 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, 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. The focus of my presentation 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 and I look at real-time order flow in Bookmap and real-time market maker hedging flow in SpotGamma Hero to confirm my thesis and for setups. And just to be clear, I'm using the options market for the basis of my analysis and I will be talking about setups in a variety of underlines, both the ES futures as well as a variety of stocks. And I'm just talking about the underlying, but the entry, any setup, long or short can be taken with futures options or shares if you're trading stock. And questions and comments are welcome and I will be watching both the options-dog chat channel and Discord and the chat in YouTube for your questions and comments. So again, feel free to post your on-topic questions and comments. All right, let's get started. So what I want to talk about today, my agenda for today, will first of all be go over the news that came out this morning as well as the rest of the week. Then I'll talk about my positional analysis. I'll talk about setups. And I'm going to focus on the S&P 500 and specifically zero DTE options and how they came into play today for the S&P 500. All right, so let's get started. The news, the PPI came out this morning. It was lower than expected or in line with expected and the market has reacted positively to that. And then tomorrow retail sales come out at 8.30 a.m. eastern time and then Michigan consumer sentiment at 10 a.m. And that'll wrap up the data for the week. All right, let's take a look at charts. I'm going to start with my positional analysis and this is the bookmap chart ES futures, the S&P 500 futures. Before I dig into this chart, I'm going to take a look at a larger timeframe. This is the SPX. This is a 20-day one-hour chart. And this is thinkorswim. And I'm just showing SPX price and key gamma levels. These are from Spot Gamma. They're provided to Spot Gamma subscribers for a variety of platforms. This, again, is thinkorswim. And notice that the SPX has been in a pretty narrow trading range. It looks like it may be trying to break out now. The trading range from around 4070 to 4035 now again appears to be trying to break out of that range. So that's for the last 10 days. And you can see that here. This narrow trading range consolidation. All right, let me point out a couple of the key gamma levels. First of all, this is the put wall at 3900. That's the strike with the largest net negative gamma that can be expected to act as support. Here's the 4000 level. That is the absolute gamma strike or the key gamma strike. The strike with the largest absolute gamma. And then here is the 4095 volatility trigger and also SPX 4100, which has been a key level. You can see that price has been oscillating above and below the 4100 level. And the volatility trigger is Spot Gamma's proprietary gamma flip level. Below that level, market makers position on the gamma curve is negative and they have to trade with price to hedge their delta exposure. That tends to increase volatility in a negative gamma environment. Then on the other hand, above that level, market makers position on the gamma curve is positive and they have to trade against price to hedge their delta exposure and that tends to subdue volatility in a positive gamma environment. And then finally, here's the 4200 call wall. That's the strike with the largest net positive gamma and that can be expected to act as resistance. So those are the key levels that are in range on this 20 day one hour chart. That's the bigger picture view. Let's take a look at another thinkorswim chart and this is just for today. This is a one day one hour chart showing a couple of key levels here. There again is the 4095 volatility trigger and the 4100 level acted as support in the morning and now price is moving higher. Alright, let's take a look at book map now and I've got the same levels on this chart and a few more. What this is showing, first of all, here are the levels that I have on my chart. These are the spot gamma cloud notes provided to, again, spot gamma subscribers for a variety of platforms and for book map they're provided in the form of cloud notes which are updated automatically and for the cloud notes the only level shown here in play is the 4100 level. I've got more levels on my charts. Here's the 4100 level. Spot gamma is using a 27 point difference between ES and SPX and I calculated that difference at about 25.5 points today and I think that's closer to accurate and you can see that the 4100 level clearly acted as support so price finally resolved this chop consolidation above that level after a final test of the 4100 level around 10 a.m. and note the aggressive buyers coming in with these green dots and now price has moved up to the spy 412 call wall and for spy that is the strike with the largest net positive gamma that should act as resistance although recently the spy call wall has not done its job very well and there are a couple of other levels that are in play that are not shown on the spot gamma cloud notes there's the 410 pivot level the 410, 4110 pivot level SPX and there's the spy 410 key gamma strike ES 4150 and it's pointed out before the spy 412 call wall and then the next resistance level up is the SPX 4130 so those are the levels that are in play for today and the primary levels really are the 4100 SPX 4100 level that acted as support and then now price is moving above the spy 412 call wall and I'll look at this setup in more detail in a few minutes so let's continue with the positional analysis now and there were