SpotGamma traders know how important support and resistance levels can be, making it highly impactful when they disappear. Following May Options Expiration, NVIDIA (NVDA) lost a large zone of positive Gamma support that had helped stabilize price for weeks.
SpotGamma’s Compass, Equity Hub History, and Dealer-Side Gamma Heatmap all pointed toward a weakening setup before the market opened. When HIRO confirmed traders were buying puts and selling calls immediately after the open, the pieces aligned for a high-conviction short setup that captured a six-point move lower with a 6:1 reward-to-risk ratio.
Author: Doug Pless
Professional Trader & SpotGamma Content Contributor
| The Setup | The Tools | The Execution | The Payoff |
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Stock: NVIDIA (NVDA) Trade Type: Intraday short using stock shares Bias: Bearish following May OPEX Volatility: Expensive implied volatility with positive gamma support expiring Thesis: Compass, Equity Hub History, and the Calendarized Gamma Heatmap all pointed to weakening support after options expiration. A rejection at the $230 Call Wall with bearish options flow created a high-probability short setup. |
Compass • Upper-right quadrant (high IV Rank + high Risk Reversal Rank) • Indicated expensive volatility and downside potential Equity Hub History • Key Gamma Strike shifted lower • Hedge Wall shifted lower • Call Wall shifted lower • “Bearish hat trick” signaled traders rolling positions to lower strikes Calendarized Gamma Heatmap • Showed large positive gamma support disappearing after OPEX • Suggested reduced price support and greater downside potential HIRO • Traders immediately bought puts and sold calls • Market makers sold stock to hedge delta exposure |
Entry: Short stock at $226.10 after first pullback below the $230 Call Wall Trigger: Bearish options flow confirmed by HIRO following rejection at resistance Stop Loss: $1 above entry Target: Just above the $220 Key Gamma Strike Exit: Covered at $220.15 around 12:30 PM as bearish flow subsided |
Move Captured: Nearly 6 points Reward/Risk Ratio: 6:1 Result: High-probability intraday short driven by post-OPEX positioning changes and real-time options flow Exit Signal: Traders stopped buying puts and selling calls, signaling downside momentum had exhausted |
- Compass identified NVDA as a high-conviction bearish candidate, with expensive calls and elevated downside potential.
- The Calendarized Gamma Heatmap revealed that positive gamma support disappeared after OPEX, removing a key source of buying pressure should price drop.
- HIRO confirmed bearish positioning at the open, as traders bought puts and sold calls while market makers sold stock to hedge.
- The trade captured nearly six points into the $220 Key Gamma Strike, delivering a clean 6:1 reward-to-risk intraday setup.
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