 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 Excuse me before I get started. I need to go through the disclosure general disclosure I'll book map them in a materials information and presentations are for educational purposes only and should not be considered specific investment advice nor recommendations risk disclosure training futures equities and options involves substantial risk of loss and is not suitable for all investors Past performance is not necessarily indicative of future results 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 bookmap discord. There's an option stash Doug chat channel. That's a great place to post questions Comments and content related to the topics of the channel Which I'll go over in just a minute. So discord. That's the best way to get in touch with me. I'm also known On x formerly known as Twitter. My name there is at Doug plus The focus of my presentation today in the focus of the options stash 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 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 the directional bias And the second step of my process is execution and I look at real-time order flow and book map 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 Setups can I'll be talking about setups and an underlying asset and those setups can be taken With futures shares of stock or options For example a setup in the SME 500 can be taken with the 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 stash Doug chat channel and discord As well as the chat and YouTube for your questions in comments. So please feel free to post I'll do my best to answer your questions My agenda for today what I want to cover first of all go over news items economic data Events and earnings for the week, then I'll go through my positional analysis Then I'll review some setups from this morning 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'll be glad to do that All right, let's get started first of all with news items There were a couple of data releases this morning at 9 45 and 10 a.m Manufacturing PMI data came out Also, I believe Jerome Powell was speaking at 10 a.m. In some sort of round table and then on Wednesday Services PMI comes out At 9 45 and 10 a.m. Again, and then Friday the big Big event for the week is the employment report non-farm pain rolls at 8 30 a.m. Eastern time That's on Friday All right, let's get started with positional analysis now I'm going to start with the SME 500. This is the S futures and book map And I did have the same issue today my computer restarted when I went to launch Still have not been able to solve the problem So everything is up and running, but I did lose MBO data, which is the stops and icebergs Up until when I restarted right around 120. So this is the stops and icebergs Both flat Book map does not retain the MBO data used for the stops and icebergs indicators so anyway all as well except for the MBO data and This ongoing problem with my computer still Still trying to find trying to find a solution All right, so this is the SME 500 futures before I take a closer look at this chart I want to take a look at a larger time frame this is spx and a 30-day one-hour chart and this is showing this downtrend began at the 9 15 Monthly expiration that was a large expiration call dominated And the spx has traded lower since then Tried to move up last week and is down back down to around the 42 50 level just above that level And that was a call dominated expiration All right, let's take a look at some levels on this chart First of all, I've got the lower and upper weekly expected move Showing with the dash purple lines Those levels are based on the options market indicating a one standard deviation or 68% chance that spx should trade Within that range for the week Then the dash blue lines are showing the lower and upper Daily expected move again, this is from an options options change should be available in any trading platform that has an options chain Showing the lower and upper daily expected move again a one standard deviation or about 68% chance That spx should trade within that range for the day There are also some spot gamma levels on this chart These are proprietary spot gamma levels based on gamma weighted open interest. These are available to spot gamma subscribers I'm going to point out the key daily levels First is the put wall at 40 to 40 200 That's a strike with large net negative gamma that can be expected to act as support. So that's the potential floor The next level up is 4300 that is the absolute gamma strike. That's a strike with large absolute negative and positive gamma Above that is the volatility trigger At 43 50 that is spot gammas proprietary gamma 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 increase or enhance volatility And 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 hedge their delta exposure and that tends to decrease or subdue volatility and Then finally the call wall is at 44 50 That's a strike where the largest net positive gamma and that can be expected to act as resistance so the call wall the potential ceiling and Put wall the potential floor and note the call wall did shift lower from Last Friday at 4500 down to 44 50 today. So that's not really in play but Overall slightly bearish that that call wall would shift lower All right, so those are levels