 Hello everyone, welcome to Options with Doug, streaming live daily on Bookmap Discord and the Bookmap YouTube channel at 1.30pm Eastern Time. Excuse me. 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 involve substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. Give me just a moment. I need to adjust my screen resolution. Note that I am streaming at 1080p on YouTube. I had to adjust my settings. I am watching YouTube on another computer so I can see the chat there. Just a reminder again, I am streaming on YouTube at 1080p. If you have any issues with your resolution, just click the gear icon and you can change to 1080p. Risk Disclosures out of the way. Here's my content information. The best way to get in touch with me is through Discord. My name on Discord is Doug P. Also on 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 my channel and the topics of my presentation that I'll go through in just a moment. And note that Bookmap Discord is free and available to everyone. There's a lot of great content there on a variety of topics. Stocks, futures, a variety of languages and a lot of traders, active traders that are ready and willing to help other traders, all trying to grow and become better traders in a very active community. So Bookmap Discord free and available to everyone. Everyone is welcome. Please feel free to join us. Next, formerly known as Twitter, my name there is at Doug Pless. The focus of my presentation today and 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. 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 the directional bias. And the second step in my process is execution. I look at real-time order flow in Bookmap and real-time market maker hedging flow and spot gamma hero to confirm my thesis and for setups for entries and exits. And when I talk about setups today, I will be focusing on an underlying asset. For example, the SB500 setups can be taken with ES futures, spy shares, spy options, SPX options, or even ES options. So again, I'm focusing on an underlying asset. Setups in that asset can be taken any number of ways. Also, the setups that I talk about today, I'm generally focusing on intraday trading, but they can also be suitable for a longer time frame. Either swing trades or even longer time frame trades. Questions and comments are welcome. And I will be watching both the options dash jug chat channel and discord as well as the chat and YouTube free of questions and comments. Please feel free to post and I'll do my best to answer your questions. So here's my agenda for today, Friday, January 12th. First of all, I want to go over news items, economic data, and events for today. Preview of next week. And then I'll go through my positional analysis. Then I'll review some setups from earlier today. And 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. All right, let's get started with economic data. So today the big data release was the PPI data out at 8.30 a.m. eastern time and that there's a month over month year over year month over month lower than expected, lower than the previous number, and then year over year also lower than expected but slightly higher than previous number. And here's the market reaction to that data 8.30 a.m. eastern time very bullish reaction follow through after the cash open. All right, so this is the EES futures and book map. I'll talk more about this in a few minutes. So very bullish reaction to the PPI data. So that wraps up the data for the week. It was a pretty light week with CPI yesterday, PPI today. Next week note that Monday is a market holiday and I will not be streaming on Monday also I will be out on Tuesday so I'll be back on Wednesday and then we can wrap up the week with the January options expiration and this could be an interesting expiration so be sure and stay tuned for that. All right, so again I will be out Monday and Tuesday next week I will be back on Wednesday. All right, so let's start with positional analysis now and this is the SAP 500 futures and book map the EES futures before I take a closer look at this chart I do want to start with the larger time frame and we'll go back to the underlying index for the EES futures and that is SPX and I want to start with the uptrend that began October 30th and the trend continued higher for a variety of reasons IV collapse put Van der Rally, Dovish, FOMC inflation reports coming in better than expected and then the SAP 500 SPX has definitely had trouble getting above 4,800. All right, now let's go to another SPX chart take a look at a little bit shorter time frame and this is the 30 day one hour chart showing price action again for the last 30 days one hour chart. Here is the 4,800 level and then the end of last year the last week of December SPX moved up forward 4,800 and could not get above tested it yesterday and then tested it again today and was soundly sin heading lower. All right, let me point out levels on this chart first of all the weekly expected move that's shown by the dash purple lines so that's the lower weekly expected move and the upper weekly expected move is right here this may be difficult to see there are kind of a cluster of lines there so that is the weekly expected move based on the options market SPX training above the upper weekly expected move and that information is updated once a week I update that