 Hello everyone, welcome to Options with Doug, streaming live daily on Bookmap Discord and the Bookmap YouTube channel at 1.30pm Eastern Time. Before I go any further, let me 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. And as an introduction, this presentation and my channel in Bookmap Discord is very focused and the focus 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 step is planning and I use positional analysis. Other traders may use technical analysis or fundamental analysis and again I use positional analysis and that is looking 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 volatility and expected trading range for the day and also directional bias. And the second step in my process is execution and I look at real-time order flow in Bookmap and market maker hedging flow in Spot Yamahiro to help confirm my thesis and for trade setups. And questions and comments are welcome on topic, questions and comments again, questions and comments focused on what I'm saying, what I'm presenting or these topics. Okay, that's the introduction and now let's get started. First, some quick news items. Of course, the big events this week were the CPI report that came out on Tuesday, then the FOMC announcement and press conference yesterday and apparently the market has interpreted what Fed Chair Powell said as more hawkish than expected. I think he was indicating that more rate hikes are needed than the market expected and so the market sold off yesterday and continues that today. And this morning there was one other piece of economic data released and that was the U.S. retail sales that came in worse than expected. So just adding a little fuel to the fire and the last thing to note is tomorrow is the large monthly quarterly options expiration. It's the December 16th options expiration and it's a significant event for options and we can look for, typically after a large monthly expiration, look for potential shifts and levels after that. So today what I want to talk about, I'm going to go through, first of all, my positional analysis and I'm going to look at an S&P 500 overview and then I want to talk about setups that I saw this morning and I want to also take a deep dive on a setup that I saw yesterday, not in time, it was Moderna, a stock that's not on my watch list that I normally don't look at, but it's been in the news and I want to take a closer look at that setup for educational purposes and then we will look at setups today. There are some great setups. I posted my spot gamma hero watch list this morning in Bookmap Discord Chat and it was ranked from the weakest hero signal to the strongest and the top stocks on that list all provided great short setups and we'll go over those. So first of all, so now let's start with the positional analysis for the S&P 500. So we'll take a look at the ES futures and here I'm showing levels that are from spot gamma. So in this column here, this SG column, these are spot gamma cloud nodes and I'm showing what these are showing, what's visible here is the SPX levels 3950 and 3900 adjusted for the equivalent ES price. So right now, spot gamma is using a price difference of 25 points between SPX and ES and then this column, the C levels column, that's my column and I'm showing the support and resistance levels that spot gamma provided in the AEM founders note. So both the 3950 and the 3900 SPX levels were indicated as support today and there were some, it looks like some stalling and chop around the 3950 level for a while and the same with the 3900 level but price has, ES has continued lower. So those are the support and resistance levels that were, that have been in play today and as far as shifts and levels go, there was an increase in the volatility trigger for SPX, SPI and QQQ and the volatility trigger is spot gamma's proprietary gamma flip level and above the volatility trigger, market makers are typically in a positive gamma, they're on the positive gamma part of the gamma curve and that means they have to sell futures as price rises and buy futures as price decreases to hedge their delta exposure. So in a positive gamma environment, market makers are trading against price and that tends to reduce volatility and that's not the case today. Both all of those instruments, SPX, SPI and QQQ are trading well below their volatility triggers meaning that now those instruments and market makers are in a negative gamma environment and in that case, market makers have to sell futures as price decreases and buy futures as price increases to hedge their delta exposure. So they will be trading with price in a negative gamma environment and that tends to increase volatility. And one other thing, the SPX put wall actually moved up to 4,000 and that's just because of the dominance of the 4,000 level, SPX 4,000 and we'll look at the SPX gamma levels in just a minute and we can see that. And then also the SPI call wall dropped down from 410 to 405. Okay, let's take a look at some data now. Here was a note that regarding the put wall that I wanted to point out. This is in the SPI gamma AM founders note and just regarding that change in the put wall 4,000 is so large that it has now become the put wall and also noting that all these options will expire tomorrow morning. That's the AM settlement for SPX. Okay, so let's look at the data now and as you know, I always focus on gamma notional. That's one of the, for me in my mind that's one of the most important pieces of data here and this is what I'm talking about. So market makers, this is market makers position where they are in the negative portion of the gamma curve and gamma notional for SPX. This is for yesterday afternoon and I compare the gamma notional number from morning to morning. So