8 lessons · 18 min
🎯 Options Flow
How options positioning and dealer hedging can shape index futures — and how uncertain those estimates are.
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Index futures don't trade in isolation. S&P 500 options — on SPX, SPY and the futures themselves — are enormous markets, and the hedging done by the dealers who take the other side of them can add to or dampen moves in the underlying. This module covers the mechanics and the language.
Key Insight
Options data on public dashboards is an estimate. It depends on assumptions about who holds what. Use it to frame the kind of day you might be in, not to pick exact turning points.
Questions this module helps you answer
- What are calls, puts and the Greeks, in plain language?
- Why would a dealer's hedging push the futures one way or the other?
- What does "positive" or "negative" gamma actually mean?
- How do open interest, implied volatility and expiration change the picture?
Core Pillars
- Contracts and Greeks — what an option is and how its value responds to price, time and volatility.
- Dealer hedging — market makers hedge their option books in the underlying.
- Gamma exposure — how that hedging may change as price moves.
- Flow vs positioning — volume today vs. open interest held.
- Expiration — positioning resets, sometimes abruptly.