Official Playbook

TWI x OD

Pair technical analysis with dealer positioning. The complete gamma trading playbook.

Introduction

The Market Has Evolved. Have You?

Technical Analysis (TA) is the foundation of trading. It shows us the history of price. It highlights where buyers and sellers have stepped in before, and where they are likely to react again if those levels are revisited.

But charts alone only tell half the story.

While TA reveals the psychological memory of the market, there are hidden forces moving beneath the surface that price action alone cannot see. That force is The Market Makers (MMs).

Market Makers are the engine of the market. Their goal is not to gamble; it is to facilitate liquidity and remain neutral. To do this, they must constantly hedge their positions.

↑If they are forced to buy, the market is supported.
↓If they are forced to sell, the market accelerates.

The Democratization of Data

Until now, this dealer positioning was locked away in institutional “black boxes.” OptionsDepth has democratized this. We are now able to visualize exactly where dealers are positioned, where they are trapped, and where they must hedge.

This isn't replacing Technical Analysis; it completes it.

Technical Analysis gives us the context of history. Gamma positioning gives us the physics of what is happening in the present.

What This Means For You

Protection

Avoiding certain technical setups that are more likely to fail because they run into a hidden wall of dealer suppression.

Conviction

Striking with confidence when a technical analysis is also aligned and in favor with the dealer positioning.

This playbook will help you stop guessing and trade with a full picture. View it as the perfect complement to your trading strategy. The added visibility you never knew you needed.

Section 1: Foundations

The building blocks of gamma-based analysis.

1.1 Key Terminology

Peak(The Green Line)

A high gamma area in the profile. These create significant hedging behavior from dealers.

Function: Acts as support, resistance, or in a trending environment, as magnets.

POLR(Path of Least Resistance)

A trough or valley (low gamma area) in the profile.

Function: Acts as voids where price can move quickly, often acting as magnets.

The Landscape Metaphor

▲

Peaks

Mountains

▼

POLRs

Valleys

≈

Price

Water

It is hard for water to travel uphill to a mountaintop (Peak). It is fast and easy for water to flow downhill into a valley (POLR). This is why Peaks act as resistance/support, and POLRs act as magnets.

1.2 Core Concepts: The Forces That Drive Price

We track two primary data points to understand market structure.

Gamma Market Stability

Positive Gamma (Blue)

A stable, “magnetized” environment. Price movement is often slower, and levels are “sticky.” Dealers are buying into weakness and selling into strength, acting as a stabilizing force.

Negative Gamma (Red)

A volatile, “accelerant” environment. Price movement is fast and can trend sharply. Dealers are selling into weakness and buying into strength, accelerating the current move.

Charm Dealer Hedging Flow Over Time

Supportive Charm (Blue)

Dealers are positioned to passively buy as price drops. This creates a tailwind for upside moves and provides a buffer against sell-offs.

Suppressive Charm (Orange)

Dealers are positioned to sell as price rises and sell more as price drops. This creates a headwind for any rally and can accelerate downside moves.

Key Rule: The influence of Charm becomes most significant near the end of the day (EOD).

1.3 The Market State Matrix

The value (or “heaviness”) of Gamma and Charm is the most important filter for our strategy. It tells us what kind of day to expect.

Gamma Value (Stability)

Light	< 500	Thin landscape. Price has more freedom, TA gains more weight. Generally more volatile.
Moderate	500 - 800	Price is more influenced by the gamma levels.
Heavy	> 800	Thick landscape. Price movement is difficult, levels are very "sticky." Range-bound or chop environment.

Charm Value (Flow)

Light	< 25	Less significant influence on price.
Moderate	25 - 45	A clear influence on price; this value should be respected.
Heavy	> 45	A dominant, controlling force on price.

Section 2: Daily Roadmaps

The first step is to analyze the overall Gamma and Charm landscape to set your daily expectations. This “Roadmap” determines your bias and which types of setups to focus on.

Upside

2.1 TWI Squeeze

The most aggressive bullish environment. It creates a powerful vacuum for price to move higher, often rapidly.

Signature: Negative Gamma + Supportive Charm

Key Feature: A strong POLR (trough) above price.

Expectation: This POLR acts as the strongest upside magnet. Price will be pulled toward this level. Dips are often bought with an overall more volatile market environment.

Upside

2.2 TWI Trend

A steady, bullish environment. Less volatile than a squeeze but favors a consistent grind higher.

Signature: Positive Gamma + Supportive Charm

Key Feature: A strong Peak above price.

Expectation: The market is stable and supported. The Peak above acts as a target or magnet for price to trend toward.

