Good Morning!

Yesterday brought us another eventful day of trading! Our flagship trading strategy, which is trading SPY using Gamma heatmaps, paid off again yesterday. I noticed massive gamma building at the 685 strike. I ended up playing it conservatively as I am in the middle of construction of a new office building and wasn’t planning on trading yesterday. I was on site assisting contractors with a few things and couldn’t help but notice this trade appearing.

I ended up taking a 4/17 exp to ensure I had a bit of flexibility on this one should it not go my way if I was a bit distracted. Honestly, I missed out on some gains by this not being a shorter duration contract, but I can live with that.

Today’s particular installment of whale watching brings us some really good flow from Monday. These were both really strong flows that I believe could be tradable. I’ll see how they look today, but very strong.

This flow triggered my favorite alert which is the “Urgent Repeater” alert. We had massive volume of nearly $9 million in premium come across this contract. These were primarily sweep orders that were filling at ask or even above ask. This type of urgency is always interesting to say the least. Being able to see an order like these come through tells me that we may be preparing for the next leg up in GOOG. If you look at enough options flow, you can begin to tell what is truly bullish and what is just hedging or part of a multi leg trade. This one looks directionally bullish to me.

This one slipped in right towards the end of the trading day. This one is interesting because of the amount of volume that came in on BE to be as far out of the money as this contract is on a short term expiration. Either someone is absolutely throwing money away, or BE could be looking at a massive jump this week.

Current SPY update shows us up about a quarter of a % premarket. The largest pocket of gamma is located at the 690 strike showing that there could be some positioning overhead. This positive gamma will act as a resistance of sort. However, should it build up rapidly it can act as a magnet for price and begin to pull the market towards it. We will have a better understanding once the market opens and we begin to see the reshuffling of gamma.

I’ve said it a dozen times on this letter already but actively monitoring the build up of gamma is often a precursor to where the market is moving. We monitor that and use short dated options to trade those moves and it has a high hit rate for us. This information is critical to trading SPY accurately.

Many of you have requested live updates so that you can get on these trades that I am taking. I’ve heard enough feedback that I am moving forward on bringing you live alerts. My team and I are spinning up the capability and should have it ready for you by next week.

Just a heads up, there will be a slight cost to this. Nothing crazy. I’m not trying to make a bunch of money off of you, I make my money trading. However, a slight barrier to entry will keep it reserved for those who really want the service. The letter in it’s current format will always be free. It will just be the additional service for those who want it. I will have more updates on that as it becomes available.

Have a great trading day!

-Caleb Gregory