 Hello everyone. Welcome to Options with Doug. Streaming live daily on Bookmap Discord and the Bookmap YouTube channel at 1.30 p.m. Eastern Time. Before I get started, I need to go through the disclosures. General disclosure, all Bookmap limited materials, information and presentations are for educational purposes only and should not be considered specific investment advice nor recommendations. Risk disclosure, training futures, equities and options involve substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. Here's my contact information. The best way to get in touch with me is through Discord. My name on Discord is Doug P. Also in Bookmap Discord there's an options dash Doug chat channel. That's a great place to post questions, comments and content related to the topics of my presentation and the topics of the channel which I'll go through in just a moment. I'm also on X, formerly known as Twitter. My name there is at Doug Plus. The focus of my presentation today and the focus of the options dash Doug chat channel is options, order flow, the impact of options markets on stocks and futures and the influence of market maker hedging flow on price action. I have a two-step process for trading and the first is planning and I use positional analysis. I look at 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 the expected trading range and volatility for the day as well as a directional bias. And the second step of my process is execution. I look at real-time order flow in Bookmap and real-time market maker hedging flow and spot gamma hero to confirm my thesis and for setups for entries and exits. And when I talk about setups today I will be focusing on an underlying asset and setups can be taken any number of ways. For example, SMB500 setups can be taken with ES futures, spy shares, spy options, SPX options or even ES options. Questions and comments are welcome and I will be watching both the options dash Doug chat channel and discord as well as the chat and YouTube for your questions and comments. Please feel free to post and I'll do my best to answer your questions. And hello Don, welcome glad you're here. Alright here's my agenda for today. First of all I want to cover news items economic data and events for today as well as the rest of the week and then I'll go through my positional analysis and then I'll review some setups from earlier today and then I'll talk about the live market. And when I get to the live market if anyone has any stocks they want me to take a look at please let me know and I will be glad to do that. Our list gets started. So again this is Thursday, December 7th. Let's start with news items and let's see today the jobless claims came out mostly in line that was 8 30 a.m. Eastern time not much of a market mover and then tomorrow the big jobs report for the month is out at 8 30 a.m. Eastern time. It was pushed back a week from from last Friday norm late's the first Friday of the month and this month it will be on the second Friday of the month. Tomorrow December 8th. That's the jobs report 8 30 a.m. Eastern time could be a market mover and then at 10 a.m. Michigan consumer sentiment comes out at 10 a.m. So that wraps up the week. Next week there are some big events economic data CPI data and the FOMC meeting and announcement and then finally the big December options expiration and I'll talk more about that on Monday. All right let's get started with positional analysis now. I'm going to go to the SB 500 first. This is the ES futures and book map SB 500 futures and before I take a closer look at this chart I want to take a look at a larger time frame. I'm going to go to SPX this is the underlying index. First of all I want to point out key turning points on this chart. This is October 30th this is when the current rally began and then on the Friday before traders were loading up on puts concerned about weekend risk and then on Monday price increased implied volatility dropped and that led to a huge IV collapse put banner rally. Traders loaded up on puts and market makers sold the puts they had to sell futures to hedge their delta exposure and as price increased implied volatility dropped market makers delta notional decreased and they can buy back their short futures and during this time it's initially market makers position on the gamma curve was quite negative and as price continued to rise market makers position on the gamma curve became more and more positive leading to a slower slower moving rally more consolidation then the next turning point was this 11 November 14th CPI report came in much better than expected and the rally continued positive gamma environment slow moving and then for the last two weeks I'm going to zoom in now on this portion of the chart and then for the last two weeks consolidation between around 4550 and 4600 maybe 4540 and 4600 so very narrow range positive gamma environment and that appeared to be possibly changing this morning we'll talk about that in a minute and most likely if the rally continues gamma notional will become more positive again alright so this is the SPX and now I want to point out key levels on this chart first of all the dash purple lines are showing the lower and upper weekly expected move this is based on the options market I update this once a week and SPX is trading inside that range then the dash blue lines are showing the lower and upper daily expected move and SPX is trading above the upper daily expected move today that's also based on the options market updated once a day the dash the I'm sorry the solid red lines are showing spot gamma levels I'm going to point out the key daily levels these are proprietary spot gamma levels provided to spot gamma subscribers on a variety of platforms this is think or swim the first level is the put wall that's the last strike with the largest net negative gamma that is at 4400 that can be expected to act as support the next level up is 4550 that's the absolute gamma strike that's a strike with the largest absolute positive and