Good Morning!

Yesterday was a huge upward movement day for the markets as I am sure you are well aware. My priority today is to show you exactly where the S&P 500 stands and to share with you some of the biggest option flows of yesterday!

Whale Watching is our recurring segment where we share some of the most significant options buys from Wall Street whales.

This CRCL flow triggered the “Sizeable Sweep” alert. This alert triggers when you have large orders come in sweep the ask side of the order. This generally indicates directional bullishness and often is not part of a hedge or multi-leg strategy. This one makes sense after CRCL has pulled back from ~$140 recently and seemingly makes the timing of this entry strong.

This TSM flow triggered the “Urgent Repeater” alert. This alert triggers when someone is building out an aggressive position in a particular contract urgently, repeatedly, and aggressively. TSM fit the bill for this yesterday as this contract already has risen in value 37% since the alert triggered yesterday. I found this one interesting as well thanks to the positioning of the ~3 month expiration.

Let’s take a look at today’s gamma structure and talk about how to trade SPY today based on how Wall Street institutions are hedged.

We are currently in the midst of some strong positive gamma. This is also known as a “pinning zone.” Positive gamma acts as a stabilizer to SPY price. This means that institutions are going to try to stabilize the price in this range. The heavy pins are set between $650 and $660. Let’s call this the chop zone.

It’s a little harder to trade in the chop zone but definitely possible. The key is to be super selective with your entry/exits. I simply would look to enter calls at $650 support or enter puts at $660 resistance. Anything in between is a no trade for me.

Let’s not forget to mention the news driven nature of this market. Bad news could send us into the negative gamma pockets below. Good news could send us right out of the chop zone to the upside just like we saw yesterday. Please remember that the news discounts all the analysis we do here if a narrative comes in and changes things.

That being said, I’ll keep an eye out for the positionings I am looking for and I hope this helps you do the same.

Happy Trading!

-Caleb Gregory