in play for spx or the key daily levels Let's take a look at a One-day chart to see the levels that I'm playing for today. So this is spx In a one-day one-minute chart and note here The key takeaway from this chart is the 4300 level in that combo L2 level just above that that combines SPX and spy gamma into one level did act as resistance today We'll just scroll in a little bit here and see that spx is trading Within the upper and lower daily expected range But closer to the lower daily expected move and also spx is Well below the volatility trigger for today Shown here at 43 50 All right, so those are the SPX levels in play for today Let's take a look at book map now in Book map. I have my own cloud nodes and I'm showing SPX levels. There's that 4300 absolute gamma strike Resistance level that did act as resistance. I also have spy levels on this chart Here's the spy 425 put wall absolute gamma strike That level around that level acted as support so far today also this 4275 level and the spy 426 level has been a key level today acting as support and then resistance So we'll keep an eye on the sub 500 see what it does at that level again again 426 4275 Acting as support and then resistance. I'm going to darken up the heat map and you can see the Liquidity at these levels the heat map is showing a history of the resting liquidity limit orders and Notice they're lined up exactly with that level All right. No, there is a difference between the price of ES and SPX right now it is Actually around 36 and I had set it earlier today at 35 So it has changed a little bit during the day trading now at 36 so that 4275 level would be up at Just a little higher 4311 All right, so those are levels in play for the SAP 500 today I talked about shifts in levels for SPX the call wall shifted lower for spy The volatility trigger shifted slightly higher one point and the call wall also shifted lower From 460 to 450 and then the absolute gamma strike shifted lower to 425 And that's shown right here just above the ES 4300 level so overall Especially considering the shift lower in the absolute gamma strike and call wall for spy Slightly bearish based on the shifts lower in the levels Traders are looking for and accepting lower prices by shifting their open interest to these lower levels and Hello Derek glad you're here afternoon here. Welcome All right, so that's the SAP 500 shifts lower in levels call walls for both SPX and spy absolute gamma strike for For spy Let's take a look at NASDAQ So this is the NQ futures and book map looks like I didn't get everything loaded here Start up my price lines All right, so while we're waiting on that so it looks like the upper daily expected move acting as resistance And we'll take a closer look at that in just a moment. So let's take a look first of all at QQQ For the day and note the 360 level right in the middle of the price range That is the volatility trigger and Also the absolute gamma strike so kind of a key level for QQQ there And we'll go back to NQ in just a moment and most likely a good bit of the volume today will be clustered right around that level So those are the 360 and the combo level just below that I believe are The only spot gamma levels in play for today For QQQ or let's take a look at NDX and there's that combo level combining NDX and QQQ open interest Into one level. All right, so it looks like the Volume is actually clustered above and below that 360 level All right, so this is in Q Key level for today resistance at the upper daily expected move Again, I have mouth cloud notes. I'm showing QQQ levels. There's the 360 level That would also the NDX level this zero gamma level Did act as support this morning and for some reason that was not on the not shown on the thinkorswim NDX chart that we just took a look at most likely before because that Support actually occurred before the cash open when the DX starts trading. All right, so those are the levels for Nasdaq For shifts in levels For NDX the volatility trigger shifted lower put wall shifted higher to 14,000 and then for QQQ the Volatility trigger shifted lower so minor shifts in levels for the for the Nasdaq All right, let's take a look at gamma notional now We'll see how market makers were positioned on the gamma curve at the beginning of the day This is gamma notional for SPX by NDX and QQQ I normally don't look at NDX. It's not significant compared to the other numbers for example spy is at 2.345 billion and NDX at 626k All right, so these numbers for SPX spy and QQQ are negative quite negative and the changes were mixed so for SPX gamma notional became slightly less negative than Friday And for spy gamma notional became more negative and again both quite negative Especially spy at over minus 2.345 billion also for QQQ that number did shift lower from Friday. So also for negative so negative for all the Indices there all right, let's take a look at the Vana model now and see get a graphical representation of what that means And why we why we take a look at that? All right, so that I'm going to start with the Vana model for SPX and let me explain this chart This chart is showing market makers delta notional. This is market makers delta exposure And this is showing how they change how delta notional changes with changes in price that is shown by the This great curve here remember options