over the weekend then the dash blue lines are showing the lower and upper daily expected move also based on the options market that's updated once a day and SPX is training right in the middle of that range between the lower and upper daily expected move and note that expected move for today was right around just a little bit less than plus or minus 26 points yesterday it was plus or minus 32 points and the day before plus or minus 21 so the increase yesterday was due to the CPI report and then the increase today was also due to the PPI report right now SPX trading above the weekly expected move and inside the range between the lower and upper daily expected move the dark red lines are showing spot gamma levels these are proprietary spot gamma levels provided to spot gamma subscribers shown on a variety of trading platforms again this is think or swim I'm going to point out the key daily level so once spot gamma does they take the open interest data that's provided by OCC they apply their own proprietary algorithms to come up with these levels so again I'm going to go over the key daily levels first of all there's the put wall at 4600 that's a strike with the largest net negative gamma expected to access support and the next level up is the volatility trigger at 46 4765 and that is spot gammas proprietary gamma volatility flip level below that level market makers position on the gamma curve is negative in a negative gamma environment market makers have to trade with price to hedge their delta exposure and that tends to increase volatility when market makers are trading in the direction of price on the other hand above that level like SBX is trading now 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 subdue or decrease volatility and then finally the call wall up at 4800 that's the big resistance level that I just spoke about so that's the strike with the largest net positive gamma can be expected to act as resistance and that is also the absolute gamma strike that's a strike with the largest absolute positive and negative gamma and as price approaches that level and expiration approaches that gamma should increase I'll talk more about that in a few minutes so the potential ceiling at 4600 potential floor at 4600 potential ceiling at 4800 the call wall note there was only one minor shift in levels for the S&P 500 for the SPX the volatility trigger did shift slightly higher from 4745 yesterday to 4765 alright let's take a look at one other SPX chart and again jumping down in time frame this time to a one minute chart just so we can get a closer look at the levels in play for today so this is SPX showing about a day and a half of data maybe a little almost two days worth of data so this is the reversal yesterday that began right around noon somewhat of a continuation today up into the the call wall here there's a combo level below that and then the call wall acting as resistance I'll talk more about that when we get to and sorry can you hear me now alright can somebody tell me how long sound was out WRB says three minutes alright so I'm going to go over sorry I must have accidentally pressed the mute button on my microphone alright so I'm going to go over the ES chart again alright so let me clean this up alright so this is the ES futures and book map we've taken a look at the underlying index sorry about that so I'm going to take a look at the underline so I've taken a look at SPX the underlying index now I'm going to take a look at ES so in ES I have my own cloud notes the C levels column so I can show a variety of levels all in one column first of all I have SPX levels there's the SPX 4800 level that's the call wall that acted as resistance this 4799 C1 level that's a combo one level just below that combining SPX and spy gamma weighted open interest into one level converted to an equivalent SPX price and note that level was resistance today and then other levels in play for today 476 this is a spy level SPY 476 acting as support for a pullback for a long entry before the cash open as a follow through to the bullish reaction to the PPI data right here bullish reaction pullback to 476 launching point for a long up to the 4800 call wall also I have another SPX level here that's the 4765 volatility trigger acting as support before the cash open so those are levels in play for today I'll talk about setups in a few minutes and just want to point out I just want to point out this sound just angry rejection at 4800 this was kind of amazing at this time I had the market pulse tool on which does make sound so I've turned it off now and this was just angry I'll talk about this setup more in a few minutes and note at this zoom level huge excuse me there were just huge iceberg orders sell orders that is in this zoom level looks like 42 executions for a total number of contracts 7468 that's huge and that's also shown here by this following light blue line iceberg orders selling as ES moved up toward that 4800 level and it was just like you shall not pass just a very angry angry rejection at 4800 and set up a great short there and you've taken short ES futures I think WRB want to put any number of ways to take that short just again a very angry rejection at 4800 and really kind of setting the tone for the rest of the day and note today this is showing icebergs this is cumulative for the