negative gamma that's where most of the gamma weighted open interest is concentrated then just above that is the volatility trigger at 4560 that is spot gammas proprietary volatility flip level below that level market makers position on the gamma curve is negative in a negative gamma environment market makers have to trade with price to hedge their delta exposure and that tends to enhance or increase volatility on the other hand above that level like SPX is trading now market makers position on the gamma curve is positive in a positive gamma environment they have to trade against price to hedge their delta exposure and that tends to subdue or decrease volatility and then the next level up is the call wall at 4600 that's a strike with the largest net positive gamma that can be expected to act as resistance like it did last Friday all right so those are the key daily levels the potential floor at the 4400 put wall and then the potential ceiling at the 4600 call wall with most of the gamma weighted open interest concentrated at 4550 all right let's take a look at a shorter time frame again sticking with SPX to see the levels and play for today this is a couple days worth of data for SPX noted SPX did gap up today trading above the volatility trigger now back up above and also up above the upper daily expected move all right let's take a look at book map now so now we're back to ES futures in book map and I look at ES in terms of spy and SPX levels so I have my own cloud notes so I can show those levels and hello Floyd's garage welcome glad you're here all right so I can show SPX levels there's the 4560 volatility trigger and here is the 4550 absolute gamma strike noted as support and the spot gamma M founders note note there is a difference in price between ES and SPX and today it looks like it's somewhere between four and five and I'm using five so I'm showing the 4550 level for SPX at ES 4555 so here's the SPX 4550 absolute gamma strike again noted as support just above that the spy 455 absolute gamma strike and note before the cash open that was a pretty strong support level and the rally today really began right around 7 30 a.m. Eastern time a move higher from those levels and the SP 500 continues to make higher lows so support level really around the 4550 455 level and then the resistance for today yet to be determined here's this 4590 level noted as resistance in the spot gamma M founders note and then above that of course is the 4600 call wall and we'll talk about setups in a few minutes so those are levels of play and again I have SPX levels also spy levels I'll show what my cloud notes here and then here's the lower weekly expected move for ES ES now trading above that level also the upper daily expected move right there was only only one shift in levels for the estimate 500 and that is the very minor shift lower in the volatility trigger for SPX otherwise no shifts in levels other for spy so one one shift lower for the SP 500 the SPX volatility trigger shifted slightly lower to 4560 or let's take a look at NASDAQ now this is the NQ futures and book map and before I take a closer look at this chart I want to take a look at first of all QQQ a QQQ chart one-day chart so we can isolate the levels and play for the QQQ right here here's the 386 volatility trigger QQQ trading above that level and kind of a launching point for the move higher today here's 390 on Monday that was the absolute gamma strike the absolute gamma strike shifted lower to 385 not shown on this chart just below so currently the absolute gamma strike is at 385 and this 390 level is a large gamma one level so that level may be acting as support now initially minor resistance then support and maybe support again so that's QQQ the levels and play for today let's take a look at NDX so the for NDX the 16,000 large gamma one level is back in play it's very close to the QQQ 390 level here acting as resistance or more consolidation around that level now maybe acting as support or let's go back to book map go to the NQ futures so just like ES with spy and SPX levels on my NQ chart I have my own my own cloud notes so I can show NDX levels and QQQ levels so there's that 16,000 level it's been a very important level and then 390 just below that and note the launching point for this morning was this cluster of levels the QQQ 386 volatility trigger and then the NDX 15,825 absolute gamma strike call wall and again we'll talk about setups in a few minutes so those are levels in play for today note NQ is trading above its upper daily expected move for today all right let's take a look at gamma notional now to see how market makers were positioned on the gamma curve at the beginning of the day this is gamma notional market makers position on the gamma curve at the beginning of the day for the SP 500 NASDAQ and Russell 2000 and this is showing I'm showing a portion of the spot gamma AM founders note this is provided to spot gamma subscribers every morning that's where this information comes from so again this is market makers position on the gamma curve at the beginning of the day and note first of all all of these numbers became either less positive or even negative compared to yesterday so yesterday market makers position on the gamma curve for all of these index products was positive today now has shifted to negative for spy and for QQQ and then less positive for SP X and also less positive for the Russell 2000 so what that means first of all on a positive gamma market spot gamma assumes that traders are long puts short calls mark market makers on the opposite side of that so their short puts long calls in a positive gamma environment they have to trade against price to hedge their delta exposure and then on a in a negative gamma environment they have to trade with price to hedge their delta exposure so this reduction in gamma notional I think is is kind of helping to contribute to the to the trend a rally day today so again spy gamma notional has shifted to negative as well as QQQ and most