market makers want to remain delta neutral their job is to make markets and Manage their risk. So they want to remain delta neutral So we assume they are delta neutral at the beginning of the day And then this Vana model shows how they may have to hedge as price and implied volatility changes that shown by the purple curve so the purple curve adds implied Volatility to the equation again showing how market makers delta notional changes with changes in price and implied volatility so what this is showing is if price and And price increases implied volatility drops Market makers can buy back short futures so when traders Buy and sell options SPX and spy Market makers hedge those trades with the ES futures So they take the opposite side of the trades and then they'll hedge their delta exposure with ES futures they always want to remain delta neutral so as price increases Implied volatility drops Market makers can buy back short hedges on the other hand if price decreases and implied volatility increases Market makers can they they'll have to sell futures to hedge their delta exposure. Remember, they always want to remain delta neutral All right, SK gang go ask. What is the importance of delta gamma and ban a notional levels, so I'm talking about that right now and This is primarily to understand how market makers may react to changes in price and applied volatility and How they have to hedge if they're trading with price or against price and In this negative gamma environment, they're training with price. So I'm looking for larger moves higher volatility Setting my price targets further away Again looking for wider trading ranges in a in a negative gamma environment All right, let's see where SPX is trading right now SPX is around forty two seventy two So that looks like that's a new low of the day So right around here So this is showing if Price continues to decrease Price moves down prices on the horizontal axis Following this curve market makers Let me redraw that Market makers delta notional is Increasing they want to remain delta neutral. So they have to sell futures To hedge their delta exposure So prices decreasing implied volatility increasing Their delta notional is increasing and they have to sell futures to hedge their delta exposure All right, so SK gain go hope that hope that is Hope that helps hope that explains this so I'm looking at this again to get a sense of the volatility and trading range for the day And I know in a negative gamma environment market makers are trading with price That means that traders long puts market makers are short puts and his price drops Those puts are gaining delta. They want to remain delta neutral So they have to sell futures to hedge their delta exposure. All right, let's take a look at spy Very similar and by the way this curve is very typical of a very negative gamma environment Here's gamma notional. Here's the Vandal model for spy spy is trading between 425 and 426 There's 425 right there again, remember that's the put wall and And spy did test that level earlier today. So again Price decreases implied volatility increases market makers delta notional increases and they have to sell futures on the other hand If price increases implied volatility drops Market makers delta notional drops and they can buy back short futures and by the way that change in Delta with a change in applied volatility is the Vanna model is the Vanna fact Vanna is a second order Greek All right, let's check QQQ now And QQQ is trading Right around 360 So not quite as much of a Vanna tailwind here if price increases But again, this works both ways at price decreases market makers will have to sell futures All right, let's take a look at some setups down and by the way my thesis for the day was bearish based on the shifts lower and levels For the SMB 500 and also looking for a higher volatility wider training range today All right, let's take a look at the SMB 500 first This chart is the hero chart hedging impact real-time options This is available to spot gamma subscribers What this chart is showing is price and the hero signal price in the white line for SPX Purple is the hero signal Again hedging impact real-time options This is showing options trades and market maker hedging activity for a combined signal for SPX spy XSP and ES futures So if you trade any form of the SMB 500, this is a signal that you want to take a look at All right, let's zoom in on this so this is You zoom out just a little bit starting at The cash open here 9 30 a.m. Eastern time pretty choppy up until about 11 30 and There was a great divergent short set up here. This is what I want to highlight So I'm going to zoom in on that and note that this is Showing the key gamma strike, which is the same as the absolute gamma strike for SPX at 4300 Generally hero was rising wrong tool He was rising traders were taking positive delta positions Up until that point and then his price Hit that 4300 level. They immediately started taking negative delta positions Hero continues to drop. They continue to take negative delta positions and Price falls when traders take negative delta positions Market makers are taking the opposite side of that positive delta positions And they have to sell futures to hedge their delta exposure. All right, let's go take a look at book, ma'am Let's go back to ES Gonna zoom in