day for the session icebergs negative stops negative and CVD all negative very bearish and that was after this rejection at 4800 alright so those levels of play for the SB 500 let's take a look at NASDAQ now this is the NQ futures and book map and before I take a closer look at this chart I want to take a look at first of all QQQ this is a one minute chart showing in gray over here the before the cash open extended hours and then the dark portion the regular trading hours note that 407 this L4 level acted as support before the cash open and then after the cash open or I guess just before that call wall acted as support and then after the cash open also 411 acting as resistance 410 resistance so after the this rally that began right around 645 the NASDAQ is traded in a pretty narrow range so those are the QQQ levels in play for today call wall absolute gamma strike at 409 and note that is the absolute gamma strike and call wall again and the call wall shifted lower from 415 gamma strike shifted higher to 404 so that with a call wall absolute gamma strike or at 409 we'll take a look at the absolute gamma strikes and closer in just a minute right so those are levels in play for for QQQ and let's go to NDX take a quick look and here this L4 level at 16,850 and then this combo L3 level just above that acting as resistance earlier today let's go back to book map so book map again I have my own cloud notes so I can show NQ levels so there's the NQ 1750 17000 I'm showing the zeros in the 50s NDX levels there's that combo level and the LG 4 level large gamma 4 and there's the SPI SPI sorry the QQQ 411 level acting as resistance for the NASDAQ and that reversal lower and then there's the 409 absolute gamma strike call wall right so those are the levels in play for today for NASDAQ acting as resistance and we'll talk about setups in just a few minutes alright so let's take a look now at gamma notional so we can wrap up the positional analysis I like to look at this everyday this is showing how market makers were positioned on the gamma curve at the beginning of the day for SPI NDX RUT and IWM so the SP500 NASDAQ Russell 2000 so this gives me a sense of the expected volatility and trading range for the day so note these numbers with the exception of the Russell 2000 are positive so positive for SPX and SPI so what spot gamma assumes is for an index like the SP500 traders are short calls market makers long calls in a positive gamma environment market makers are long calls hence positive gamma and they have to trade against price to hedge their delta exposure and that tends to subdue or decrease volatility leading to smaller trading ranges more mean reverting price action not so much a trend day more of a range day these numbers did shift from yesterday so the gamma notional although still positive did shift lower for SPX, SPI and NDX actually shifted higher for QQQ and then shifted lower to negative for Russell 2000 so overall today in this for the SP500 and NASDAQ I'm in a positive gamma environment I'm typically looking for lower trading range more mean reverting price action the next thing I want to look at to wrap up positional analysis is these absolute gamma strikes just so we can focus on where the gamma weighted open interest is concentrated this is for SPX I'm going to zoom in on this chart a little bit and I've talked about this several times this week what this chart is showing is gamma for SPX at different strikes so gamma is shown by the orange bars that's called gamma or positive gamma blue bars showing negative gamma or put gamma at the 4800 strike and you can see the amount of gamma weighted open interest concentrated at that level so that level has been changing somewhat from day to day but today it is definitely the absolute gamma strike the strike with the largest absolute positive and negative gamma and as expiration approaches next week on Friday January 19th price approaches that level that gamma will increase and this strike will become more and more important if price stays up toward that level and as expiration approaches and could act as a magnet for price and as we saw today it definitely acted as a resistance level alright so that is the SPX let's take a look at spy zoom in on this chart just a bit this is the 475 strike so really the thing to note here is the concentration of call gamma between 475 and 480 and put gamma below 475 and then finally let's take a look at QQQ remember 409 409 is the call wall and absolute gamma strike and there it is right there the 409 that's where most of the gamma weighted open interest is concentrated so there are your key levels and key zones for SPX spy and QQQ alright let's get to some setups now so the first thing that I want to do is take a look and see what options traders have been doing today I'm going to start with the SME500 and this is the hero chart so everything that we've looked at so far other than book map has been based on static data open interest that's updated once a day sometime during the night SPOT gamma takes that data applies their own proprietary algorithms to that data and comes up with the information that we've just looked at the levels absolute gamma levels key daily levels and so that's the information that I use in my planning process now we're going to go to the execution process and I'm going to