 Hello everyone, welcome to Options with Doug, streaming live daily on Bookmap Discord and the Bookmap YouTube channel at 1.30 pm Eastern Time. Before I go any further, 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. Risk Disclosure, trading futures, equities, and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. As a reminder, the focus of my presentation and the focus of the Options with Doug chat and Discord 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 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 volatility and trading range for the day and also a directional bias. And the second step in my process is real-time order flow. I look at real-time order flow in Bookmap and real-time market maker hedging flow and SpotGammaHero and I use that to confirm my thesis and for entries, both set-ups, both entries and exits, excuse me, and questions and comments are welcome and I will be watching for questions and comments and Discord and the chat and YouTube. All right, let's get started. It's a very interesting day. Okay, and there's a question in YouTube and ancient the architect asked how do I determine what stock or future I will be trading for the day and that is somewhat of a complicated process. So I, you know, I've talked about my Key Gamma Strike List and that is a starting point and then I look at the first few minutes of trade. I look at my hero signal list and see what is strong and what's weak and I'm looking for some sort of correlation between my Key Gamma Strike List and this hero signal list. So for example, if I see a rising Key Gamma Strike and a strong hero signal, if I rank the list from strong to weak and see that stock at the top of the list, then if I'm looking for a long entry, that would be a starting point. Okay, so today the things that I want to talk about are first news and then our positional analysis and finally go over some setups. So first of all news, I don't think there was any significant economic data today, but there were a couple of stocks in the news and first was Netflix and Netflix reported earnings yesterday after the close and I guess the market reacted possibly to the increase in subscriber growth. So Netflix gapped up pretty significantly and is still trading higher today and we'll take a closer look at Netflix and then Google announced layoffs and apparently that was interpreted as positive as well. So both Netflix and Google are up pretty strongly today and then today the big, as far as options go, this is the monthly options expiration. So all stocks, equities, indices have options expiration today and keep in mind for the monthly expiration, SPX has an AM settlement and a PM settlement and the AM settlement occurs at the open today, so that has already happened. So then there's still the PM settlement this afternoon with everything else. And then finally, the FOMC meeting, first meeting of the year and announcement is on January 31st and February 1st. I would expect to that event coming up to keep volatility somewhat bid up until that event. Okay, let's take a look at the levels on charts today. So I'll get book map ready while we're waiting on that. I'm going to take a look at the big picture and I've got some thinkorswim charts and this is a 20 day one hour chart for the SPX and thinkorswim and the things that I'm showing here are just a line drawing for SPX and then the horizontal lines are the spot gamma key levels. So this shows that this trading range, again I've talked about SPX breaking out of this trading range and that was a few days after the beginning of the year, traded up to 4,000, traded down to 3,900 and those are both key levels, 3,900 and 4,000 and then today SPX tested 3,900 and is moving higher. That looks like toward the 3950 level. So that's the big picture for SPX and the reason I look at this, I think this SPX and these SPX options levels, key gamma levels are key drivers of price action for the S&P 500. This is the actual S&P 500 index and let's take a closer look now at a smaller time frame. Again, this is a thinkorswim chart showing the test of the 3,900 foot wall this morning and then after that price has continued to move higher towards the 3950 level and note that SPX is trading above the volatility trigger now and that is a positive sign that this spot gamma is proprietary gamma flip level. So below that level, market makers, the assumption is market makers are in a negative gamma position and they have to hedge against price action to hedge their delta exposure and above that line they're in a positive gamma and they have to trade against price and that tends to subdue volatility but it's generally a bullish sign when any index is trading above the volatility trigger. And now let's take a look at book map and we'll see the levels that are in play on the chart today. I have two columns of levels. This is the spot gamma cloud notes that are updated automatically every day and they are showing key SPX levels as well as SPY and SPX combo levels converted to an equivalent ES number and these numbers are a little bit off again. So they were for a while at 25 which is way off. That's the difference between SPX and ES. And now the numbers are 20 points and that's still a little bit off. So remember we saw on the thinkorswim chart that SPX actually tested right at the 3,900 level and this is showing that that's a little bit below the 3,900 level and that's not