 Hello, everyone. Welcome to Options with Doug, streaming live daily on Bookmap Discord and the Bookmap YouTube channel at 1.30 p.m. Easter time. Before I get started, I need to go through the disclosures. General disclosure, all book 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. And I also need to pause for a public service announcement for Bookmap. Bookmap is asking everyone to fill out a form for Bookmap Discord. It will provide extra additional benefits, webinars, services, beta programs, free add-ons, other freebies, and it will help us to reduce spam and Bookmap Discord. So if you can scan this code, it should send you to a form. You'll need your email address, your Bookmap Discord name, your Discord name, and your license key for Bookmap. And if you don't have a license key for Bookmap, you can just sign up for a free version if you're not interested in subscribing to a paid version of Bookmap, so you can subscribe to a free version of Bookmap that's for crypto. It does include delayed data, pretty substantially delayed data, I believe. All right, so everyone, if you have not done so already, please fill out the form for Bookmap Discord. Here's my contact information. The best way to get in touch with me is through Discord. My name on Discord is Doug P. Also, in Bookmap Discord, there's an options-doug-chat channel. That's a great place to post questions, comments, and content related to the topics that I'll go through in just a moment. And note that Bookmap Discord, there's a lot of great content there about a wide variety of assets. Options, stocks, futures, crypto, also in a wide variety of languages, a number of experienced traders and less experienced traders, all working together to help each other become better traders. Also, again, I'm also on X, formerly known as Twitter. My name there is at Doug Pless. I also want to go over my key tenants for trading. This would set the framework for what I'm looking at, what I'm showing today, and how I look at the market. So, first of all, I believe that options, trades, and market maker hedging activity are key drivers of price and many need to edit that. Oops, sorry about that. All right, there we go. And many stocks and futures. So, again, options, trades, market maker hedging activity, or key drivers of price, and many stocks and futures. Excuse me. Also, for the SME 500, SPX and SPI, which is just another version of SPX, is the underlying index. ES is a derivative of SPX. So, when traders buy and sell, puts and calls in the SPX and SPI, market makers hedge those trades with ES futures. They always want to remain delta neutral. So, if traders are buying calls, for example, in SPX, market makers are selling calls, and they have to buy ES futures to hedge their delta exposure. And that's the only way to hedge SPX. All right, for the NASDAQ, the same NDX and QQQ, that's the underlying index. And in the case of NASDAQ 100, the QQQ is the most important underlying, and NQ is a derivative of the NDX. All right, so for the same thing, when traders buy and sell, puts and calls, and QQQ. Now, there are other drivers of price, and this does not occur all day, every day. But overall, options trades, market maker hedging activity are key drivers of price in many stocks and futures. The focus of my presentation today, and the focus of the options-jug 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 to 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 the directional bias. And the second step in my process is execution. I look at real-time order flow and book map, and real-time market maker hedging flow and spotting a hero to confirm my thesis, and for setups, for entries and exits. And when I talk about setups today, I will be focusing on an underlying asset. And setups in that asset can be taken any number of ways. For example, the S&B 500. Setups can be taken with ES futures, spy shares, spy options, SPX options, or even ES options. Questions and comments are welcome, and I will be watching both the chat and the options-jug chat channel and Discord, as well as the chat in YouTube for your questions and comments. Please feel free to post. I'll do my best to answer your questions. All right, here's my agenda for today. Tuesday, February 6th. First of all, normally I go over news items. There's nothing today. So we'll just skip over that. Oh. Slow to Rossi did post some earnings today. The stocks that I follow, mostly I have most have already reported earnings, except for NVIDIA. All right, so the next positional analysis, then I'll review some setups from earlier today. Then I'll take a look at 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'll be glad to do that. And hello, Steven. Welcome. Glad you're here. All right, let's get started with positional analysis. I'm going to start with ESP 500. This is the ES Futures and Book Map. And before I take a closer look at this chart, I do want to take a look at the underlying index, which is SPX in a larger time frame. Hello, Caesar. Welcome. Glad you're here. All right, so let's go to SPX. I'm going to start with a one-day chart. This is in Thinkorswim. The current rally began last year, October 30th, ran into resistance at 4,800 toward the end of the year and early this year. Then SPX broke out of that range above 4,800 on options expiration last January, this past January, January 19th. All right, from there, let's