Educational material, not financial advice. Nothing here is a recommendation to buy or sell any security. Options involve significant risk and are not suitable for every investor. These are past examples chosen to illustrate a reading; they are not typical results, and past behavior of any setup does not guarantee future results.
DESCRIPTION
When we have a yellow node stacked above a purple node with no obvious floor in sight, we can identify the setup as a rug setup.- Why? - The negative gamma ceiling can accelerate a rejection from the positive gamma ceiling, almost like “pouring gasoline on the fire”. In the example below, the negative gamma floors at 670 and 669 could also accelerate a move down.
EXAMPLE: SPX/SPY/QQQ 10/7/25
- Early in the day, we noticed some pretty heavy sized nodes for next day expiration, likely hedge nodes. These heavy sized nodes could have some influence over price action today.
- As the morning scramble began, I kept noticing SPX 6720 nodes growing gradually, with very little upside accumulation on all 3 indices. At this point the map leaned bearish.
- no upside accumulating, downside growing.
- SPX:
- very little activity at the start of day, but we saw growth to the downside.
- SPY:
- had downside pressure at 672 / 671 nodes that continued accumulating, preventing price from grinding higher.
- identified a rug pull setup developing, in which we have a yellow node stacked above a purple node. When the yellow node unwinds, reactions to the downside can be rapid and violent.
- The negative gamma nodes below could also accelerate a drop, with no clear floor in sight.
- QQQ:
- Was sitting above its king node, with very little upside accumulation.
- 608 / 606 remained lit up, so those were the nodes the map pointed to. The catalyst in this case was SPY’s rug setup.