right. I believe that SPX did actually test close to 3,900. And then the second column here, these are my notes. These are my cloud notes and I'm showing key SPY levels. So there's the 390 put wall and I update that ratio between ES and SPY pretty much daily so this is close. So really the key here was the test of 3,900 and it looks like a kind of a brief pause at the 390 SPY 390 level and then increase in price again is heading potentially towards 3,950 today and that's SPX 3,950. So those are the levels that are in play and I posted a note in Discord chat this morning indicating that several key gamma levels for SPX and SPY have shifted lower and I'll talk about that now. So first of all the volatility trigger, triggers for both SPX and SPY shifted down. So now the volatility trigger and this is shown at right here at 3,935. We saw that on the Baker Swim chart. It's actually at SPX 3,915 and the SPY volatility trigger is at 395 and then also the SPY put wall shifted down and you recall yesterday it shifted down from 395 to 390 consolidating a lot of gamma at the 390 level and now it has shifted down further to the 385 level and also the SPX call wall shifted back down to 4,000 and actually it was 4050 shifted up yesterday to 4,100 then back down to 4,000 today and most notably the key gamma strike or the absolute gamma strike for SPX shifted down to 3,900. So let's take a look at the S&P 500 charts for a visual representation of what I'm talking about. So here are the absolute gamma levels for SPX. This is the zero level here and above that line the black lines are showing positive gamma or call gamma and below that line put gamma or negative gamma and this is shown by the teal lines. So you can see the 3,900 level there is the most important level and regarding the call wall yesterday if you recall I talked about the 41 level being insignificant just kind of a technical based on the technical definition of the call wall which is a strike with the largest net positive gamma but the the important strike today most important strike is 3,900 then there's 3950 which SPX appears to be heading toward and then the 4,000 level which is still the call which is the call wall. So those are the SPX levels then SPI and the key gamma strike for SPI remains at 3,900 and the call wall at 400 and now the put wall and you can see that is the strike with the largest net negative gamma has shifted down to 385. So that is the playing field for SPX and SPI for today and ancient the architect asked is gamma the same as open interest and no so what spot gamma is doing they're looking at open interest and that is information that's from the OCC options Cleary Corp it's provided once a day sometimes during the night and then spot gamma provides includes a gamma waiting so if there's a strike that's way far out of the money that has huge open interest the gamma would be so low at that strike that it would not be in play not have any any impact or factor today so spot gamma provide they have a I guess a proprietary method of doing a gamma waiting to open interest to come up with these absolute gamma levels so again it's based on open interest with a gamma waiting and one other thing to note some of the QQQ levels shifted lower as well the volatility trigger the call wall and the key gamma strike all shifted lower all right let's take a look at data and this is the gamma notional this is the spot gamma AM founders note and the thing that I always look at is gamma notional and this is gamma notional for spx on the left and gamma notional for spy on the right and these numbers are quite negative and that is indicating market makers position on the gamma curve is again quite negative and that means that traders are long puts market makers are short puts and they have to sell futures as price decreases to hedge their delta exposure and they had they can buy back their futures as price increases since their delta exposure is decreasing so that is I think that's what's in play today and that was the second part of my post this morning and it was kind of brief I was actually sitting in a waiting room this morning typing that on my phone so there's only so much that I could do but the the post noted the shift down in the absolute gamma strikes or the key gamma strikes for spx and spy and also noted the significant shift down in gamma notional or shift more negative and gamma notional for spx and spy and those numbers for yesterday for spx was minus 424 and now spx gamma notional is more negative at minus 558 and spy yesterday was minus 1808 and today it is minus 2187 so again pretty far down the gamma curve and I laid out a couple of scenarios for today and first was prices pinning close to the spx 3900 and spy 390 due to the the large amount of gamma at those levels and then the second was a put Vanna rally either today or Monday and I think that's what's happening today so let's take a look at take a look at a VIX chart and using VIX is a proxy for implied volatility seeing that VIX has been dropping for most of the day it's down a little bit over 4% today down below 20 so that's pretty significant so that means that implied volatility is dropping and all of those puts and we'll talk we'll talk about the gamma expiration in in just a moment so all those puts are losing value as price increases and implied volatility drops and market makers can buy back their short futures and JC asked