start and see what options traders have been doing today so again this is the hero signal in SPOT gamma hero stands for hedging impact real time options so now we're going to take a look at real time data this chart is showing price for SPX and the hero signal again hedging impact real time options and it's showing options trades and market maker hedging activity for a combined signal of SPX, SPY, XSP and ES futures all combined into one signal alright let's take a look let's take a closer look at this chart and right now I'm just looking at the hero signal for the regular trading hours I am going to turn on extended hours here just to show the setup that I talked about that was before the cash open so this is the reaction and the options market at 8.30am eastern time after the data note that SPX and ES options do trade before the cash open at 9.30 so that's what this is showing note that flow alert just after the move higher at 8.30 here's the pullback notice traders were taking positive delta positions so a rising purple line indicates that traders are buying calls and or selling puts and when traders take positive delta positions market makers take the opposite side and they have to buy futures to hedge their delta exposure so whenever traders buy and sell puts and calls in SPX, ES, SPY market makers are taking the opposite side of that and they hedge their delta exposure with ES futures alright so this is the helping to set up this long in the morning that I talked about so let's take a look at that first so let's go back to ES now go over to ES alright here's the reaction actually let me I'm going to zoom in on this more sorry about all this zooming alright so this is what it looked like at that time note that here's the reaction to the 830 data very bullish and then a pull back to 476 and there were some liquidity just below that level that's showing a history of the limit orders in the order book below price those are limit buy orders also note that all the lines in the sub chart were increasing so this is showing these numbers are pretty small but large traders buying with the iceberg orders that's the light blue line the pink line magenta line is cumulative volume delta that was rising and also the yellow line showing buy stop orders all moving higher helping to set up along so here the big picture was setting up along bullish reaction to the data pull back to a level that you expect to act as support and it does and this actually leads to a pretty large move after the cash open or actually mostly before the mostly before the cash open alright so again pull back to a level that you expect to act to support it does and then a pretty sharp reaction before the cash open and then the next setup was the short just right around 945 alright so let's go back to hero now alright now in this case I'm going to turn off the extended trading hours so we can just focus on regular trading hours so now this begins at 9.30am eastern time alright so here's the call wall that's also the absolute gamma strike for SPX and notice price reaches up to that level initially traders were taking positive delta positions that's shown by the rising hero signal and then that reverses sharply lower as traders start fading that they start taking negative delta positions at that level of resistance and that gave you just a little bit of a lead here note that hero starts to drop lower and about five minutes later price moves lower giving you a good leading indicator for a short you know of course you know again that is going to be that is a potential resistance level at the call wall alright let's go back to ES now zoom in on this alright so we know that traders started taking negative delta positions also note as price moved up to that level large traders I pointed this out before were aggressively selling this with iceberg orders they used to hide their size so now that I've zoomed in to this area a little bit these iceberg orders are separated out a little bit that's 350 sell icebergs and two executions 2,390 15 executions and 4,282 and 222 executions shown by the on chart indicators as well as the sub chart indicator so we know that aggressive buyers were moving price up to this level also options traders we know that about five minutes before this final test of the call wall traders started taking negative delta positions we already know that traders were selling this with iceberg orders and then the last clue the volume dots here in book map volume dots are showing market buy minus sell green dots indicate more buyers than sellers magenta dots indicate more sellers than buyers so there were I guess a lot of clues here confirmations for a short again hero signal shifting lower traders shifting from positive delta to negative delta positions market makers take the opposite side they have to start selling futures and then large traders also fading this move with iceberg orders in pretty substantial size and then aggressive sellers start to come in and this last test of 4800 was a great entry point for a short and as price starts to move lower you can just see all the magenta volume dots secondary entry point at 478 and as price starts moving lower more and more magenta volume dots shown by falling cumulative delta and then sell stop order start to fire off that's shown by the on chart indicator there