that setup in the morning So the reversal happens above the the put wall But the water flow shows it pretty clearly note the Pink dots the aggressors sellers taking price down to the liquidity here At the 38 30 level the es 38 30 and then the Green dots coming in the aggressor buyers come in As traders are buying calls And move price up to the volatility trigger And at the same time these lines In the sub chart are showing iceberg orders And that is the blue line and i'm showing these in in summation mode And also there are some by stops firing and that's shown by the yellow line And then the pink to dark blue line shows cumulative volume delta So Those they were rising slightly and then this large order iceberg orders come in And then This 522 those are by stop orders So there's Fueling that final move up into the volatility trigger So there's the setup in es Let's just go back and check Make sure we have the correct time alignment and yes so that Move higher starts around 9 50 before 10 a.m And goes up until about uh an hour later Let's just go back and check So yeah 9 50 it starts And then the the final peak is Just around 10 50 And that's really one trader start a stop buying calls Let's take a look at the total signal again So looking at the purple line that's put some calls and that is for spy and spx But most likely mostly spy and we'll take a look at spy And just a moment So i'm looking at Hero the purple line Making an equal high there And then making a lower high As price is dropping So options trades Driving price however higher Then showing the The peak And then and then starting to fall as options Trades become Negative negative delta Okay And there's a question about iceberg orders Let's go back to book map So this again i have my sub chart Stops an iceberg shown in some mode So the spike just shows a big order here if that's what you're what you're asking And that is that order here And there was one other One other large order here. I've got the Let's see if I can Zoom in on this a little bit So that was about 3 000 right there and you can see by the the sloping The increase in the blue line And the yellow line Again a summation mode and it's showing so The this is the mbo Market by order Indicators from book map And there are two components the sub chart and The on chart indicators and I look at both So I have the sub chart indicators in In some mode and that's showing this cumulative Uh a fact of stops and icebergs and then I have the events Shown on the on chart indicators And that is shown Here I have the icebergs Shown in in blue this Blue and Let's see if I can find a Cell iceberg and I don't see a Let's see if there's one further down I'm looking for an on chart So here's one right here See this I got a horizontal line again. Sorry about that All right that I kind of a little wavy icon with the teal or the I'm sorry the pink purple color That is a cell iceberg and you can see the Decrease in the blue line there showing the same thing same thing. So that is the Those are the iceberg orders the the blue And the pink purple Showing on chart and then the blue line is showing the the light blue line is showing icebergs in summation mode So showing the same thing same thing just cumulative effect In the sub chart and the events on the on chart indicators and Now for stops That is shown by the yellow line and these are just my colors. This is what I have chosen to use to look at and I have So these are cell stops Yellow line dropping and you can see these red circles here 158 125 135 So This is a little bit off topic There's not much to look at so i'm spending a little bit of time on this uh You know, I refer you to uh You know other book map webinars. There's plenty of information Bruce talks about it. Of course scott pulsini talks about it. He's Does an advanced webinar every every thursday And then bruce does his webinars monday tuesday and friday all at 10 a.m So You know, you can watch those or look at the uh book map youtube channel for more information on on stops and icebergs so let's Let's go take a look at spy And I want to look at hero So pretty much the same as es And that has been the case recently that looks like spy options trades driving And actually there's been an issue with spx and heroes. So I Can't see that So same thing traders buying spy calls This is just like the uh The es chart so another Divergent setup again and spy es However you want to trade it spy shares spy options es futures And just quickly there were I didn't see much today so end of the You know end of the week end of the quarter end of the year pre-holiday trade pretty pretty light Especially compared to yesterday when there were so many strong uptrends with traders buying calls in many stocks So maderna Pretty strong correlation between price action Options trades. Let's take a quick look at book map. Right. Let me check for Check for questions in youtube And jonathan ask have you heard of the jp morgan collar trade? Yes, I've been talking about it all week And talked about it Earlier today, I'm glad you're here for a live session and I talked about it earlier today and all last week and my my sessions on YouTube are recorded so you can go back and and look at the beginning of the session today or Any of the past sessions this week? I've I've covered that extensively Okay, so this is maderna Nice steady uptrend a lot of pullbacks Uh made for good entries here and let's go look at So again strong correlation as usual Between price action and options trades in maderna and the next was microsoft And today, uh, although there was not much range. There was also Strong correlation between price action And options trades although it seems to be lagging just a little bit on this uptrend Let's take a look at book map And really the only notable thing here Uh was the this 240 key gamma strike And the liquidity up there Being a potential target if price had continued higher And as usual netflix is pretty volatile And I don't believe there are any Any gamma strikes I didn't get to update the uh my cloud levels for all the All the stocks they were the uh equity hub equity hub updated late So I didn't have time to get all those levels in So anyway, there are liquidity levels at 290 and 295 at play and let's take a look at hero netflix And netflix is another stock that has high correlation with options trades price action And qqq And this is one that I wanted to highlight. So remember we saw a call divergence Set up for a reversal hire and spy And the