what do you mean put event today or Monday and no I don't mean a short squeeze so what I mean is that again traders were long puts market makers are short puts to hedge their delta and to hedge their delta exposure their short futures as their delta exposure decreases due to two factors first as implied volatility drops their delta exposure decreases and that is the Vanna effect is the second order of Greek that measures the change in delta with a change in implied volatility and of course puts are going to lose value if price increases so market makers delta exposure is decreasing and they're buying back there at least this morning I'm not looking into chart right now but they were buy they you know they were buying back their short futures and let's take a look at a couple of other things that will help to illustrate that so first of all this is the this is the gamma curves for today and for the next expiration so you can see the shift shift here in gamma draw the small arrow here from the current expiration to the next expiration the next expiration would be Monday so there's gamma that is expiring today and let's take a look at the spy gamma chart and the same thing so that's showing all this gamma expiring today back to SPX and then let's take a look at the Vanna charts now so this is SPX and what this is showing as price so this is delta notion or delta exposure on this vertical axis and price on the horizontal axis and this is showing as price decreases market makers delta exposure increases and they have to sell futures then more relevant today as price increases their delta exposure decreases and they can buy back those short features and the green line is showing the current expiration and showing the Vanna effect with changes in implied volatility excuse me all right so that's SPX and those are these are two illustrations of what is happening today and then we can we'll take a look at one other thing so let me clear this and we'll take a look at spy now so there's the there's the Vanna model Vanna charts for spy and showing this even steeper line remember recall that gamma notional for spy was about four times larger or more negative than gamma notional for SPX so again showing that as price increases market makers can buy back their short hedges and the black line is showing the delta exposure at the next expiration assuming nothing else changes and that's the charm effect the change in delta as time passes then finally I want to take a look at equity hub and this is showing SPX and this is the put and call impact chart and the call line is shown in orange and the put guy put gamma line in blue and this is showing in this price range of slight dominance of put gamma versus call gamma and it's more pronounced in spy okay there was a question earlier in discord about the I believe about the composite view chart and what this chart is showing is first of all this color indicates options position size here's a scale over to the right and that for need to know if you're if you're watching now and need more information just take a look at the information on the spot gamma website and so the way that I interpret this chart so the dark red means put domination dominated by put gamma or negative gamma the darker the red the larger the size this blue line right on the edge here indicates activity the darker the line or the thicker the line the more activity so there's a lot of activity in SPX options put dominated and then this vertical axis is the spot gamma momentum indicator and that can be that's the rate of change in gamma and can be equated with volatility so right now this in this range the SG momentum indicator is pretty high and then these points are considered inflection points and could act as support and resistance so this this chart is I think a little bit difficult to interpret and maybe take will take some time to interpret so I think this I often look at this chart just put and call impact chart and it's showing some of the same things like the steepness of the line is showing the rate of change of gamma but overall it's a little bit easier to interpret and then this is showing right here put and call gamma at different strikes so this is showing the dominance at this level right here the large blue and orange bars of that strike okay the next thing that I want to take a look at is my key gamma strike list and this is spreadsheet that I keep every day this is the these are the stocks and symbols on my watch list and I track the key gamma strike and the key gamma strike is the absolute gamma strike that's a strike with the largest absolute gamma and it often acts as support and resistance it's just a a key level to keep track of and I what I do is I track the key gamma strike for the previous day and at the beginning of the day I'll just shift this current key gamma strike over to the right that becomes the previous key gamma strike and then I'll note the key gamma strike for the current day and then I'll color code this green or red and red of course indicates that the key gamma strike dropped from the previous day and green indicates that it increased so given all this just this information alone regarding the shifts lower in the uh all the levels for SP uh at the S&P 500 again SPX and SPY volatility triggers shifted lower the SPY put wall shifted lower the SPX call wall and key gamma strike all shifted lower seeing the red here