likely with this rally today they will all about shift back to positive all right let's take a look at the Vanna model now to get an idea of what that means a graphical representation this is the Vanna model for SP X what this chart is showing is market makers delta notional on the vertical axis and the price for SP X on the horizontal axis there are two curves on this chart the first the light gray curve shows how market makers delta notional may change with changes in price only and then the purple curve adds implied volatility to the equation that shows how market makers delta notional may change with changes in price and implied volatility and that change in delta with a change in implied volatility is the Vanna effect Vanna is the second order Greek all right let's take a look at price now and SP X currently trading right around 45 85 so somewhere between these two lines so now for SP X as price continues to increase remember again SP X was gamma notional is positive at the beginning of the day and this is showing that as price continues to increase market makers delta notional will increase and they will have to sell futures to hedge their delta exposure so earlier today there was really with SP X toward the bottom of the curve not much of a Vanna tailwind or headwind and now that Vanna effect is turning to more of a headwind all right let's take a look at spy here's the Vanna model for spy spy currently trading right around 458 also toward the bottom of the curve so a little bit of a Vanna tailwind remember for spy gamma notional was negative today so a little bit of a Vanna tailwind now looks like that's mostly gone take a look at QQQ QQQ currently trading right around 390 that large gamma one level so shifting up toward the this positive gamma portion of the Vanna model indicating if price continues to increase market makers will have to start selling in Q futures to hitch their delta exposure all right so that's the Vanna model all right let's take a look at some setups now the first thing that I want to take a look at is what options traders have been doing today and this is the I normally start with the S&B 500 signal and today I'm just going to get right to the heart of what is driving price today what this chart is showing is the hero signal hero stands for hedging impact real-time options so everything that we've looked at so far other than book map has been based on static data that is updated once a day based on open-interest data that comes from OCC spot gamma applies their own proprietary algorithms algorithms to these levels to this information to come up with their own levels that I showed earlier all right so this is real-time data now hedging impact real-time options showing options trades and market maker hedging activity for a combined signal for these stocks known as the Magnificent 7 that's Apple, Amazon, Google, Meta, Microsoft, Nvidia and Tesla the purple line is the hero signal again showing options trades market maker hedging activity for that combined signal and then this white line is the price combined price for those instruments and it looks like it may be shown in terms of a QQQ price all right let's take a closer look at this chart and really this was the this is the key for today so this signal let's break out puts and calls and notice the hero signal up until about 10 a.m. 10 05 was kind of choppy up and down and then right around 10 05 traders started buying aggressively buying calls sorry about that nothing I did that's an issue with hero so traders started buying calls pretty aggressively right around 10 05 and price had already been moving higher and then really started to increase pretty rapidly when traders buy calls market maker sell the calls and they have to buy stock to hedge their delta exposure and the hero signal for the Magnificent 7 continues to rise today so today traders continue to buy calls shown by the rising orange line they're also selling puts that shown by the rising blue line both are positive both positive delta all right let's take a look at the SMB 500 signal so this this is a combined signal also in this case for the SMB 500 so it's showing options trades and market maker hedging activity for a combined signal of SPX by XSP and ES futures all into one combined signal this is typically what I look at when I'm trading the SMB 500 all right let's zoom in on this this is the cash open right here 9 30 a.m. Eastern time though initially traders were pretty aggressively taking negative delta positions and that slowed down and stopped all around 10 10 all right let's take a closer look and see what happened separate outputs and calls zoom in on this just a little bit so what this looks like to me is initially traders were pretty aggressively buying puts they slowed down and then they started buying calls so the price shifted from a quick move down to rising as traders were buying calls and then they took their foot off the gas with puts all right so today they are still buying puts they're also buying calls and actually the put buyers are more aggressive today than the call buyers note the total notion of a is still negative minus 1.1 1 billion well let's go take a look at book map now so we know that traders were around 10 10 shifted from aggressively buying puts took their foot off the gas started buying calls also traders in the magnificent seven we're taking positive delta positions this is a heat map in in think or swim this is showing you can just see all these magnificent seven stocks whoops wrong tool they make up a huge portion of the S&P 500 have a very strong influence on price action and an even stronger influence on Nasdaq all right so let's take a look at that set up and I'm need to go back to ES sorry about that let me zoom in a bit all right so here's where traders started stopped buying calls buying puts started buying calls and then they also started buying calls in the magnificent seven and note the clues in book map here large traders were buying with iceberg orders that's