here So remember, let's get just go back to hero real quick So right around 11 21 22 11 22 traders immediately Started taking negative delta positions tone this down just a little bit make the volume dots a little bit smaller So that's right around here as price hit that 4300 level and There was I looked at this earlier today There was a stop run up to that level by stop orders helping to fuel the move higher But book map is showing that aggressive buyers Also, we're moving price higher That's shown by the green volume dots the volume dots are showing a market buy minus sell orders That's a delta with a green dot indicates. They're more buyers than sellers So options traders were starting to fade this move then aggressive sellers start coming in Market sell orders shown by the magenta volume dots You can see the shift in cumulative volume delta below here That's shown by the dark blue line and the sub chart cumulative volume delta shifts and you can very see clearly see the shift in order flow Options traders taking negative delta positions. This is a potential resistance level at 4300 and Aggressive sellers start coming in at that level. This was a very very easy read clear read for a short at that Potential resistance level again this 4300 level noted as resistance and the spot gamma am founder's note and price moves lower down to the Spy 425 put all right there did trade a little bit lower All right, so that's the trade that I wanted wanted to highlight in the SB 500 Took some patience to wait for it. There are also a few other setups reversal here at spy 428 but this was the The best setup there two hours after the cash open just waiting patiently for a reaction at that 4300 level. All right, let's take a look at NASDAQ now So NASDAQ let's go to hero See what options traders were doing We'll get back to the SMB 500 in a few minutes and and see Just slice and dice this a little bit more and see exactly what options traders are doing So let's go to NASDAQ. I'm going to take a look at this combined signal for NDX and QQQ zoom in All right, so if you'd like to trade the open This was a pretty clear signal options traders taking positive delta positions from the open setting up along For again from the cash open. Let's go take a look at book map. I'm gonna zoom in Here's the cash open Just above the QQQ 358 level that's shown by the yellow line also the NQ 14850 level Aggressive buyers shown by the green volume dots So price moves up about a hundred points to 950 Consolidates Then takes off again up to the upper daily expected move Where it reverses lower? All right, so if you were patient held a runner you got it all the way up to the Upper daily expected move just below the 1550 level All right, let's scroll Scroll to the right a bit then we'll look at this short setup Right around the same time as the SMB 500. Let's go back to the combined signal for NASDAQ So I'm on this so another divergent setup as NASDAQ was making its way up to that upper daily expected move Options traders started taking negative delta positions Price consolidated for a couple of minutes and then move lower again at the upper daily expected move Let's go back to book map Very similar to the SMB 500 aggressive buyers on the way up This pink line is showing cumulative volume Delta And I have my cumulative volume Delta set The color set so that when this cumulative volume Delta is negative It's the line is pink when it's positive. It's dark blue So it's still rising showing by the rising Line in the sub chart it levels off that moves lower So the aggressive buyers step away aggressive sellers start to come in And then they take price much lower as options traders were taking negative Delta positions And again when traders take negative Delta positions market makers are taking positive Delta positions They're just taking the other side of those trades and for QQQ and NDX they trade they Hedge their Delta exposure within Q futures right, so if you trade the open there was the long setup and then the The short set up at the same time as the SMB 500. All right, let's take a look at some stocks now Let's go back to hero Let's just check the alerts here. See if there's anything that we want to take a look at. Oh, here's QQQ Let's see what QQQ is trading down All right, so this is this is interesting. I'm looking at the Not the current flow alert, but this previous flow alert. This is came in at 11 30 Showing this reversal Here's the flow alert as Heroes started dropping and then price was starting to respond There's the flow alert. So there's a an additional confirmation of that short setup that I just talked about All right, let's take a look at some stocks now. And here's what I did earlier today I ranked my watch list by this hero signal and Again remember Nasdaq was bullish in the morning up to that upper-day. They expected move I'm gonna start with Nvidia at the top of the list. So what I'm looking at here is The hero signal and This slider is showing the strength of the hero signal Compared to the last five days and last 30 days So the entire length of this slider and I'm sure it's impossible to see But it ranges from right around here to here That's the entire length of the slider So this dot is showing comparing the current hero signal for today with last 30 days So far to the right, that's as strong as that