pick it up with a shorter time frame. Still sticking with SPX, the underlying index. I'm going to go to a one-hour chart. So this is SPX, one-hour chart. Here's the resistance, 4,800 level. The breakout on expiration Friday. Resistance at 4,900. Then a breakout last Monday. So not this week, but the previous week. Breakout, FOMC reaction, and then rally beginning Thursday after the FOMC, up to 4,975. All right, so that's where the SPX stands now right around a couple of key levels that I'll talk about in just a moment. All right, so speaking of levels, let me point out the levels on this chart. First of all, I have the lower and upper weekly expected move. This is based on the options market that's shown with the dash purple lines. I update that once a week, and those levels remain in place for the entire week. All right, next, the dash blue lines are showing the lower and upper daily expected move. Also based on the options market, I update those levels once a day. That's on the closing price of SPX. And hello, Ida. Welcome, glad you're here. All right, the other lines on the chart are showing spot gamma levels. These are levels that are provided to spot gamma subscribers. They're based on gamma weighted open integers. They are proprietary to spot gamma. Each one has a different meaning. And I'm going to start with the key daily levels. Here's the, let me zoom in on this just a little bit so we can get a better picture of these levels. All right, so the key daily levels. First of all, here's the put wall. That's at 4920. That's a strike with largest net negative gamma. That can be expected to act as support. That level did move slightly lower from yesterday. It was at 4930 yesterday. Now at 4920. So a slight move lower in the put wall. Then the volatility triggers the next level up. Then a spot gamma is proprietary gamma and 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 hitch their delta exposure. And that tends to enhance or increase volatility. On the other hand, above that level, market makers position on the gamma curve is positive. In a positive gamma environment, market makers have to trade against price to hitch their delta exposure. And that tends to subdue or decrease volatility. When market makers are trading, they're selling as price moves up and they're buying as price moves lower. Then finally, in that level, did move higher from yesterday from 4930 to 4945. So a slight move higher in the volatility trigger for SPX. And then finally, 5000 is the call wall. That's the strike with the largest net positive gamma that can be expected to act as resistance. That's also the absolute gamma strike. That's the strike with the largest absolute positive and negative gamma. So that's where most of the gamma-weighted open interest is concentrated. So those are the key daily levels. Fairly tight range there. A potential floor at 4920, potential ceiling at 5000. All right, finally, let's take a look at the, again, sticking with SPX. One more chart. We're going to go to a one minute chart. So the right shaded portion here is the regular trading hours. And note the levels in play for today. Here's the volatility trigger at 4945. This combo two level that has acted as support, then resistance. Now price testing that level again. So that's been a very important level today. That is the combo two level combining SPI and SPX. Gamma-weighted open interest into one level shown here in terms of an SPX price. 4950 just above that. So note that SPX has been trading up and down around the volatility trigger. So that gamma volatility flip level has definitely been in play for today. All right, let's go to book map now. In book map, I have my own cloud notes. So I can show those levels on my book map chart. So here are the SPX levels that I talked about. The volatility trigger combo two level and then the 4950 large gamma four level above that. Note there is a difference in price between ES and SPX. And today is trading somewhere between 20 and 21. Right now I'm using 21. So ES minus SPX again somewhere between 20 and 21. What I'm showing is 21. So ES minus SPX 21. Here's the SPX 4950 level at ES 4971. So SPX 4950 ES 4971. And that level has definitely been in play for today. I'm also showing SPI levels on my chart. Here's the SPI 494 large gamma four level great entry point for short this morning. Here's the SPI 493 large gamma three level acting as resistance multiple times here and here then price finally broke out above that level. Right so I have SPI levels SPX levels on this chart and then other key levels for ES 49 in this range. Alright we'll talk about setups in a few minutes. Alright let's take a look at NASDAQ now. Oh shifts and levels again let me just summarize the shifts and levels for the SP500 volatility trigger higher slightly higher and put wall slightly lower for SPX just the opposite for SPI volatility trigger lower and put wall higher and also the absolute gamma strike shifted lower for SPI so kind of a mixed picture for shifts and levels. Overall today my directional bias thesis for the SP500 was neutral. Alright let's take a look at NASDAQ now. So this is the NQ futures and book map a little bit weaker today than the SP500 and again remember the underlying index products QQQ and NDX so let's take a look at those charts. I'm going to first start with QQQ this is a one minute chart dark portion on the right