for some of these stocks on my watch list the shifts lower and the key gamma strike for these stocks uh given all that information my thesis for the day was bearish but again I laid out a couple of scenarios in the uh in discord in the chat room and the first again was the PIN close to 3,900 and 390 and these are more uh expiration dynamics and the second was a put Vanna rally so one other thing that I want to point out and this is just a quote from the AM founders note noting that the so SPX closed around 3,900 yesterday and all the shift all the levels shifting lowers bearish and implies options traders are accepting these lower price levels so again given all that information initial thesis was bearish for today and again I laid out a couple of scenarios in in chat and one thing to keep in mind is the S&P 500 is an index of stocks and it looks like today that the tech stocks are strong and that um that could have been the fuel that let the put Vanna fuel and is uh driving this rally higher so let's take a look let's go back to book map now let's see what the S&P 500 is doing still going higher heading toward that 3950 level and give us a difference in price it could already be there let's take a look at the thinkorswim chart and it's almost there trading right now SPX trading right now at about 3946 all right there's a question let me check for questions now I'm going to go to YouTube first and ancient the architect asked when I get those large delta alerts on thinkorswim I don't know what that is I I'm not sure what you're referring to and Alex and I believe this is a put Vanna rally I've laid out the I've laid out my my thoughts and reasons for that and discord put Vanna rally is bullish yes and put wall call wall shifting lowers bearish yes so you know again you have so I have my thesis I laid out some potential scenarios and you just have to confirm with with uh order flow price action and order flow and and so seeing vix drop and price action move higher that you know the quick test of the put wall the SPX 3900 put wall this morning and the move higher confirmed the scenario I laid out of the put Vanna rally so it's hard to pride you know not necessarily prioritize anything you just have to have these ideas the scenarios in mind and and wait and see what happens so you know there it was you know a lot to lot to consider this morning and that is often the case with options expiration and we'll take so there's a question about book map give us any hints in any way with sitting liquidity we'll take a look at some stocks so let's go let's go take a look at stocks now take a look at some setups and again remember I was I mentioned that NASDAQ is leading today so some tech stocks are leading so let's let's take a look at those and let's see what's leading the market and first let's take a look at Apple and quick drop lower trending high most trending higher most of the day and to see anything I might have to increase this bubble size the usually the opening closing print for many stocks uh overwhelms all of the volume during the day that's what this big green dot is right here there's the opening print for Apple so drop then just a trend higher and yes so uh regarding your question for liquidity it's usually a lot easier to see in stocks and this this outside liquidity number here this is a an add-on and book map is showing slightly more liquidity above than below but in this visible range here you can see that the liquidity at the 138 level and the 137 call wall is dominant it's greater than the liquidity at the 134 level so it looks like the 137 call wall for Apple is on deck so yeah Moonwalker especially for stocks liquidity always gives you hint gives you a hints all right let's take a look at let's go take a look at uh hero now and see what options traders were doing let's go to Apple so a very strong correlation here between options trades market maker hedging activity and price action and traders were selling puts and buying calls calls shown by the orange line put shown by the blue line and this vertical line here is showing a large block trade so some institution sold a lot of puts there so that's Apple so that's one of the big components of both the Nasdaq and the S&P 500 right the next stock there are a couple of others that are not necessarily large cap tech stocks that I have on my other computer that are showing strong trends as well and if uh if I have time at the end I'll take a look at those so the next stock we'll take a look at Amazon so it's trending higher but there's not really much confirmation with options trades let's go take a look at book map so nice strong trend in Amazon again not not much confirmation with options trades hero and definitely going getting back to the question about liquidity and remember liquidity attracts price buyers seek sellers and sellers buyers so this is showing out outside liquidity above price as greater than the liquidity below and I interpret that as bullish doesn't always work out that way that's not necessarily a key factor but it's you know something else to look at and JC asked I thought that the blue line increasing will mean down pressure and no so in the lines that and hero let's go back to hero let's go back to Apple it's a little bit more clear so these lines are shown in terms of delta so a a rising line means positive delta and a positive delta there uh with calls buying calls that's