just a few shifts and levels for spy the volatility trigger shifted lower from 409 yesterday to 408 today and then again the call wall shifted lower from 420 yesterday to 412 today so that should be a ceiling for spy and it's not, it's looking like price is accelerating above that level and then for QQQ the key gamma strike dropped down from 320 to 315 alright let's take a look at the gamma charts and we'll see where those levels come from alright so this is SPX this chart, this graph is showing positive gamma or call gamma in the orange bars above the zero line and below that's negative gamma or put gamma shown with the blue bars and here's the 4000 strike the absolute gamma strike the obvious strike with the largest absolute gamma that can be expected to act as support, resistance or a magnet for price here's the 3900 put wall the strike with the largest net negative gamma and then here is the 4200 call wall the strike with the largest net positive gamma that can be expected to act as resistance so that's SPX let's take a look at spy zoom in again so here's spy and for spy 410 is the key gamma strike strike with the largest absolute gamma here's the 400 put wall that's pretty obvious strike with the largest net negative gamma and there's the call wall at 420 strike with the largest net positive gamma alright I need to do a refresh then we'll take a look at QQQ so for QQQ again the absolute gamma strike the key gamma strike has dropped from 320 yesterday to 315 today and the put wall remains at 300 and then the call wall remains at 320 so that's QQQ refresh again alright there's another chart here that I want to take a look at this is the SPX Vana model and this is really important to keep track of this information this chart this graph is showing two lines the first this light gray line is showing how market makers delta notional or delta exposure showing other vertical axis changes with changes in price shown on the horizontal axis and what this is showing is that market makers position on the gamma curve will increase as price increases above about this level right here so when market makers delta notional increases they have to sell futures to hedge their delta exposure and then if price drops in this region of price they can buy back their shorts so they're trading against price to hedge their delta exposure this is typical of a positive gamma environment then this purple curve is showing how their delta notional will change when you account for implied volatility so the light gray line is just showing the change in delta not accounting for any change in applied volatility and the purple curve does show that does account for that change in applied volatility excuse me and that is the VANA effect the change in delta with a change in implied volatility and this is showing that as price increases there's really no tailwind from a change in implied volatility the purple curve is very similar to the light gray curve in a positive gamma environment then on the other hand if price drops down significantly and implied volatility increases then market makers will have to sell futures to hedge their delta exposure so that's SPX and we'll just take a quick look at the gamma curves for spy slightly steeper to the downside and then QQQ for the NASDAQ so all in all very similar VANA models for the indices SPX spy and QQQ and let's just take a look at some data here I want to point out the gamma notional for SPX spy and QQQ that's what we'll focus on notice all these numbers are positive so market makers position on the gamma curve for SPX spy and QQQ is all positive and these numbers did increase from yesterday so market makers position on the gamma curve became more positive let's take a look at so that is a lot of my planning preparation for the indices SPX spy QQQ let's take a look at something that I look at for stocks and this is my key gamma strike list and I'm just going to go over this briefly it really has not been a lot of help recently which is strange it's been more of a help in the past but what this is showing is the key gamma strike from yesterday that's shown in the far right column the previous key gamma strike and then this is for today the current key gamma strike and I color code these numbers green or red and obviously there's a lot of red here indicating that all of these numbers decrease from the previous day and generally that can be interpreted as bearish traders are looking for lower prices and accepting lower prices and positioning themselves in the options market based on that alright so let's take a look now at some setups first thing that I want to take a look at is the S&P 500 and John Hello he asked in YouTube what's easier to read or stocks and stocks large caps for trading I find recently that futures are a little bit easier to read and I'll talk more about that right now as I go through this setup for the S&P 500 alright so let's take a look at the first thing I want to take a look at is hero here this is the hedging and this is from spot gamma hedging impact of real time options and this is showing price with a white line here and then this is showing options trades and market maker hedging activity for just the SPX spike gamma provides a variety of signals for the S&P 500 so I'm going to look at the SPX but just for reference let's take a look at spy and just a different picture there generally bearish traders are taking negative delta positions for spy and then here's the combined signal for the S&P 500 and this is actually combining it's a combined signal for SPX spy and also new just in the last couple of days ES futures so it's a combined signal for the entire S&P 500 and I'm