shown by that rising light blue line let me zoom out just a little bit so we can see that so starting right at the cash open right around 930 large traders were buying with iceberg orders that shown by this rising light blue line so they were buying that move down buying weakness very typical large traders use iceberg orders to hide their size options traders taking positive delta positions price increases and then buy stop orders help to fuel the move higher nice pullback to right around VWAP that shown by this light blue line price continues higher as traders continue to take positive delta positions primarily in the magnificent seven that large component of the S&P 500 and Nasdaq and the rally continues note today that iceberg orders stop orders and cumulative volume delta all positive for the day all right so there's the S&P 500 bullish setup confirmed in book map here as well as the hero looking at options trades let's take a look at Nasdaq now or let's see what options traders were doing let's go back to hero all right now I want to take a look at first of all at the Nasdaq signal let's zoom in on this so this is a combined signal for NDX and QQQ zoom in on the morning so note the reversal higher in the hero signal for Nasdaq let's see what traders were doing so this provides a little bit more clarity looking at the orange line initially they were selling calls and right around oh 947 948 they started buying calls they were also buying puts sorry about that so they started buying calls stopped buying puts started selling puts both the blue line orange line moving in the same direction and price moves higher but really the key for the day was the was this magnificent 7 signal where traders are buying calls and selling puts and the sharp jump higher in the call line just after 10 a.m. so traders taking advantage of of the dip in prices again in the magnificent 7 to take long positions they continue to buy calls and sell puts or let's go back to go back to book map go to NQ so the case of NQ large traders are selling with iceberg orders that shown by the falling light blue line but aggressive aggressive traders are buying that shown by the rising CVD also note at these pullbacks the shifts and volume dots volume dots are showing market buy minus sell but just dots indicate more sellers than buyers green dots indicate more buyers than sellers so nice deep pullbacks for entries then now it looks like some consolidation above the 390 16000 level all right let's take a look at some stocks so first I want to take a look at AMD so AMD yesterday announced a new AI chip I think it's the MI 300 something like that this appears to be a kind of a delayed reaction I guess AMD joined the move lower yesterday but reacting very positively today to that announcement also there was an announcement that Meta and Microsoft will be new using AMD's new AI chip alright so let's start with AMD let's see what options traders have been doing submit on AMD separate outputs and calls and this shows that traders are buying calls and that is driving price action today that's shown by the rising orange line when traders buy calls market makers sell the calls and they have to buy stock to hedge their delta exposure and that can be a very powerful driver of price action moving higher note some very timely flow alerts here these signal significant options activity great way to get your attention to take a look at AMD and so far traders continue to buy calls and price continues higher well above the call wall at 120 let's go take a look at bookmap again here's the 120 I think that was the key gamma strike and call wall let me check that again right 120 key gamma strike and call wall acting as support note all the green volume dots a lot of aggressive buyers also in first pullback entry to 121 VWAP just above above that below and below 122 again a lot of green volume dots here a lot of aggressive buyers helping to move AMD higher as well as the call buyers this is pretty big move for AMD alright the next stock I want to take a look at is Google so I'm going to kind of focus on stocks in the news so the next is Google and I'm showing price action from the for AM this is when DX feed starts to provide data so it looks like about half of this move up from 132 to 135 happened before the cash open this is the this is the cash open right here that's the opening print right at 135 so that the news for Google was an announcement about their Gemini Gemini AI platform apparently that was yesterday also and so the reaction coming today let's see what options traders are doing so AMD continues to move higher let's take a look at Google more of a mixed picture here and let's separate outputs and calls so call buyers really driving price today and Google note the flow alert traders aggressively buying calls right from the open they take the foot off the gas for a while price consolidates price moves higher and traders continue to buy calls so in this case it looks like Google price started to move higher first and then call buyers came in again they're also buying puts today but the call buyers are more aggressive alright let's take a look at meta now very strong day in meta remember meta was one of the stocks that announced one of the companies that announced they will be using AMD AI chips separate outputs and calls so again traders aggressively buying calls in in meta they're also selling puts that shown by the positive notion of value for the blue line and the positive notion of value they're buying calls for meta sorry about that notice call buyers take the foot off the gas right around 1220 price starts to consolidate so again when traders buy calls market makers sell the calls and they have to buy stock to hedge their delta exposure 330 is the call wall and 317 50 is the hedge wall 315 is the put wall down below let's go to go back to book map take a look at meta sharp move higher from the open just above that 317 50 level here's the opening print sharp move higher pullback first good