Understanding the Market: A Look at Stock Melting Up
The upcoming week will see the launch of a revolutionary trading dashboard, Trace, by SpotGamma. This tool aims to bring Wall Street-level analytics to the everyday trader, providing real-time insights into dealer gamma exposure. The application will analyze key market levels, including zones of support, resistance, and volatility, hinting at potential breakout or breakdown levels and warning of potential major moves in the immediate future.
A Glimpse of What's to Come
Brent Kochuba from SpotGamma notes a unique position for the S&P post-FOMC: negative gamma to the upside. This suggests that the major positions are traders long SPX calls, which puts dealers in a chasey, negative gamma stance, resulting in the current meltup.
For those who may not know, negative gamma implies that dealers are buying futures as the SPX moves higher and alternatively selling or shorting when the SPX drops. The recent FOMC and its 50 bps cut has shifted equity momentum to the upside, with a significant target at 5,750.
The SpotGamma Trace map below, which uses a proprietary dealer positioning estimate to forecast SPX dealer hedging flows, depicts negative gamma (red). Currently, it is predicted that dealers have large short call positions at 5,675 & 5,800, as seen as red strikes on SpotGamma’s Trace map (left side).
The Short Term and Beyond
For the day, 5,750 is a short term area of "local" positive gamma, depicted in blue. Note that the blue is concentrated into 4PM but disappears post-4PM. This is because the material positive gamma for today is driven by 0DTE positions, which expire at the close.
Looking forward, this upside equity momentum plays into a massive 9/20 triple witching expiration. This expiration could force the closing and rolling of long call positions into Friday & Monday, which could temporarily stall upside equity momentum.
A mid-day update shows that a band of positive gamma emerges above 5,700, implying market support at that level. Much of this positive gamma was driven by 0DTE positions – including a 4k lot 0DTE call seller at 5,735.
These supportive dealer positions show the SPX tracing a path up into 5,735 for the close (which is the white zone on the chart at 4pm ET).
Keeping an Eye on the Market
Trace will be closely monitored to see how positions shift into and out of OPEX, as positions are continuously updated throughout the trading day(s).
Those interested in getting an advance look at the features of Trace can do so at SpotGamma's website, which will officially launch next Tuesday.
Bottom Line
The introduction of tools like Trace could potentially revolutionize the way everyday traders analyze and understand the market. By providing real-time insights into dealer gamma exposure and key market levels, it could help traders make more informed decisions. What are your thoughts on this development? Do you think it will significantly impact the way trading is done? Share your thoughts and this article with your friends. Also, don't forget to sign up for the Daily Briefing, which is every day at 6pm.
Understanding the Market: A Look at Stock Melting Up
The upcoming week will see the launch of a revolutionary trading dashboard, Trace, by SpotGamma. This tool aims to bring Wall Street-level analytics to the everyday trader, providing real-time insights into dealer gamma exposure. The application will analyze key market levels, including zones of support, resistance, and volatility, hinting at potential breakout or breakdown levels and warning of potential major moves in the immediate future.
A Glimpse of What's to Come
Brent Kochuba from SpotGamma notes a unique position for the S&P post-FOMC: negative gamma to the upside. This suggests that the major positions are traders long SPX calls, which puts dealers in a chasey, negative gamma stance, resulting in the current meltup.
For those who may not know, negative gamma implies that dealers are buying futures as the SPX moves higher and alternatively selling or shorting when the SPX drops. The recent FOMC and its 50 bps cut has shifted equity momentum to the upside, with a significant target at 5,750.
The SpotGamma Trace map below, which uses a proprietary dealer positioning estimate to forecast SPX dealer hedging flows, depicts negative gamma (red). Currently, it is predicted that dealers have large short call positions at 5,675 & 5,800, as seen as red strikes on SpotGamma’s Trace map (left side).
The Short Term and Beyond
For the day, 5,750 is a short term area of "local" positive gamma, depicted in blue. Note that the blue is concentrated into 4PM but disappears post-4PM. This is because the material positive gamma for today is driven by 0DTE positions, which expire at the close.
Looking forward, this upside equity momentum plays into a massive 9/20 triple witching expiration. This expiration could force the closing and rolling of long call positions into Friday & Monday, which could temporarily stall upside equity momentum.
A mid-day update shows that a band of positive gamma emerges above 5,700, implying market support at that level. Much of this positive gamma was driven by 0DTE positions – including a 4k lot 0DTE call seller at 5,735.
These supportive dealer positions show the SPX tracing a path up into 5,735 for the close (which is the white zone on the chart at 4pm ET).
Keeping an Eye on the Market
Trace will be closely monitored to see how positions shift into and out of OPEX, as positions are continuously updated throughout the trading day(s).
Those interested in getting an advance look at the features of Trace can do so at SpotGamma's website, which will officially launch next Tuesday.
Bottom Line
The introduction of tools like Trace could potentially revolutionize the way everyday traders analyze and understand the market. By providing real-time insights into dealer gamma exposure and key market levels, it could help traders make more informed decisions. What are your thoughts on this development? Do you think it will significantly impact the way trading is done? Share your thoughts and this article with your friends. Also, don't forget to sign up for the Daily Briefing, which is every day at 6pm.