Downside

2.3 TWI Flush

The most aggressive bearish environment. It creates a vacuum for price to fall, often rapidly and with little support.

Signature: Negative Gamma + Suppressive Charm

Key Feature: A strong POLR (trough) below price.

Expectation: This POLR acts as the strongest downside magnet. Rallies are often aggressively sold.

Downside

2.4 TWI Fade

A steady, bearish environment. Less volatile than a flush but favors a consistent grind lower.

Signature: Positive Gamma + Suppressive Charm

Key Feature: A Peak below price.

Expectation: The market is stable but under pressure. The Peak below acts as a target or magnet for price to trend toward.

Section 3: The Playbook

Core, repeatable setups based on the gamma landscape.

Long

Play #1 TWI Peak Bounce

Setup (The “If”):

Price sells off into a gamma Peak that is expected to act as support.

Nuances:

•Strongest when the overall Roadmap is bullish (Upside Squeeze or Trend Day).
•Highest-probability when Supportive Charm is present at or below the Peak.
•Can also work when price sells down from a Suppressive level but finds a Supportive Charm level at the Peak, creating a clear “floor.”

Invalidation

This setup is NOT valid if the entire charm environment is Suppressive. Shorting is a higher probability play.

Short

Play #2 TWI Rejection

Setup (The “If”):

Price rallies into a gamma Peak or POLR and fails to break through.

Nuances:

•Strongest when the overall Roadmap is bearish (Downside Flush or Trend Day).
•Highest-probability when inside a Suppressive Charm zone.
•Can also occur if price rallies into a Supportive Charm flip line but is clearly denied, showing a lack of buying power.

Use Caution

It is very difficult to short against strong Supportive Charm. Option premiums will struggle to pay out. Using futures may be a better instrument for this specific scenario.

Short

Play #3 TWI Breakdown

Setup (The “If”):

Price fails to hold a gamma Peak or POLR that was previously acting as support.

Nuances:

•Strongest when the overall Roadmap is bearish.
•Highest-probability when the breakdown occurs in a Suppressive Charm environment.
•A very powerful version is when price fails at a Supportive Charm zone and breaks down into a Suppressive Charm environment, causing an acceleration of selling.

Invalidation

Do not attempt this play in a strong Upside Trend Day Roadmap. You will likely be shorting into a dip that will get bought.

Section 4: Instrument Selection

The “heaviness” of the gamma landscape is your primary filter for instrument selection.

Directional

Options & Futures

Environment: Thin Gamma (Light, < 500)

In a thin landscape, price has freedom to move. Levels are less “sticky,” and technicals have more weight. Ideal for strategies that profit from clear, directional moves.

Plays to Favor: The Breakdown, The Squeeze, The Flush Day.

Spreads

Butterflies, Condors, etc.

Environment: Heavy Gamma (Heavy, > 800)

In a heavy landscape, price movement is difficult. Gamma levels are extremely “sticky” and act as powerful magnets, creating a range-bound environment. Very difficult for directional plays but ideal for premium-selling strategies.

Strategy: Fade the edges of the range and collect premium.

Section 5: Advanced Rules & Nuances

Refine your edge with these advanced rules.

Respect Charm at All Times

It is very difficult to short against Supportive Charm. Even if a setup looks good, option premiums will struggle to pay. In these cases, futures are a better instrument, or you should simply pass on the trade.

Charm's Influence Grows Throughout the Day

The influence of Charm becomes most significant toward end of day (EOD). However, it still provides a clear roadmap when paired with the gamma landscape. A heavy Charm value is significant even early in the session, while a light Charm value is less important.

Not All Charm Is Created Equal

Suppressive Charm by itself does not guarantee a sell-off, especially if it is Light. The value (Light/Moderate/Heavy) of the Charm is the key filter.

Flip Lines Are Reversals, Not Breakouts

Gamma Flip lines and Charm Flip lines are critical points of interest. Treat them as potential reversal points. They are not generally levels to be played as a "breakthrough," with the rare exception of a late-day (last 30-60 min) squeeze that has made multiple prior attempts.

Strategic Value vs. Tactical Confirmation

Use the value of Gamma/Charm (Light/Moderate/Heavy) to set your strategic expectation for the day. Then, use the contract size at a specific level as your tactical confirmation for a trade.

Nuanced Setup: Moderate Suppressive Charm

On days with Moderate Suppressive Charm where price is in a downtrend underneath the Gamma Flip, a late-day reclaim of that flip from positive territory can lead to a sharp rally.