showing today price action for today regular trading hours 430 level that's the absolute gamma strike acting as resistance in the morning notice price moves down consolidation at the round number levels then a lot of chop around the zero gamma level at 427 the 428 is the volatility trigger and QQQ currently trading below that and earlier today the 426 acting as support right shifts and levels for QQQ just minor the volatility trigger shifted higher up to 428 so QQQ again trading below its volatility trigger all right let's take a look at NDX we'll take a look at this just for completeness but I typically focus most of my attention on QQQ for the NASDAQ alright so levels in play for for NDX this combo level up above just to right around the QQQ 430 level acting as resistance and then these two levels the 17,625 also on range today alright let's go back to book map in Q futures so just like ES I have my own cloud notes so I can show QQQ levels there's the 430 absolute gamma strike acting as resistance just after the cash open and there's the NDX levels the 600 and 625 large gamma levels and QQQ 428 427 and 426 I also have the big brown numbers the zeros in the 50s for NQ and then also note the lower daily expected move for NQ and price did trade below that today and now trading back above alright shifts in levels again for QQQ the volatility trigger shifted higher and the same for NDX alright so minor shifts in levels for the NASDAQ as well alright let's take a look at gamma notion we'll see how market makers were positioned on the gamma curve at the beginning of the day remember this is at the beginning of the day so what I'm going to look at this is the data table at the bottom of the spot gamma AM founders note gamma notional for the SB500 NASDAQ and also 2000 note for SB500 and NASDAQ all these numbers are positive again at the beginning of the day this indicates for an index that on this position of the gamma curve traders are short calls market makers are long calls hence the positive gamma and they have to trade against price as their delta exposure now this does not paint a complete picture so what I want to do is take a look at the a couple of things on the index page here this is for SPX I'm going to start with the VANA model what this chart is showing is market makers delta notional on the vertical axis price for SPX on the horizontal axis there are two curves on this chart the light gray curve shows how market makers delta notional may change with changes in price only and the purple curve that's what we want to take a look at shows how market makers delta notional may change with changes in price and applied volatility with changes in applied volatility is the VANA effect hence the name of this chart so the purple curve is the one that we want to take a look at so the let's check the low of the day for SPX right around 49-35 so let's see where that is on the on this curve here so that's on this portion of the curve to the left typical of a negative gamma environment so what this is showing is if price price continues to fall market makers delta notional will increase and they'll have to sell futures to hedge their delta exposure on the other hand if price increases market makers delta notional will decrease and they can buy back their short futures hedges alright so then the VANA model pinks a little bit different picture than the gamma notional at the beginning of the day looking more negative and that's really confirmed by SPX trading up and down around the volatility trigger today let's take a look at one other chart let's see where that is this is the combo strikes so remember the volatility trigger is right around 49-45 right between these two strikes so these bars are showing gamma the bars above the zero line are showing positive gamma call gamma and below the zero line showing put gamma or negative gamma so it's pretty clear from this chart that's the gamma flip level so below this level put domination there's slight put domination below this level alright so that's my planning process so based on this looking for again kind of neutral for the SMB500 as far as directional bias goes and also looking for low to moderate volatility more of a range day alright let's take a look at some setups now so everything that we've looked at so far other than book map is based on static data once a day OCC provides open interest data once a day spot gamma takes that data applies their algorithms to that data to come up with the levels that we've looked at and everything else the Vantamodel gamma curve alright so now let's switch over to the execution process and start to look at real time data so what this chart is showing is the hero signal this is available to spot gamma subscribers hero stands for hedging impact real time options and the white curve on this chart the white line is showing price for SPX the purple curve is the hero signal hedging impact real time options so what this means is if traders are taking positive delta positions they're buying calls and or selling puts the hero line is going to be rising this is in terms of delta so traders are taking positive delta positions market makers take the opposite side and they have to buy ES futures to hedge their delta exposure and this hero signal is for a combined signal of SPX by XSP and ES futures so spot gamma's combining options trades and market maker hedging