yesterday morning SPX gamma notional was positive 106 and it has shifted to minus 152 today and SPI gamma notional was minus 101 yesterday and today it's minus 571. So gamma notional has shifted back to negative for SPX and has shifted more negative for SPI and with the sell-off today, I anticipate that both of these numbers will shift further into the negative part of the gamma curve and again, that means that market makers have to sell futures as price decreases and that tends to increase volatility and let's take a look now at the gamma levels back to SPX and this is just showing that the 4000 strike is still the, clearly the dominant strike as it has been for quite some time. I'm going to zoom in on SPI a bit. This is the 400 strike and it's still the dominant strike but there are more substantial put positions below that level and those are shown by these teal lines below the zero level. So that just goes along with the larger negative gamma notional for SPI indicating more substantial put positions down below and finally let's take a look at the Vantage charts and this is just a quick visual reference that indicates what I'm talking about. So this is the, what this is showing is how market makers delta notional changes with changes in price, implied volatility and time. So the green curve shows how gamma notional shifts with changes in price and also implied volatility and that's the Vantage effect and the way to interpret this is to draw a line through here that makes sense based on the curve and this is indicating again that market makers delta exposure will increase as price falls and that means they have to sell futures as price drops and they can buy back the futures as price increases and let's just take a look and see how that has shifted over time. So this is information, this is information based on the market close yesterday, this is the day before more of a neutral than a model so we can see over the last couple days that gamma notional has shifted towards a more negative gamma and the same with SPI. Okay, are there any questions about that? So what I'm looking for is again, traders are buying puts today and we'll take a look at that and spot gamma hero and they're buying SPI and SPI puts and I expect this gamma notional to become more negative for both SPI and SPI tomorrow and one potential thing to look for is all of these puts and they're buying puts that expire today and tomorrow and those puts will be gone on Monday and what has happened quite often this year in a negative gamma environment, again, traders along puts, market makers are selling the puts and they have to sell futures to hedge their delta exposure. When all those puts expire on Monday they can buy back their short futures. They don't need them anymore since those puts are gone and that has been a pretty typical scenario this year in a negative gamma environment. So just one thing to keep in mind, one thing to look for. Okay, I want to now let me just check for questions on YouTube and there's a question about the seed levels in BookMap and I use an add-on that's available in the BookMap marketplace called PriceLines and I fill out all the levels that I want in a spreadsheet and then PriceLines uses the cloud notes feature in BookMap to display the levels in that column and also draw the lines that are shown on my chart. So I use that for futures and for stocks and we'll see that in my charts. And there's a question also on YouTube. Aren't market makers always negative gamma? They have been for most this year but there have been times where market makers position has shifted to positive gamma and that's for the S&P 500 and other indices. For stocks, the spot gamma model is different. For stocks, spot gamma assumes that traders are long puts, long calls, and or long calls. Market makers are short calls and or short puts. They're always in a negative gamma environment for single stocks like Apple or NVIDIA but for the S&P 500, their gamma position can be negative or positive. Okay, let's take a look at the setup from yesterday that I want to talk about and this is Moderna. So again, it has been on the news. There was an announcement about a cancer vaccine that apparently this news was interpreted as bullish, whatever it was. I think that was on Monday. So anyway, this is from yesterday. This is from 1214 and I'm going to do a review of this setup. So this is from 1214 and what I'm showing here is my spot gamma or this is actually all of the stocks available in spot gamma hero and right now 190 stocks and what I do is I have my own watch list that I normally watch in spot gamma but this is one that I thought was interesting another potential use of this. So anyway, Moderna has been on the news. It's been interpreted as positive and what this is showing is Moderna is at the top of the list of all these symbols ranked by hero signal. So I clicked on hero signal here and it ranks them from either strongest or weakest or weakest to strongest. If I clicked it again, it would be from weakest to strongest and what this is showing is a hero signal in the 30 day range which is the entire range here and also you can see on this GLD below this colored section shows the range for the last five days. So Moderna is showing the hero signal for yesterday was the strongest that it has been in the last five days and last 30 days. So that's a starting point. Now normally I would approach my watch list a little bit differently but anyway this is since Moderna is not on my watch list I took a little bit different approach here. So first of all I wanted to see what was going on with all these stocks. I see Moderna at the top of the list I recall that it's been in the news so then I open up Spot Gamma Hero the chart for