entry point right around 10 note now that more aggressive sellers are coming in that's shown by the budget to volume dots let's take a look at cumulative volume delta so initially cumulative volume delta was rising now it is leveled off and now moving lower price consolidating as call buyers have taken their foot off the gas as well alright does anyone have any stocks they want to take a look at let's see what Microsoft is doing there Microsoft is also one of the stocks that announced they will be using the AMD AI chip a little bit more choppy price action here in Microsoft but moving higher let's see what options traders are doing so right around 950 traders started buying calls also selling puts that shown by the rising orange line for calls blue line for puts and that's when price started to move higher take their foot off the gas price levels off a little bit another good pullback entry take their put their foot back on the gas price moves higher alright so bullish day and Microsoft so we can take a look at some of the other suspects here take a look at Nvidia very bullish day and Nvidia also trading above its 460 key gamma strike so traders are buying calls and selling puts and Nvidia call buyers more aggressive drying driving price higher they start to take positive delta business they stop selling calls start buying calls and price responds higher it's just right around 10 0 5 10 10 let's go take a look at book map go to Nvidia note all the green volume dots here again let's just zoom in on this very deep pullback here down to 457 you can see the all the green volume dots aggressive buyers coming in around that level second pullback to VWAP again aggressive buyers start to come in shift to green volume dots as traders were buying calls forcing market makers to buy stock to hedge their delta exposure grizzly bull wants to take a look at PayPal sure so I don't have PayPal and book map here but we can take a look and hero so let's go back to hero all right so far today traders are taking positive delta positions shown by the rising purple line the positive notional value let's see what they're doing so they're buying calls shown by the rising orange line they're also buying puts shown by the following blue line call buyers more aggressive helping to drive price higher all right you're welcome grizzly bull all right let's take let's circle back take a look at the first of all the SB 500 and Jerry welcome glad they help what Jerry is referring to is the index relationships that I post in discord every day the ES to spy ratio the NQ to QQ Q ratio and also the difference in price between ES and SPX and NQ and NDX all right so now notional value for the hero signal for spot for the SP 500 has shifted positive I believe that was negative a little while ago so now notional value is again shifted to positive separate outputs and calls so now the call buyers more aggressive than the put buyers and again notional value has shifted positive let's go take a look at book map go back to the SB 500 okay there it goes so it looks like the 4590 level that's SPX 4590 maybe acting as resistance and the heat map excuse me the heat map showing some limit cell orders just above between 4590 and 459 and if the SB 500 can move through that looks like the next next level of interest is the this 4599 combo one level that combines SPX and spy gamoy that opened interest into one level and then the SPX 4600 call wall just above that so once past the 4590 level then those are the next levels in play for today by stop orders helping to fuel that move higher so a little bit of a stop run up to 4590 let's take a look at NASDAQ so it looks like NASDAQ has cleared the 16,000 hurdle 390 just below that as far as gamma levels go it looks like clear sailing above let's go back to hero check the magnificent seven and they continue to take positive delta positions in the magnificent seven all right last call anyone have any stocks they want me to take a look at all right i'm going to wrap it up in just uh just a minute just to point out again this magnificent seven signal is uh one of the most important things that you can look at to understand price action in the SB 500 and especially NASDAQ these stocks make up such a large component of again the SB 500 and especially the NASDAQ 100 that they have uh you know just a very strong influence on price action and when traders buy calls market makers sell the calls and they have to buy stock to hedge their delta exposure since those stocks are such a large component of those uh indices they help to drive price higher all right david wants to look at coin all right let's take a look at that coin base so an initial move higher and coin base today traders were buying calls very typical pattern they aggressively buying calls up until anywhere from 11 to 12 or so they take their foot off the gas and price consolidates so they stopped aggressively buying calls and started buying puts and now price is trending lower oh uh grizzly bull wants to look at uh uh upstart i believe let's take a look at that so pretty small notional value today choppy price action so they're selling calls and buying puts so compare that with uh let's compare that with Nvidia so the notional value uh minus 4.97 let's take a look at Nvidia for example notional value 345 million so this is why i like to trade these stocks the magnificent seven um very liquid uh very large active options market that almost always is a key driver or price and these stocks that i like to trade that i have shown in book map here these stocks up here in book map all very liquid very large options market that is almost always again a key driver price action all right everyone uh thank you for watching uh thank you guys for posting questions comments and stock suggestions on youtube remember tomorrow the jobs report comes out at 8 30 a.m eastern time michigan consumer sentiment at 10 and we'll talk about it tomorrow afternoon thank you everyone have a great afternoon and i will see you tomorrow bye