going to go back to SPX I thought it provided the best signal for the S&P 500 so let's zoom in and we'll look at book map in just a minute and notice this line this is the all expirations the purple line notice how it is rising even as the ES futures S&P 500 chops around and then finally resolves higher so that's the total line and let's take a look now we can separate out the 0 DTE options with this green line here so I'm showing puts and calls both for the all expirations and for 0 DTE only and notice the notional value here is almost identical so in terms of the notional value the 0 DTE 0 DTE options the options that expire today this is what's driving the SPX and I think it's what's driving the entire S&P 500 ES futures as well as SPX and let's take a look at one other thing now going to go into even more detail and separate out puts and calls 0 DTE and this is actually pretty unusual typically traders will buy calls and buy puts and it's really just a matter of looking at the total signal to see who's winning and prices that is often driving price in this case both of these numbers are positive so traders are actually selling puts today they're selling 0 DTE puts and they're buying 0 DTE calls and notice when this signal is separated out how obvious this is that traders are buying calls and price finally resolves higher after chopping around for the first 30 minutes of the ECH session so let's go take a look at book map now we'll start with the ES futures I'm going to zoom in start with the morning session here so remember that traders are buying SPX calls that expire today and they're also selling puts they're buying calls more aggressively and price starts to move higher test of the 4100 level SPX 4100 and the second test and notice after that second test order flow shifts bullish notice the green volume dots there those are market buy orders starting to move price higher that's confirmed with cumulative volume delta here this dark blue line and there are a few iceberg buys here here 540 534 large traders buying as price moves up with iceberg orders they use to hide their size and then finally stop orders shown by this rising orange yellow line here in the sub chart rising stop orders fueling the move higher as well shown there with a small green dot 800 this all levels off levels off price consolidates for quite a while between the SPY 410 key gamma strike and then the SPY 411 level let's go back and take a look at hero and notice how the how steep this initial line is to move price up between the SPY 410 and SPY 411 level it levels off price slowly trends higher traders continue to buy calls less aggressively continue to sell puts and then price resumes higher as aggressive call buyers come in again and this green line is showing call buyers the rising line positive delta showing call buyers and then this kind of purple blue line is showing put sellers and that's shown up here in the in the legend so now take a look at the rest of today so they continue to buy zero DTE calls and sell puts let's go take a look at book map again so now prices made it up to the the SPX 41 30 resistance level and that was noted as resistance in the spot gamma AM founders note and one thing to keep in mind well first of all Brent could you but the founder of spot gamma did a presentation on research about zero DTE options on it's on YouTube available for everyone I put a link to that presentation in and discord and the options dash Doug channel and discord and it's worth a look it's again it's primarily research one thing that that Brent presents and the research is how traders will monetize these zero DTE options at a certain time in the day and let me just show you an example of that that is this is from a couple of days ago so this is the this is for the S&P 500 signal the combined signal of SPX and spy and I think this was just SPX and spy the ES futures was not added to this signal until yesterday I believe but anyway notice the time here 230 and that's when there's a significant shift lower and I'm looking at the total signal notice exactly at 230 eastern time that's when this hero line shifts from positive delta to negative delta traders are starting to take profits they come back in for a minute and then start moving lower so it takes a while for price to respond so that is the total signal for all expirations and so that's the total signal for all expirations let's take a look at the next chart and this will just show the zero DTE options again for the total S&P 500 signal exact same thing zero DTE driving reverses lower at 230 and then price finally responds lower toward the end of the day and then here's the book map chart for Tuesday notice these just steady steady uptrend and then price finally moves lower around 315 something like that as the pressure from traders taking profits on their zero DTE options finally finally resolves to the downside as price reverses lower at the ES 4150 level and John asks what's the most effective book map indicator for scalping and there is no most or better I'm looking at a combination of things I'm looking at book map I'm looking at and book map I'm looking at order flow stops iceberg cumulative volume delta and I'm also looking at hero so I'm looking at a combination of signals also the levels are very important so there is no most or best it's just whatever you prefer and whatever whatever makes sense to you alright and so you know again I pointed out the zero DTE options for SPX look like they're driving this rally higher in this case today traders are buying zero DTE SPX calls and selling the SPX puts and that's showing a strong correlation to price action and also I