Moderna and see that traders are taking positive delta positions so they're selling puts and buying calls and this shows that they are again the blue line shows that they are selling puts and the orange line shows they're buying puts and the orange line is also showing around 10-15 traders start buying puts more aggressively and price starts to rise again after chopping around in this range for a while. So seeing this and I'm showing this Spot Gamma chart up until about just from the open all the way to a little bit after 12pm Eastern time but you could have opened it at any time and seen Spot Gamma Hero up to that point. So just to confirm what I'm seeing and do a little bit further investigation that I can do is go to Moderna in the Spot Gamma Equity Hub and I can see that the key gamma strike increased from 170 the prior day to 200 today. So that's a bullish signal and also the put wall jumped up substantially from 155 to 190 and that's also very bullish. So a couple of bullish confirmations there. And the next thing I check this Composite View chart in Equity Hub and see that this is the price from the prior day and showing that it is near the top of this chart showing the Spot Gamma Momentum indicator and this is indicating a high rate of change of gamma at this level and you can equate that with volatility. So Moderna is near the peak of this chart which shows the highest rate of volatility and also this is showing that at the 200 level gamma will shift from put dominated to call dominated. That's this reddish orange color below 200 and the green color above 200 indicates that shift. And the next thing this chart the Put Call Impact chart also shows that large call dominance above that 200 level. So just a lot of the same information here just a different format and then finally this is the skew chart and what this is showing is implied volatility on the vertical axis and delta on the horizontal axis. And this delta 50 is the at the money strike and what this chart is showing is implied volatility for calls above this level or actually you know that would be delta less than 50 so that's calls to the right of this line and puts to the left of this line. So this is indicating that there is a high demand for calls and the dashed lines are showing implied volatility for the current actually this would be the previous day since this data is generated at the close every day and I'm looking at this on the 14th and this is showing data for the 13th and the 12th so the dashed lines are showing the current or next expiration which would be the Friday expiration that's the 12-16 expiration and then the solid lines are showing the expiration approximately 30 days out. So what this is indicating is that there is a you can equate implied volatility with demand so there is a higher than normal demand for calls when you see this Q lifting up to the right indicating a higher demand for calls now you would never really see this in SPI or SPX there's always a higher demand for puts than calls. So this is another bullish signal. So let's take a look at book map and see how that played out and it was a huge rally in Moderna traders are buying calls market makers are selling the calls and they have to buy stock to hedge their delta exposure and that is a very powerful force that can drive a stock much higher when the stock continues to increase in price market makers have to continue to buy stock to hedge their delta exposure and that can again fuel a powerful rally, create a feedback loop and here remember I noted that Moderna chopped around a level until traders started buying calls again so this was a good good breakout setup here okay I just wanted to I just wanted to highlight this setup and then here's how the day played out so it rallied up to about 217 and then you can see as the options traders start to take profits then price levels off for the rest of the day alright let's take a look at some setups for today so this is the this is the watch list that I posted today for those who are not in bookmap discord chat so this morning I ranked my watch list from the weakest signal to the strongest signal so unlike the list that I showed before this is just my watch list so it does not include all the 190 symbols it only includes the stocks that are on my watch list so now let's let's go through this list and one thing that I want to show before before I go into this any further is my spreadsheet and this is something that I keep every day and I track the key gamma strike for all stocks in my watch list so this shows the key gamma strike for these stocks for the previous day and for the current day so when I start in the morning I just shift this lever this column over to the right and then I color code these the key gamma strike for these stocks with red if that key gamma strike dropped and green if it increased so that's just another starting point so I look at that's part of my preparation and then I look at this spot gamma hero watch list as soon as the market opens alright so let's start with the first of all notice so the first stock on the list was google so again that watch list is in book map discord and I post that every morning so notice the first stock on the list is google and it also the key gamma strike dropped from 100 to 95 and that's the levels in google really don't shift around that much so that's kind of significant alright so let's go take a look at google now and we'll start go just go down this list and look at setups so here's google look at the total signal and there was a very strong correlation this morning between price action and options trade shown by hero here and especially puts traders were buying puts and that's been pretty common today is traders are buying