same thing here in qqq In the morning So traders buying calls from the open price dropped and then Reverse is higher Let's go take a look at book map now So there's the reversal hire in the morning session If you were fast You might have caught this first reversal As aggressive traders see the green dots come in there These dots up just a little bit So you can see the buy sweep and the green dots coming in And then the first pull back to the 263 level And then the 265 Key gamma strike And play there and that was the target So really this The qqq trade and the spy trade Were the were the best setups that I saw today So there's the qqq trade. Let's go back and take a look at at hero once more So again, there's the There's the long entry First the divergence You know the sharp increase both traders buying calls and selling puts And then they continue to buy calls As price reverses higher Okay And There's a question Let's see a comment from panamets. I was chasing it gave up. I thought the price was too high I don't know are you referring to qqq Anyway in general I don't use fundamental analysis. I use position analysis So es You know, whatever maybe You know, maybe relative to You know fair value for the day or something like that, but I I only consider price too high if it's trading above the call wall So that was the case yesterday is price was trading above the call wall and The you know the es chart that I showed for yesterday showed What happened when price price was trading above the call wall Uh, it was You know kept reverting back to Close to the 38 35 level And again, those are spx numbers Okay, so there's the setup in qqq Pretty similar to spy You know another good setup And finally, let's take a look at tesla And tesla's another stock stock with this Very active options markets and Oh, there's a question about numbers in the qqq block orders and those You know the only way that you can come up with those numbers and I didn't I don't I don't recall noticing a A block order you would see a vertical line In a in a block order. Well, I'm not looking at hero on On book map if that's if that's what you're talking about Uh, I have turned that off that will be discontinued At the end of this year. So today's the last day for book map hero and I've taken it off my charts For some time. So, um This is the only version of hero that will be available in 2023 All right, so I I don't understand your question The number in the book map chart All right, so let's go Let's go back to book map All right, so I I assume you're referring to these numbers the um Okay, those are the absorption and sweep indicators and There are two sets of uh indicators absorption And sweeps so absorption is passive orders. Those are Resting liquidity and they are showing Again passive buys and sells and I have Those numbers that I use the numbers that I chose. See this pink line here Peak number is a passive Cell absorption Just disappeared. So a bigger number came in For buy sweeps and sells I use green and red So this is a buy sweep here and typically you would see a a pink absorption at the end of a green buy sweep So what I'm showing here These are the the absorption and sweeps indicator All right, then we wanted to look at tesla and then uh, then we'll wrap it up And for more information more questions about the absorption sweeps again, I refer you to the Bookmap youtube channel Take a look at the features and components playlist that is You know not my focus again my focus is options So this is tesla Very fast Move up in the morning. So this again see all these green little green circles here That's buy sweeps heading up into the liquidity at 124 and then this number So those are aggressive buyers those are Those are um Buyers on the You're buying on the ass. So they're you know again aggressive market orders let's just So here then the these pinkish purple Dots and actually this number right here. This pinkish purple number is showing the absorption So anyway, the setup was clean this up a little bit price making lower highs You know potential entries that sell sweep the red dots And then the aggressive sellers are coming in with the You can see that with the pink purple dots and the same here And let's go take a look at hero And really the level and play is the 120 key gamma strike for the move down Look at hero. Oh, that's qqq. Sorry tesla So if all else fails if you can't find anything to trade Tesla is always a good go to And it always has a very strong correlation between options trades and price action and it's Rare to see a divergence and tesla almost always trend confirmation One to one so market makers are hedging options trades in And tesla immediately So there's the There's that short setup. Let's just see if we can gain any information by looking at puts and calls So it really looks like At least Right now. Let's i'm going to change this to see if that adds adds any more clarity And yeah, so I just changed the rolling window and I I can You know, so this is now instead of a one day look back period It's looking back just 30 minutes So it's like a shorter moving average and showing that Here traders were Selling calls and buying puts so this reveals a clear divergence setup for shorts here And here and let me check for any final questions Okay, so Again, all else fails go to tesla. You can always find something to trade go to book map So there's the setup And let me just check for any final questions on youtube And jonathan ask are the put and call walls? Dynamic throughout the day or is it static? The levels may be changing During the day, but there's no way of knowing that information most of the data that Or most of the information that spot gamma provides is based on An open interest which is updated once daily sometime during the night. So all those levels are generated Based on that information so the Information that we have is just a snapshot in time of basically the close from the prior day So that is all these all the gamma strikes The the five key daily levels for equities as well as all the gamma levels In spx are all generated once daily Okay, so that's it My time has passed I need to wrap it up So I want to thank you for watching. Thanks for your questions and comments and I you know hoping for Good start to next year as the You know traders come back and markets. Hopefully we'll see some nice nice volatility next year. So again Thank you for watching. Thank you for your questions and comments And I will see you next year. Thanks again. Bye