pointed out that traders may start to monetize that take profits and that's what research shows that the peak zero DTE occurs I think around two or two thirty and I believe that research was from Morgan Stanley anyway Brent presented that in the YouTube video that I referenced from just a couple of days ago so just look at the look for the spot gamma YouTube channel and the impact of zero DTE options alright so that is the S&P 500 and there were some other other setups as well let's take a look at Apple and very strong uptrend price target at the 165 call wall notice all the liquidity at that level the dark orange those are resting cell orders that tends to attract price let's go take a look at hero let's clean this up take a look at all trades so now we're just looking at the total signal so that again is SPX take a look at Apple and in the morning there was a strong confirmation correlation between options trades hedging flow and price action go back and take a look at book map so again there's the target at the 165 call wall take a look at meta and again a call wall target 225 220 I'm sorry notice all the liquidity at that level let's take a look at hero and if anybody has any stocks that they want me to take a look at let me know so again for meta there was a strong correlation between options trades hedging flow and price action in the morning zoom out for the entire day and notice how as hero drops price drops a bit and levels off started moving higher than options trade options traders joined in on the party so the best setup was early in the morning the morning session so that's meta confirmation long same for Apple, confirmation long with a call wall target let's take a look at Microsoft and similar to the other stocks that we looked at very strong correlation of the morning up until about 1030 with options trades hedging flow and price action take a look at book map and the price target above is the 290 level notice all the liquidity there the dark band all the resting limit sell orders at that price at that level tends to attract price let's go back and take a look at hero a lot of chop there now price is starting to resolve higher as traders continue to take positive delta positions that's Microsoft let's take a look at Netflix and this was I'm going to zoom in on the on the morning very nice setup in Netflix a divergence long notice how price drops price drops right down to the call wall at 340 and then moves higher and that call wall a breach of the call wall and a move higher can act as an accelerant and remember the call wall is the strike with the largest net positive gamma all the calls at those levels at that level but for stocks traders traders are buying calls spot game assumes that traders are buying calls market makers are selling calls and as price continues to go higher they have to buy stock to hedge their delta exposure so traders are buying calls market makers are selling calls they have to buy stock to hedge their delta exposure and as price continues to rise they have to continue to buy stock and now all the calls at this 340 level and below are going further in the money delta is increasing and market makers have to continue to buy stock to hedge their delta exposure and let's just take a look at Netflix and equity hub here to get a better sense of how that works so this is the right here is the call wall level the 340 level that level right there so now all of these calls at that level and below are going in the money their delta is increasing as they go further in the money traders market makers are short those calls so they have to continue to buy stock to hedge their delta exposure and at some point this will slow down as these gamma curves here will the slope of the line will decrease at a certain point and market makers need to to hedge starts to decrease but around this level these lines the gamma curve for calls shown with orange and the blue shows puts those of both very steep on this area right here showing a high rate of change of gamma that is Netflix and the next stock I want to take a look at is Nvidia and Nvidia there was a zoom in on the morning again pretty similar to other stocks strong correlation between hedging flow and price action and this is pretty typical of Netflix kind of chops around for the first half an hour or so and then finally starts to move higher as traders start taking positive delta options trades let's go take a look at book map and notice the reversal higher let's just zoom in zoom in on the morning notice the reversal higher just before 10 a.m this is a by sweep shown by these small green dots trend line break then a retest of the 265 hedge wall and price moves higher primary target at the 270 high liquidity and so far price has not made it up to the 270 level the next is actually let's take a look at spy look at spy when we're at it showing the same levels and my that I showed on the ES chart just to my my cloud notes here so there is the support at the 4100 level chop between the 410 and 411 level until finally resolving higher a retest of 411 some consolidation at the 412 call wall on the 40 30 41 30s spx 41 30 resistance level and now price is heading up to the spx 41 50 level and that was actually not noted as a resistance level I just still have that note from yesterday I guess but that is the spx 41 50 level and that has been resistance in in the past so there's spx just a nice steady uptrend now heading up to the spx 41 50 level and let's take a look at Tesla and let's take a look at hero for Tesla and there was zoom in so we can see this the only gamma level that was in play this morning is the 182 hedge wall let's go take a look at