a lot of puts so that's shown by the blue line here blue line falling indicates that traders are buying puts alright let's go to book map now go to google and let me check for questions and let's see there's a question about spot gamma does require a subscription yes and I'm using I have a spot gamma alpha subscription and another question about spot gamma go to go to spot gamma dot com that's where this comes from so I use book map and spot gamma to develop a thesis and to plan and execute trades during the day so here's the here's the first one on the list google and again remember traders are buying puts and this is a nice short setup I drew these triangles this morning or the rectangles this morning and there may be a little bit hard to see now but it looks like the first entry that I saw here was this break of the 93 level and notice the 92 put wall was the first target and then there a couple of liquidity targets shown here below in book map at 91 and then at 90 the key delta strike so that would be that would be the target for this afternoon is the 90 key delta strike and all that liquidity at that level and that would actually be the primary target for the day that was google and the next next one on the list cispx and there's a very strong correlation between price action and hero and options trades today and like I said traders are buying puts now this is showing all expirations and let's just take a look at what they're doing with the next expiration which would be today so this is showing a pretty substantial amount of the puts that traders are buying are in puts that expire today the zero DTE puts and that's shown by this darker blueish purpleish line here so this lighter blue line is the total of puts that they're buying and this darker line is the total of the puts the zero DTE puts so there are any number of ways to trade that you could buy an SPX put you could have bought one this morning or if that's too much too big you could buy spy puts sell spy shares sell ES futures so this is what I did this morning as I just worked my way down this list normally google does not move enough I like to keep it in my watch list because I track the large cap tech stocks but it typically does not move enough to be of much interest so QQQ was really my first stopping point here looking at looking at it more closely for a trade and this morning there was a strong correlation between price action and a hero I'm going to zoom in on that I've sent a support ticket to SpotGam about that change in change in zoom level so anyway just as we've seen traders are buying puts in QQQ that's shown by the blue line here let's take a look at book map now QQQQ so like I said this was my first first close look this morning and I'm going to zoom in on the morning session a bit here so here was the first entry point break of this trend line here and then a retest of the 281 level and then another entry point was a break of this on our 280 40 level and you can see all the pink dots coming in there and that's also the put wall so that was a break of the put wall and prices continued lower and it looks like the primary target is the 275 level and all the high liquidity there for questions again and there are quite a few questions in YouTube so Alex asked can I apply this methodology if I trade ES yes definitely I think a large number of book map users and spot gamma users trade ES I trade primarily trade stocks but ES is certainly again a lot of traders using book map and spot gamma trade ES well ES is not covered in spot gamma but yes the underlines that are driving ES are SPX and SPI so what spot gamma is showing is options trades in SPX and SPI are driving price action in ES and that's because market makers that's the only way ES is the only way to hedge options trades in SPX you can't buy or sell SPX and it's the most efficient way to trade or to hedge options trades in SPI so the underlines that spot gamma is using for ES are SPX and SPI there's a question about CME futures options instead of SPI options yeah you can certainly trade ES options if you want yeah less margin but that's like the equivalent of 500 shares of SPI and a question about the many ES yeah you can trade that the only I guess the only circumstance where I would trade the many ES is if my account was very small and I wanted to avoid the pattern day trading rules so what's the many of ES well yeah the many ES is the equivalent to 500 shares and the micro is one tenth of that I prefer to trade SPI right the many is ES and the micro is MES okay let's go back the next one on the list was Netflix looks like I need to add more price levels below 290 here in my spreadsheet and let's go take a look at Netflix here in spot gamma hero and just like most other stocks traders were buying puts today and that's shown by the blue line and when traders buy puts market makers sell the puts and they have to sell stock to hedge their delta exposure and just like when traders are buying calls and price rises as price continues to decrease market makers have to continue to buy stock to sell stock to hedge their delta exposure and I want to take a look at one other thing that could potentially be driving price here I'm going to go to equity hub and look at Netflix and first of all point out that 38% of gamma expires today and a little bit smaller amount of delta expires tomorrow I'm sorry tomorrow expiration so 38% gamma expires and almost 29% of delta expires tomorrow and let's take a look now let's go down here and I'm going to look at the composite view chart so this shows that and this is more pronounced than some other stocks that we'll look at in just a minute call domination call gamma domination above 335 and put domination below so there