and also the falling yellow line in the sub chart so long set up extended trading hour long set up before the cash open and then just right after the cash open great short in the in ES futures or any form of SB500 again the WRB said he bought a put great or he or she bought a put so so way to go or let's take a look at nasdaq now very similar setup let's take a look at hero see what options traders were doing in nasdaq so just like the SB500 this is a combined signal for NDX and QQQ going to zoom in on the morning here and note just starting starting around 945 to 955 heroes started making a series of lower highs then move sharply lower just before 955 and then just a couple of minutes later nasdaq reverse lower so a little bit of a leading indicator there in the nasdaq hero signal as well let's go to book map go to nasdaq zoom in a bit alright for nasdaq we know that traders started taking negative delta positions about you know three to five minutes before this final test of 411 and note that large traders were fading this move with iceberg orders as well that shown by the falling light blue line although not nearly in the size of DS volume dot showing aggressive sellers start to come in shown by that large magenta volume dot there and then aggressive sellers start to come in and take price sharply lower down to from 411 down to 409 and as price starts moving lower that was fueled by sell stop orders and then also aggressive sellers and note at this point right at 10 o'clock cumulative volume delta shifts from positive shown by the dark blue line to negative shown by the magenta line there let's go back to hero and take a look at one other signal also for the nasdaq especially I like to take a look at this mag 7 signal and let me show you what this is this is another combined signal in this case combining options trades and market maker hedging activity for a combined signal of the stocks known as the magnificent 7 that's Apple, Amazon, Google, Meta, Microsoft, NVIDIA and Tesla zoom back in so in this case the mag 7 indicator was a little bit late both the SMB500 and nasdaq signals acted as leading indicators this was lagging a little bit but it is good confirmation and finally broke lower just right at 10 a.m and really price was already moving lower let's go back to nasdaq alright let's take a look at some stocks now and also if anybody has any stocks they want me to take a look at please let me know and I'll be glad to do that several I want to highlight first of all AMD back in and AMD short set up this morning and this is the total signal I'm going to separate outputs and calls now and this is showing that traders the blue line showing puts traders not doing much with puts and just before 10 a.m they started selling calls that's shown by the falling orange line so the blue line showing not much with puts orange line showing right before 10 a.m traders started selling calls when traders sell calls market makers buy the calls they have to sell stock to hedge their delta exposure and traders continued to sell calls overall and note they started shifted starting to buy calls right around 11 alright let's go take a look at AMD and book map this is by the way this is a fairly typical pattern in this case a bullish pattern for the morning traders taking negative delta positions and they finally reverse and price consolidates not the best example alright so let's go to book map go to AMD alright so AMD breaks lower just right around 10 a.m write it 148 as traders start taking negative delta positions primarily selling calls and a sharp break lower note the magenta volume dots coming in as aggressive sellers were selling AMD as it broke below 148 and VWAP shown by the light blue line there and that was good for a about a three point move lower in AMD notice the liquidity here at 145 that comes in at the cash open this is pretty typical below price those are limit buy orders the heat map is showing a history of the limit buy orders in book map and those large limit orders can act as a magnet for price and then AMD reverses right at that 145 level alright let's see the next is meta so a bullish day here in meta note for meta 370 is the key gamma strike launching point for a long and 375 is the call wall alright let's go take a look at hero and see what options traders were doing let's go to meta here's the 370 key gamma strike 375 call wall initially acting as resistance now price trading up and down around that level let's separate outputs and calls so initially in the morning traders were buying calls assume it on this just a little bit so initially in the morning traders were buying calls note the timely flow alert traders buying calls when traders buy calls market makers sell the calls they have to buy stock to hedge their delta exposure they start selling calls and note that price although still rising does not rise at the same rate after traders started selling calls and not as aggressively buying calls alright that's meta total let's go to book map and there's that sharp move higher up to the 375 call wall note in this case there were some limit sell orders in the order book before the cash open more came in at the cash open price moves up to that level finds resistance and then finds support at VWAP moves up and now is trading right around that 375 level alright the next I want