hero for Tesla and for Tesla there was a strong correlation not as strong as some other stocks certainly not as strong as the spx strong correlation between hedging flow and price action definitely traders taking positive delta positions and let's just see what they were doing so they're primarily selling puts today and that's interesting that's shown by the rising blue line there and then they also are net buying calls but the put sellers are primarily driving price today so that's Tesla positive delta options positions helping to drive price higher let's go back and take a look at book map and there's the 190 call wall still a few points away notice the high liquidity at that level let's go back and look look at the sp500 let's see where price could be going next so again the 4150 level there's also a combo level l2 at 4149 alright so now it looks like price is finding some resistance let's just see what the RJ we'll look at QQQ I just want to see what the options traders are doing for SPX let's go back to SPX and notice the the dip in the line there and let's separate out let's take a look at the zero DTE that's also falling so that could be could be our zero DTE options traders starting to take profit and it may take a while for that to resolve and that would be similar to the example that I showed from a couple of days ago from the 11th RJ asked to see QQQ and this is why I didn't show QQQ it's in a nice steady uptrend it's just that for most of the day options trades options traders did not have much of an impact on price action and they were all in the it looks like they were all in the large cap tech stocks and we can just take a look at something else in SPX let's take a look at NASDAQ so this is where see all this green this heat map is showing where traders are putting their money and we showed examples Microsoft, Apple I didn't show Google but Meta, Amazon and Tesla traders are all taking positive delta positions and that's what's driving the NASDAQ and QQQ higher options trades in all those stocks and that is the that's well over half of the NASDAQ so again traders are taking positive delta positions let's just take a look at Google so slightly negative in Google but in these other stocks all bullish RJ I hope that answers your question about QQQ so let's go back to SPX there's a question in discord so there is zero DTE for ES let's see if there is for SPX I'm going to go to thinkorswim so this is this indicates it's zero DTE today this is probably not significant to compared with SPX and SPY so we can take a look at what hero is showing is next expiry so if they're for stocks for example for Tesla if we were looking at this for Tesla it would show tomorrow's expiration Friday single stocks typically have just Friday expiration once a week compared with SPX, SPY and QQQ which have options that expire every day so this zero next expiry is showing zero DTE for SPX, SPY and QQQ and then it's showing the Friday expiration for single stocks so the combo product so that's the zero DTE for hero for ES and it looks like again from the option chain at thinkorswim there is a zero DTE for ES and then they also have the combo product which is this also showing zero DTE which is showing again next expiry and you have to know if that is a zero DTE or a Friday expiration or whatever and I think I've shown that today here's SPY SPY versus SPX and I think it's pretty clear which is driving less behavior so I for the SPX for the S&P 500 whether you're interested in creating SPX, SPY or ES I typically look at the combined signal and that's pretty close to what's happening today and I've just found that recently this SPX signal is maybe a little bit more clear but if you want to be completely thorough and look at everything I suggest this total signal of the combined SPX SPY XSP which is not significant and ES and in YouTube Bartos asked do you lift and I'm not quite sure what that means if you're talking about weight training I do some weight training mostly body weight exercise but I'm primarily a cardio guy alright final question Doug is the selling now selling calls or buying puts in SPX so let's take a look at SPX and let's clean up the signal so that we're just looking at well we'll take a look at all expirations puts and calls so really they're selling calls now and buying puts so this makes sense that's shown by the following orange line here craters have been buying calls all day and they're starting to sell those take their profits which totally makes sense you know this has been rising all day time to take your profits right so it's starting at somewhere around 215 isn't there starting to starting to sell calls let's go back and take a final look at book map and you can see that has somewhat confirmed with order flow here and I would I would watch this for a while but what I'm talking about is notice the aggressive sellers coming in here all these pink dots coming in but I would certainly watch this for a while before looking for a short alright partos again I'm a cardio guy I'm very thin, very small guy cardio resting heart rate in the mid 30s I just do a little bit of body weight training to maintain some strength and then Floyd Grudge asked do I care about bondage yes I don't look at them that much for day trading maybe I should alright I'm going to wrap it up keep an eye on the S&P 500 let's see if traders start to monetize their zero DTE options and we'll keep an eye on it and again tomorrow we've got retail sales at 8 30 a.m consumer sentiment at 10 a.m and we'll go over that tomorrow so I want to thank everybody for your questions and comments and thanks for watching and I will see you tomorrow bye