The Delta Pressure lens displays the net change in market maker delta positioning across all prices and time frames.

Image description: Delta Pressure heatmap showing price drop to support line before stabilizing, from August 22, 2024.

Key Features

Traders can use the colors on the heatmap to gauge where market maker hedging may create upward or downward pressure for SPX.  It is important to know the type of environment we are in to optimize your trading approach.

For a positive gamma environment, the zones offer stability and cap movement:

• Blue Zones: Reflect buying support (need to buy futures or stock to hedge)  
• Red Zones: Reflect selling resistance (need to sell futures or stock to hedge) 
• Contours: Lines reflect zone borders (can guide toward closing levels) 

For a negative gamma environment, the zones offer areas of acceleration: 

• Blue Zones: Reflect buying pressure (need to buy futures or stock to hedge)  
• Red Zones: Reflect selling pressure (need to sell futures or stock to hedge) 
• Contours: Lines reflecting large shifts (can guide toward closing levels) 

Trading with the Delta Pressure Heatmap

Traders can use the heatmap to anticipate where market makers' buying or selling pressure will “kick in” to act as support / resistance (positive gamma environment) or exaggerate price movements (negative gamma environment).  

Positive gamma environment:  Overhead red zones indicate areas where market makers are expected to be selling as price moves higher whereas underneath blue zones provide support as price rejects lower. This infers that breaking these levels will take considerable volume.  

Negative gamma environment:  Overhead blue zones reflect where buying can extend or accelerate an upward move and underneath red zones reflect where selling can extend or accelerate a downward move.

• Strength: More likely in a blue zone (consider the gamma environment)
• Weakness: More likely in a red zone (consider the gamma environment)

If you are interested in learning more about TRACE, check out the full TRACE User Manual.