to take a look at is Tesla Tesla good for a quick long in the morning note that 220 is the put wall and 225 is the hedge wall let me squeeze this in just a little bit so we can see 225 so 220 put wall acting as support for a move higher at the cash open and 225 hedge wall acting as resistance let's see what options traders are doing so there's a Tesla this is pretty typical a very strong correlation between options trades hedging flow and price action zoom in just a bit launching port for a long at the put wall as traders were taking positive delta positions price moves up to the hedge wall note the timely flow alert for a mean reverting trade and then options traders started taking negative delta positions and Tesla moves lower alright let's go back to the sb500 now and I've got a couple things to wrap up here so gray wanted to take a look at zero tte flow from yesterday so we can do that so this is for today with the hero signal here I can take a look at up to five previous days so I'm going to go back to yesterday the 11th that's a starting at 11th and then let's make the end date the 11th also so this is from yesterday regular trading hours and then gray wants to see the zero tte flow so I'm going to turn on next expiry and this would be for the sb500 this would be options that expire at the end of the day yesterday so the sb500 spy spxes all have options that expire every trading day so zero tte is showing and that's the green line teal line showing options that expired yesterday and the purple line is showing all trades all expirations and noted at the end of the day there was a very strong correlation between the zero tte trades and the all expirations indicating that zero tte trades made up a very large component a large proportion of all the options trades yesterday I'm looking at the notional value over here on the right 1.27 billion versus 1.59 billion let's turn that off and let's go back to today let's go back to book map one thing I want to mention before I wrap up is kind of the way I'm approaching my teaching here and my approach is looking at the big picture so one thing I learned from an experienced trader is he always said get the big picture right and everything else tends to fall into place so that's why I'm focusing on this larger time frame zooming out looking at the big picture trying to get that right seeing what options traders are doing large traders with iceberg orders smaller traders with stop orders all traders with cumulative volume delta in a bigger bigger picture larger time frame so you know that book map has a variety of daily streams every day Monday, Tuesday, and Friday book Bruce streams at 10 a.m. he's more focused on a smaller picture he's looking at smaller time frame and he talks about entries and exits on a smaller time frame and you can fit that in with what I'm talking about in a bigger picture larger time frame how to set up your trading day how to approach your trading day and really after after this reversal just before 10 a.m. the bigger picture really shifted bearish you can just see in the sub chart here looking at all these items in the sub chart again iceberg stop, CVD all negative no reason to look for a long and even now the order flow here is showing somewhat negative it looks like cumulative volume delta is starting to shift higher maybe starting around 1130 now of course hero signal options traders that is shifting higher and started shifting higher about 1145 traders taking positive delta positions so when I'm looking for trades I'm kind of weighing all this information looking at the big picture deciding which direction I want to trade what's my directional bias and that may change during the day it was pretty much neutral to begin the day given the minor shifts in levels so as I mentioned before SPX the volatility trigger shifted slightly higher for spy volatility trigger shifted lower also for spy the put wall shifted slightly higher but the call wall in absolute gamma strikes for SPX and spy did not change so pretty much a neutral outlook for the SMB500 as far as the shifts in levels go and again looking at that sound reaction just the angry reversal at 4800 indicated at least for the next couple of hours just to look for shorts alright so that's my approach looking at larger time frame bigger picture trying to frame your trades again the idea is to get the big picture right and everything else tends to fall into place and one other thing I want to note that I'm going to Bruce has talked about a setup checklist and I'm going to put together I don't have time to do it this weekend but I'm going to put together a trading checklist just to list a very brief list of things that I'm looking at from book map and spot gamma to make my trading decisions so I'll try and get that done in the next couple of weeks and I'll post that in discord and one last question is Ebu asked what does the yellow alert mean for Tesla that's a hero flow alert indicating significant options activity there are different ways to interpret that so Ebu it is not necessarily a big order of options it's just a significant options activity alright my time is up I'm going to wrap it up remember next week I'm out Monday and Tuesday I will be back on Wednesday and everyone have a great weekend and I will see you next Wednesday alright thanks everyone bye