it has been in the last 30 days also the colored portion is showing the Strength of the hero signal for the last five days So this dot to the far right is as strong as it has been in the last five days and last 30 days And that's for Nvidia So let's take a look at Nvidia zoom in on this note first of all the 455 Call wall key gamma strike key level. Let's see what traders are doing. So Up until about 1130 options traders were Buying calls shown by the rising orange line and selling puts shown by the rising blue line Orange shows calls Blue shows puts the slope of the line the direction is bait is In an indication of Delta positive Delta for a rising line negative Delta for falling line So they were buying calls and selling puts go back to the combined signal And note how the traders options traders take their foot off the gas as Nvidia hits that 450 call wall key gamma strike and price starts to move lower So great uptrend up to the 450 call wall level options traders take their foot off the gas and then price starts to move lower Let's go take a look at book map go to Nvidia All right Truman asked does the flow alert go off when the stock price starts to respond to hero? So The flow alert are new and I You know, I don't know the algorithm behind that Brent has talked about some they were just released last week. I believe So I don't know They just indicate a Unusual hero activity and I have not looked at them long enough to really base any decision You know training decision other than something to get my attention So no, I think it just indicates unusual hero activity All right, so here's Nvidia Here's the 450 call wall key gamma strike and Notice the sharp move higher this morning a couple of pullbacks for entries as price moves up to the 450 level reverses and then moves up To 451 before options traders at 1130 take their foot off the gas they stop buying calls Stop selling puts and price moves lower All right, so I true, but I've used hero for quite a while and I I still rely mostly on my My interpretation my read of hero and look at the alert as something that would Get my attention another pair of eyes looking at hero something to get my attention All right, so that's Nvidia Let's go back to hero nice long set up in Nvidia. Let's take a look at Microsoft This one's not as clear. It looks like a long setup right here around 1045 Up to and above the 320 key gamma strike Let's go take a look in book map Remember, I'm going by hero signal here That's my my criteria for going through these stocks. All right, so here's the cash open There's the opening print that big green dot and the long setup was right around 1045 When traders started taking positive delta positions and price moves up to the 321 level 320 again as the key game strike of a lead. Let's go take a look at that again Yeah, 320 key game strike Notice price starts to move lower as traders take their options traders Stop buying and start selling started taking negative delta positions Right the next on the list Google here. Let's see what traders are doing and Google So mainly buying calls Aggressive call buyers from the open Price moves higher. Oops. I'm not sure what caused that Let's go back to the total signal zoom back out. Sorry about that So in the case of Google, all right, I got a message from OBS studio. This is something that I use to stream to YouTube So can someone on YouTube? Please confirm that you can hear me and see my screen All right Truman says yes. Okay. I'm not sure what happened there all right, so anyway in the morning traders were taking positive delta positions and Google responded moving higher when traders buy calls Mark it make your sell the calls and they have to buy stock to hedge their delta exposure All right Truman. Thank you Max. Thank you Mark. Thank you and Don. Thank you as well Thanks for the confirmation. All right. There's Google Let's take a look at Netflix Netflix traders were buying calls Show mother rising orange line Also net selling puts for the day this Notional value for the blue line is Positive well, so when traders buy calls and sell puts Market makers take the opposite side and they have to buy stock to hedge their delta exposure And again, just like we've seen over and over again when options traders Take their foot off the gas whoops wrong tool When options traders take the foot off the gas Probably starts dropping earn consolidates All right, let me check for questions All right slow down. Hello Ask me if I can recommend an easy way to convert spy QQQ To ES and Q if we don't have think or swim did you use the script? I You your first choice would be to whatever trading platform you use see if you can Find a scripting language or some way to To get that information automatically calculated if not What you can do is The the manual way and I used to do this Let's go to So what you can do if? If you don't have any access to any trading platform or script You can take a look at a chart like this and at the same point so take take just Calculate or look at the value so think or think or swim is showing. I'm looking at 10 43 And this is it may be hard to see but it's up up here This is showing me the the high and the low and the close For every every minute on the chart so you can go to 10 43 for example take the low You could take the high at this point and Then compare