activity of these instruments to display on this chart so this is the most complete picture of options trades and market maker hedging activity in the SB500 this is the chart for the day I'm going to zoom in on this chart now and this number this total notional value of 480 million is very low not much going on today so the first thing I want to do is let's review a setup from this morning I'm going to zoom in on this chart and I did post this in discord I didn't actually I posted the hero signal and the book map chart in discord so what I was looking at in the morning up until about 945 traders were taking positive delta positions and that shifted pretty sharply to negative delta positions so when traders take negative delta positions again market makers take the opposite side and they have to sell futures to their delta exposure Steven says saw that thanks for sharing you're welcome Steven so let's go take a look at the book map now I'm going to zoom in and we'll take a look at the clues and confirmation in book map for the short setup alright so what I was looking at remember right around 945 options traders started taking negative delta positions shift from positive delta to negative delta I'm looking at this 494 level I typically want to frame my trades around the levels shown on my chart so I'm looking for reactions at these key levels so there's the spy 494 level I see just at the cash open that acted as resistance actually let me change that one more time get my arrow pointer so that was resistance note also the liquidity in the heat map just above that level the heat map and book map shows a history of trading orders in the order book those were limit sell orders and then as traders start taking negative delta positions so price moves higher traders start taking negative delta positions price does a recheck a 494 lower high so at this point that's the first lower high great entry point for short the aggressive sellers starting to come in the volume dots are showing buy minus sell magenta dots indicate more sellers than buyers and green volume dots indicate more buyers than sellers note also on the sub chart both the dark blue line that's showing CVD cumulative volume delta is falling and as price starts to move lower the yellow line starts to drop that's showing stop orders sell stop orders help to fuel the move lower so again what I'm looking for is reactions at these key levels so there's your entry point for short and if you missed it there's another entry point as ES continued to make lower highs so nice short setup in the morning again I posted that in discord let me just point out let's go back and take a look at options trades again and then we'll take a look at some other areas on this chart alright so during this time let's go back say around 10.30 to not quite 11.30 there were some great shorts multiple shorts at the volatility trigger that's this area here so let's go see what options traders were doing during that time go back to hero so note that just before 10.30 trader started taking positive delta positions price moved up higher hero consolidated and there was chop up and down around that volatility trigger mostly lower setting up multiple shorts at the kind of cluster of levels there let's take a look at one other thing so this is a combined signal again for the SB500 one thing that I look at every day is this mag 7 signal and this is the combined signal for the stocks known as the Magnificent 7 Apple, Amazon, Google, Meta Microsoft, Nvidia, Tesla these stocks make up a large component of both the NASDAQ and the SB500 it always helps to pay attention to this and note for the day we've been trending down all day after a brief move up starting around 9.45 it began moving lower this was some additional confirmation actually acting as a lead for the SB500 short also a great indication for a NASDAQ short during this time of consolidation that I was just talking about the mag 7 signal continued to trend lower not quite the steep slope of this initial move lower but instead of consolidating like the SB500 signal it was still trending lower in my mind putting downward pressure on the both the NASDAQ and the SB500 so note the time here this is right around 9.43, 9.45 when the hero signal for mag 7 starts to make a lower high so that the high of the day for the mag 7 signal 9.43 let's go back to the SB500 here's the high of the day that's at 9.46 so a slight lead for the hero signal for mag 7 alright so let's go back to this area right here we know that the hero signal for the mag 7 was trending lower mostly sideways for the SB500 let's go back zoom in a little bit more so this is what I was looking at multiple shorts at either the spy 493 level or the volatility trigger each good for about 5 points or so alright let's move on to NASDAQ zoom in so if you're watching the hero signal the the safer entry for first of all this is the 430 QQQ430 acting as resistance at the cash open some aggressive buyers on the way up shown by the green volume dots aggressive sellers come in and the same thing at 9.45 when traders start taking negative delta positions in the mag 7 aggressive sellers start to come in and price reverses lower below the 625 level that's also the QQQ 429 level and then there were multiple pullback entries this one to the 600 level also QQQ428 and another short at the NQ650 and the pretty much the same