a positive delta position or selling puts both both are positive delta positions so a rising blue line indicates that traders are selling puts market makers are buying puts and they have to buy stock to hedge their delta exposure and the same with calls market makers are buying calls or traders are buying calls market makers are selling the calls and they have to buy stock to hedge their delta exposure okay so just think great so just think in terms of delta all right so we were looking at Amazon not a strong correlation between options trades but it is uh rising and it again is a key component of the Nasdaq and the S&P 500 there's Google sharp increase in the morning and Google's somewhat of a slow mover so the liquidity above at the 100 call wall uh may be a potential target maybe not Google may move too slowly to get up to that level certainly look like it had the potential this morning so let's go take a look at at hero now take a look at Google let's zoom in on the morning so this morning there was a strong confirmation between options trades and price action and then it has tapered off as options traders prices tapered off as options traders started stopped let's see what they were doing so they were both selling puts and buying calls and then as they started selling calls stop buying puts price eventually stopped rising and started falling let's go back and take a look at the total line and it's a little bit easier to interpret so sharp increase in price this morning along with a sharp increase in hero and hero starts moving down and eventually price follows and more consolidation it looked like let's go back to book map sharp move up move back to vwap retest and then consolidation with the one with the 99 and 100 call wall liquidity targets above and again recall there was positive news this morning uh from google about layoffs so that's another key component of the nasdaq and the s&p 500 and let's take a look at meta now not necessarily a big as big a component as it used to be but a very nice long setup this morning so here is the quick move down a test of the 135 key gamma strike and a move higher to the 138 liquidity and just like a google retest of the vwap consolidation and now meta may have the may have the drive to get up to the 140 call wall and all that liquidity up there so let's go take a look at hero and jc ask hero yes is in terms of delta and the total line is showing combine put and call transactions in terms of delta so a rising total line means that that is that is positive delta positions that means that traders are buying calls and and or selling puts there's meta strong correlation between price action strong correlation between options trades hedging activity and price action let's see what they were doing today so it looks like calls are driving at least in the morning so this was uh one of the better setups of the day i'm going to zoom in on the morning and show that traders were traders are buying calls and price corresponded pretty closely and as they stopped buying calls price dropped then it looks like this is a large block order somebody some large institution selling a lot of puts then price responds to that i'm going to zoom back out let's take a look at the total signal combining again combining the put and call signal into one signal rising purple line indicates that traders are continuing with positive delta positions so they are they are buying calls and selling puts as price continues to rise toward that 140 call wall let's go back to book map take a look at microsoft nice strong rally in microsoft today 245 liquidity target in play so this is another key stock uh large you know large cap large weighting in nasdaq and s&p 500 let's take a look at hero and the last time i looked it really didn't show much of a confirmation well that could be that this large block trade is kind of obscuring let's take a look at the morning see if we can get rid of that so a little bit choppy there but yeah overall there is a strong correlation between options trades and and price action just not as easy to read as is uh apple and meta for example we'll zoom back out so there's microsoft another large block trade here some large institution buying a lot of calls and let's just change the look back period to 30 minutes see if that gives us any more insight and not really okay so the total for today is still positive positive delta just not as easy to read as is apple and meta all right let's take a look at netflix now and again for microsoft at 245 liquidity is on deck that's the next target all right netflix so recall i mentioned the news and netflix reported earnings yesterday and look at this jumped look at this jump after just after the close yesterday so that was netflix up to a test of 344 level certainly not much liquidity there just a straight shot up looks like it came back to the 325 level and then settled uh around 337 338 opened higher and then we'll take a look and see what options traders were doing so traders first were selling calls then selling puts and let's take a look let's go to hero now and see what traders were doing so overall though netflix is still still positive for the day and it looks like it's starting to move up again so let's zoom in on the current day and then we'll go take a look at hero we'll zoom in on the morning so initially traders were buying calls and selling puts that show by the rising