are some some long calls out there and again this is more pronounced in other stocks that I'll look at in just a minute and I need to speed it up so anyway all these calls are expiring tomorrow or a lot of them are we saw that the amount of gamma expiring and so this could mean that traders were long in this case out of the money calls those calls are expiring and market makers that had bought stock to hedge their delta exposure can be selling to as those calls quickly lose value as price drops and the next one on the list is block we got that on another computer give me a moment to share my screen and we'll take a look at that okay so just clear nice downtrend and block and let's go take a look at hero now so I'm just working my way down the list and again puts are driving traders are buying puts market makers are selling puts and selling stock to hedge their delta exposure and let's take a look at equity again this time we'll go to block and here there's more pronounced call gamma above the here the 72 level and one other thing to point out is this is another stock with a falling gamma strike 75 to 72 so just another another checkbox on the bearish side there another check on the bearish list let's go back to equity hub and there the here is the falling key gamma strike so in this case again similar to Netflix but more more call domination above that 72 level and again market makers the traders were long out of the money calls those calls are quickly losing value and here we can see that the and this is pretty typical of a of a higher beta stock like block is traders are actively trading the next expiration so we can see here the next gamma expiration 43 and a half percent gamma expiring tomorrow and 72 and a half percent delta expiring tomorrow so all those calls is price drops all those calls are quickly losing value and that just adds more fuel to the fire as market makers who were long stock to hedge their delta exposure can sell their stock as those calls lose value and price drops so it's kind of a two two punches here to the negative side is the traders are buying puts and also all these calls are quickly losing value and let's look at one other I'm going to drop down to well let's take a quick look at Apple that's the next one on the list and here traders are both selling calls and buying puts let's take a look at book map and yes Paul I will take a look at the Tesla that's the last one that I want to look at and I posted a setup in Tesla this morning so Apple another strong downtrend here today with 135 is the is the primary liquidity target well 138 was the first target and price chopped around that level for a while before now heading down to 135 let's take a look at Nvidia and for those of you in book map discord J detailed a trade that he took this morning and Nvidia based on what he saw in spot gamma and also in book map and the liquidity there so nice strong downtrend this morning note all the all the pink dots in here until finally about noon some aggressive traders start coming in so let's take a look at spot gamma hero for Nvidia and again traders were buying puts this morning not doing much with calls and that was driving price lower and let's take a quick look and equity hub and Nvidia has been pretty strong recently and note the the call gamma dominates above 185 and we can see that in this chart as well so again traders were traders were long calls out of the money calls those calls are quickly losing value and that could be getting fuel to the fire all right the next one the last one that I want to look at is Tesla and actually let's just go to spot gamma here notice it was not on this top of this list it was actually on the other side of the list with a strong signal this morning but what I saw and what I posted let me just open up what I posted here was this divergence right here so my thinking was Tesla has been weak for some time it's rising today but everything else the broad market is falling Tesla is likely to reverse and continue lower and I saw this divergence and it made for a good short scalp in Tesla let's zoom back out let's go look at book map so strong rally in this morning if you wanted to play that that was certainly supported by and then the divergence reversal lower zoom in on that level for a short scalp break of the trend line retest of the 160 level and then short for two or three points let me check for questions and Paul you're welcome far beyond the moon you can use the equity hubs levels however you want I use them for day trading they can usually be used for swing trading as well either way you want to play it let's just take a quick look at spy looks like I need to add more levels to my spreadsheet below and let's take a look at spot game a hero so when you separate out puts and calls for spy price action becomes very clear traders are buying puts just like they were in spx and while I'm showing this let me check for questions and YouTube for the rover you're very welcome thank you for your questions and comments yeah both book map and spot gamma are essential tools so that is my time is up I appreciate your questions and comments and tomorrow again is the monthly expiration and it will be interesting to see how how the markets react and again keep in mind that the expectation is that the S&P 500 spx and spy with the sharp drop this morning will market makers position on the gamma curve will be much more negative and that could potentially lead to a rally on Monday that has been typical this year as those puts expire and market makers can buy back their short hedges so we'll keep an eye out for that and again thanks for attending thanks for your questions and comments and I will see you tomorrow on Nation Friday thanks again bye