Good Morning!

Yesterday was another interesting day in the market. SPY traded perfectly against gamma exposure! Here is an overlay of price compared to gamma exposure. You can see that all day price was drawn to the biggest gamma exposure on the map. When we trade this way it makes it predictable and easy to trade.

Let’s take a look at the most significant option buys yesterday from Wall Street whales.

This one is interesting! Remember Nokia? Yes, that Nokia. The one that used to make the old flip phones? It turns out that NOK is becoming relevant in the A.I. race. This flow came in during the last 5 minutes of the market being open. All but one order was a sweep (that’s bullish) and all of the orders were filled at the ask or even above ask which indicates urgency and bullishness. Whoever this was wanted this order filled discretely right before the market closed. It’s certainly interesting and worth watching. I like that this one is a few months out. I may take a few of these and see how it plays out.

As it stands right now, our largest gamma exposure is positioned at $710. Think of $710 as the support right now. If we lose it, there is negative gamma below and we have the potential to slip pretty quickly. Remember negative gamma (red on the screen) amplifies moves. If we slip below 710 its possible we slip to 705 which is a pretty large exposure. On the flip side, if we hold 710, there is some decent positive gamma exposure overhead. Look for 715 to be the first target if we are moving up.

How do you play this? Puts if we lose 710 with volume. Calls if we defend 710 and gamma exposure starts building overhead. We just watch what happens and make our decision purely on the data available.

Remember, today is FOMC day. Fed will announce rate decision at 2 PM EST and then they will give a speech at 2:30. These definitely can and will move markets. I think its pretty much a foregone conclusion that rates will remain put. However, it’s the speech that can move the market. Don’t let your trades get messed up by this event. Be aware and out of your positions before we get rolling on the speech.

Happy Trading!

-Caleb Gregory