orange line and blue line so it looked like they started taking profits on their calls and if they were smart enough to buy calls yesterday they made they made a killing and no wonder they're selling their calls and they were most likely calls that expire today and then they started selling puts so there was perceived value down as price was dropping down to this level and traders started selling puts we'll zoom back out so right now they've resumed buying calls and selling continue to sell puts and price is moving higher again and netflix is not a big market cap component in the s&p 500 and nasdaq but it it can influence price action during the day especially uh because it's such a high beta stock such uh has such high volatility right the next is nvidia and another great setup to what traders are doing so both buying puts and selling calls and let's go take a look at book map now and look at the setup in there so remember the uh in the hero chart showed a lot of chop in the morning so you had to be pretty patient for this one a lot of chop looking for this final final trend break and a break above the trend and price moving above the 170 hedge wall and all the liquidity there and the first target was the 175 liquidity and then multiple liquidity targets above let's go back to hero now and no real leading indicator no divergence to look at here just you just have to watch hero along with order flow in book map anticipate that trend break and price starts to move higher so a great setup for patient traders there in the nvidia i'm going to take a uh i don't i'm going to look at snow but i don't have time to look at that in book map that's on my other computer but another great setup here in snow snowflake total cyclical fries more clarity nice strong rally and not a not a key component of of either index but a nice strong rally in a higher beta stock let's take a look at qqq and then we'll take a look at spy so this was looks like calls are driving so traders are buying calls and qqq they're also buying puts but it looks like calls are driving and not as clean a correlation as some of the other stocks that we looked like looked at like apple uh google and meta nvidia spy and traders are buying a few calls but they're also buying puts and recall yesterday they were buying puts i'm sorry buying calls so as far as hero goes there's not a lot of clarity here at least to me not a lot of help with with the setup maybe early in the morning this first move higher up until about 10 o'clock or so with a rising hero line and rising price and then finally tesla and as usual there's a very strong correlation between options trades hedging activity and price action and tesla let's go take a look at book map take a look quick look at qqq see what levels are in play so qqq has made it up past the call wall the 280 call wall shown here and continues to head higher let's take a look at spy and then we'll wrap it up with tesla strong rally consolidation around the 392 level and that's also at the lower edge of the expected move for the week so now spy has moved back within that expected move for the week and looks like it's heading up to the 395 volatility trigger so any any put rally put banner rally that was could have potentially happened on monday is happening today i think so that's that's my thoughts on what's driving today all right let's go to tesla i'm going to zoom in on the morning session and just before i actually before i do that let's let's take a look at the the whole screen here this looked like a lot of other stocks quick move up in the morning retest of vwap consolidation and then prices moving up again in the afternoon let's zoom in on the morning and this first move higher and note the the break of this pattern increasing highs lower lows then a break of the pattern and a good entry point just a break above a break out of that pattern and a retest of the 129 level and targets at the 130 call wall 131 liquidity and potentially on up 132 and 133 let's go take a look at closer look at hero and i saw before that there was a look like a nice call divergence let's zoom in zoom in on the morning session breakout puts and calls so this looks like traders were buying calls from the open so when you see that you want to look in book map for a potential reversal or a breakout like we saw and just wait for the wait for the setup to happen okay let me let me check for questions then i'll uh then i'll wrap it up okay so again kind of a complicated day and the s and p 500 several dynamics in play first of all the potential pin at the large gamma strikes at 390 and 3900 for spy and spx another scenario was the put banner rally and list so we saw that vix was dropping implied volatility is dropping and prices rising could be potentially sparked by news in some of the large cap tech stocks that are continuing to rise so prices rising implied volatility is dropping those puts all those long puts remember the spy gamma notional was minus 2187 so quite negative all those puts are losing value quickly market makers are buying back their short hedges and driving price higher spx did a quick retest of 3900 this morning the put wall which is expected to act as support and has been rising higher okay that's that's all i have for today and i want to thank you for watching thanks for your questions and comments and i will see you on monday thanks again bye have a great weekend