clues in NASDAQ as the SB500 cumulative volume delta moving lower that's shown by the dark blue to pink line shifts to magenta when the value turns negative also sell stop orders fueling the move lower and down as we saw before down below finally below the lower day they expected move and that's a good place for a longer term target for the day alright so now NASDAQ back down right at the lower day they expected move let's go back in hero at hero and take a look at what the let's go back to the mag 7 signal so this continues to be negative all day some consolidation in the afternoon notional value minus 1.16 billion traders definitely taking negative delta positions in the mag 7 stocks alright so let's take a look at some of those stocks then we'll get to the live market the first stock that I want to take a look at and I kind of have a wall theme today so I'm going to start with AMD and this is actually referring back to yesterday the yesterday I showed AMD reversing at the 180 key gamma strike and today that move lower continues now down towards the put wall that's at 165 traders taking negative delta positions up until about 1150 this is pretty typical of a stock traders taking negative delta positions up until anywhere from 1030 to 12 or so and then they take the foot off the gas maybe start taking positive delta positions and price consolidates or reverses higher it's a very typical pattern aggressive early in the morning and in the case of AMD here that continues up until about noon or so and when AMD approaches the put wall they finally stop taking negative delta positions start taking positive delta positions let's go take a look at book map go to AMD so from the call wall yesterday down close to the put wall at 165 so another bearish day here in AMD the next is Amazon usually there's not much range in Amazon but I did want to point out since I have this wall theme today 170 is the call wall key gamma strike and Amazon price broke below that let's go take a look at hero see what options traders have been doing today back to hero to Amazon and here's that 170 call wall key gamma strike and price breaks below and as price starts moving lower some larger orders come in that's shown by these vertical lines large block orders institutional orders helping to move Amazon lower note the floor there indicating significant options activity and that has continued until about 130 large positive delta position comes in and price is starting to consolidate around right now let's go back to book map reversal at the 170 call wall price now trying to move higher consolidating the next is google for google 145 is the call wall key gamma strike acting as resistance let's see what options traders are doing go to google really the hero signal is kind of all over the place but it was let's zoom in on the morning here definitely bearish here's the call wall key gamma strike price reverses at that level traders taking negative delta positions price moves lower and then finally meta note for meta 455 is the put wall so in the morning traders were taking negative delta positions and then right around just before 1030 at the put wall they start taking positive delta positions so they're looking for support at 455 let's just see what they were doing separate outputs and calls orange line showing calls blue line showing puts so starting around 945 950 they started aggressively selling calls and then right around 1005 sorry about that starting right around 1005 like good contrarian contrarian options traders they start selling puts on the low taking advantage of the higher volatility of that move lower also the price lower to sell puts and then price consolidates right around that put wall level and then as they start to buy calls price moves higher so the rising line indicates traders are buying calls positive delta the rising blue line indicates traders are selling puts also positive delta now both these numbers are positive so net for the day they are buying calls and selling puts let's go back to the total signal and now as the hero signal as consolidated price is doing the same let's go back to book map go to meta there's the 455 put wall remember traders started selling puts when they started buying calls in addition to selling puts meta rose higher hero signal levels off and here meta still struggling below VWAP that's shown by the light blue line there VWAP resistance right around 459 does anyone have any stocks they want me to take a look at let's get back to the SB500 nice reversal lower we'll take a look at this reversal lower right at 4948 down to the high liquidity just around 492 the heat map and book map is showing history the limit orders in the order book so these orders below price are limit buy orders WRB wants to take a look at Tesla I'll look at Tesla in a minute let's figure out what is going on here in the SB500 this reversal lower right around 2 o'clock 2 o'clock reversal so let's go back to hero take a look at the SB500 zoom in so hero drops lower right around 2 let's see if we can slice and dice this a little bit to get some more detail first of all I want to take a look at zero DTE trades so the green line or teal line is showing trades and options that expire in the next expiry and for the SB500 that's today so the SBX by ES all have options that expire every day so the teal line is showing options that expire today