that with an ES chart at the same points in time So take the lows and the highs at several points three or four points compare that with ES Calculate an average and there's your ratio. It takes a little takes more time But that's that's a way to do it. All right, so that's the that's actually the way I used to do this All right So sorry has mentioned Tesla a couple times. So let's take a look at Tesla So by the way Nvidia was in the news. I think Goldman Sachs added Nvidia to the conviction by list and That's enough to cause a buying frenzy and calls for Nvidia Let's take a look at Tesla. All right, Tesla reported vehicle deliveries over the weekend So sorry has provided details in in discord. Let's just take a look and see what traders were doing So very bullish reaction from the open Let's take a look at heroes see what options traders are doing We'll go to Tesla and let's separate out. Let's zoom in on the morning session a little bit So uptrend in the hero signal so options traders were taking positive delta positions note the hedge wall at 245 and The key gamma strike at 250 So price traded below the hedge wall and and then traded above the the key gamma strike We'll see what traders are doing so they're Selling puts and buying calls that's shown by the rising Blue line for puts rising orange line for calls Let's go take a look at book ma'am Nice uptrend there pullback entries as traders continue to take positive delta positions Market makers take the opposite side. They have to buy stock to hedge their delta exposure multiple pullbacks to that trend line headed toward the 255 liquidity level that is showing a history of limit orders in the order book that High liquidity tends to act as a magnet for price zoom back out So price made it up to 254 Right around 1130 when everything else started to reverse and let's take a look Let's see what options traders were doing then So again at 1130 options traders Take their foot off the gas Price consolidates Instead of moving lower like some other stocks. Let's go back to book map All right, so Tesla did move lower a bit consolidating now just below the 250 key gamma strike. Let's go back to hero and Traders continue to take negative delta positions So I would I would not be looking for a long entry in Tesla Or let's go take a look at indices now Go back to the S&B 500 So overall net for the day traders are taking negative delta positions This is number is pretty small minus 220 million Let's see what traders are doing This is pretty typical They're buying calls shown by the rising orange line The positive notional value Positive notional value. They're buying calls. They're also buying puts Very typical for an index product Calls and puts moving in opposite directions And all over all the put buyers are slightly more aggressive and let's go Let's take a look at zero DTE trades I'm going to turn off all trades. So the the green line is showing what? Options traders that are trading zero DTE options that expire today Showing what they're doing the purple line is showing all expirations. So let's turn off looks like the Zero DTE traders are having a very large influence on on price today So we can confirm that when we just look at zero DTE we isolate And we can see the very strong correlation between zero DTE traders options trades market maker hedging activity and price action So now we've kind of zoomed in and isolated a key driver Price action today and that is the zero DTE traders and note the Short setup that I talked about earlier Today at 11 30 is very clear with zero DTE traders Taking negative delta positions at this key gamma strike And price reverse lower just a few minutes later All right, so again zero DTE traders and the S&P 500 Helping to drive price lower for the day this number net Notion of value is negative for the day And if we want to be extremely precise we can separate out this into puts and calls So the rising green line is showing call buyers. That's positive notion of value and the falling light purple line Is showing traders selling puts are buying puts shown by the negative notional value So they're buying calls and buying puts and the Put buyers are more aggressive All right, let's so let's Clean this up Go back to all trades. Not sure why it did that again All right, let's go take a look at book, ma'am Take one last look at the S&P 500 All right, so it looks like the S&P 500 is back down to the 425 Spy 425 absolute gamma strike put wall As zero DTE traders are buying puts And if price breaks below that level looks like the next level is the lower daily expected move Let's just zoom in on this just a little bit And you can see the shift in order flow here is price reversed Aggressive sellers start to come in Looks like a stop run Buy stop run Up to a right around point of control that show my this purple line And then price moves lower down to the 425 put wall absolute gamma strike level now it looks like Aggressive buyers are coming in at that level Take one last look at hero see what options traders are doing I'm just going to leave it on the total signal. So it looks like All expiration so it looks like they are starting to take positive delta positions All right, my time is up. I want to thank everyone for watching Thank you for your questions and comments And I will see you tomorrow. Thanks again. Bye