The Delta Pressure lens displays the net change in options positioning across all prices and time frames. With the default Market Maker selection in place, Delta Pressure informs traders where the market will likely experience buying pressure (blue) or selling pressure (red).

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 Market Maker (default) heatmap to gauge where dealer hedging may create upward or downward pressure for SPX. It is important to understand the market environment to optimize your trading approach.

For an environment with positive market maker gamma, the red and blue zones provide 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 an environment with negative market maker gamma, the red and blue zones often become 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 Maker 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:  With Market Maker selected, overhead red zones indicate areas where dealers are expected to be selling as price moves higher whereas blue zones below spot price provide support as price rejects lower. This infers that breaking these levels will take considerable volume.

Negative gamma environment:  Overhead blue zones on the Market Maker Delta Pressure heatmap 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.