for the SB500 so that provides a little bit of additional clue that did start to level off here go back to all trades shown by the purple line separate outputs and calls so right around 2 traders just started selling calls and buying puts so when the blue line and the orange line move in the same direction that's a very powerful directional signal sorry about this auto zoom this has been a problem with hero for some time so starting around 120 115 actually right around 130 orange line blue line moving in the same direction that's a powerful directional indicator and then they both shift lower right at 2 so a powerful directional indicator for a move lower alright let's take a look and see what traders are doing in the mag 7 stocks alright so not a lot not a lot of additional clue here let's go back to the total signal take a look at NASDAQ alright so now it looks like options traders are reversing higher right at that high liquidity at the 492 level alright let's get to Tesla and so to rise he wants to take a look at snap I don't have snap in book map let's take a look in hero so very bullish morning for Tesla traders take positive delta positions and as they take the foot off the gas Tesla consolidates that happened pretty early so first 15 minutes bullish for Tesla then hero signal levels off let's go take a look at book map for Tesla a lot of green volume dots in Tesla today here's the opening print just above $177 traders aggressively taking positive delta positions price seems higher they take the foot off the gas now Tesla is consolidating or moving lower alright so to rise he wants to take a look at snap so again I don't have snap in book map we can take a look here in hero see what options traders are doing very choppy very low notional value 4.2 million and net for the day traders are buying calls and selling puts let's take a look at nasdaq mag 7 back to the SB500 so for me today this is providing the the best confirmation of price action let's go back to book map go to ES so let's look at this reversal and again these are the key levels where I want to trade typically the SPY levels especially the SPY the spot gamma levels so as price moves up to this level that I expect to act as resistance price starts to consolidate then breaks lower so if you're expecting this level to act as resistance you could enter short at that level wait for a move lower and I would enter short at the 4945 volatility trigger as price moves lower and in that case you can also see there were large actually one large trader selling this move higher with iceberg orders that shown by the on chart indicator also the sub chart indicator that's that light blue line and as price moves lower cumulative volume delta starts to move lower and then sell stop orders with the yellow line also fuel to move lower a very obvious target at all this liquidity up and down around 492 alright so again I'm always looking for reactions at these levels and interesting how this liquidity has coming around the 492 level and yesterday 492 was the volatility trigger for spy alright so again what I'm doing is I'm just looking for reactions at these levels and anticipating any test from below the level will act as resistance any test from above it may act as support and Floyd's garage welcome glad you're here garage says that's fast not sure what that means maybe if you could clarify alright WRB wants to take a look at IWM or Russell 2000 I don't have either in book map we can take a look in hero here so this is a combined signal for rut and IWM so pretty choppy day let's just try IWM this is one reason that I don't don't trade the Russell 2000 there's just not a lot of options activity typically and not a lot of I don't feel like I have much edge in trading trading the Russell 2000 so again this notional value right around 31 million let's compare that with the SB500 even at a low value it's minus 600 million and I've seen this get up into range up to 10 or 12 billion for the SB500 so the SB500 very heavily driven by options trades and market maker hedging activity alright ABU ask about NQ and then we'll wrap it up for the day my time is up so NQ signal not providing much let's go to the mag 7 signal still pretty flat consolidating let's just take a look at if we can look at a shorter rolling window so here this is showing about from about 1215 the hero signal moving higher than consolidating now maybe move lower around to let's go to book map NQ and then we'll wrap it up for the day so NQ still trading around this cluster of levels here the lower day they expected move QQQ 426 and NQ 600 so now moving slightly higher and really the range is I guess the most recent range for the last couple of hours 427 on the upside and let's say 42550 on the downside chopping up and down around really around 426 in the middle and note at these lower points aggressive sellers on the way down aggressive buyers on the way up CVD shifts higher also large traders net for the day I have been buying the weakness with iceberg orders on the other hand sell stop orders and CVD have been trending down all day helping to drive the move lower alright my time is up I want to thank everyone for watching thank you very much for your questions and comments I hope I answered all your questions if not you can post them in discord everyone have a great afternoon and I will see you tomorrow thanks again bye