Option Envelopes Advanced: the complete setup, tab by tab

Option Envelopes Advanced draws the same three levels as Gamma Bands, Zero Gamma, Major Gamma and Minor Gamma, but computes them from real time open interest derived from Cboe market maker data rather than from volume. It requires the DeepGamma module and an SPX option chart. This tutorial walks through both settings tabs and what changes compared with the simple version.

Step by step

1. 01

   Open an SPX option chart

   Go to New in the top menu, then Option Chart, and pick the SPX row, symbol ES-CME, exchange CME, in the Select Instrument box. That is the first difference from Option Envelopes (Gamma Bands): the simple version accepts NDX, QQQ, SPY and SPX, the Advanced version SPX only, because it needs real Cboe participant data. If you trade NQ or MNQ, the simple version on an NDX or QQQ chart is the one you want.

   

2. 02

   Add Option Envelopes Advanced

   Click Indicator Add in the toolbar, type Option Envelopes Advanced in the search box, add it with the plus button, then open the settings icon next to the added line. In the left hand list, the indicator sits under the Deep Gamma (CBOE) category, separate from Deep Gamma: that is where the versions reading Cboe data live. The window keeps the layout you already know from Gamma Bands, two tabs named Parameters and Subgraphs, topped by the Chart area row and the Use sec. axis switch.

   

3. 03

   Pick the data source

   This is the core difference from the simple version. Where Option Envelopes offers Gamma volume, Call put and Open interest eod, the Advanced version offers only two sources, both real time. Gamma (Call OI-R - Put OI-R), the default, multiplies real time call and put open interest by gamma: a gamma weighted read of the positions actually in place, rather than an estimate drawn from the day's activity. OI (R.T.) shows real time open interest alone, unweighted, to see where positions are concentrated live. Official open interest is only published at the end of the day: OI-R is DeepChart's intraday calculation from the Cboe buy and sell flow.

   

4. 04

   Check expiration, carry and strike count

   The defaults are not those of the simple version, and that is the trap when you switch between them. Expiration starts on 0 DTE (versus All expirations in Option Envelopes), with the same choices from <= 1d to All expirations. Include Carry or Open interest is on by default (versus off): open interest carried from earlier sessions enters the calculation. Number of Strikes (0 - unlimited), missing from the simple version, limits the calculation to strikes near price; zero, the default, takes them all. If you want to compare the two indicators side by side, align these settings first, or you are comparing two different expirations.

   Screenshot to come

   Expiration on 0 DTE, Include Carry or Open interest on and Number of Strikes at 0.

5. 05

   Configure Zero Gamma (1) in Subgraphs

   Zero Gamma remains the key line: the price where dealer gamma exposure flips from positive to negative, computed here from real time open interest. Above it dealers are long gamma and dampen moves; below it they are short gamma and amplify them. It is gold yellow, Subgraph Style on Line (or Hidden), Auto Color on None (Slope and +/- available), Line Style Solid, Line Width one. You also get Short Name and the Name Label, Value Label, Name Background, Value Background switches, plus Chart color for marker, and Include on Auto Center off: leave it that way so your price scale is not squeezed.

   

6. 06

   Configure Major Gamma (2)

   Major Gamma marks the highest concentration of dealer gamma exposure above the current price, based on real time open interest: where hedging is most likely to produce resistance or support. It is green. The help center lists BrokerLine as the default Subgraph Style (a line extended to the right edge with its price label), yet the article's screenshot shows Line: check what your version displays and pick BrokerLine if you want the level to stay visible as price moves away. Everything else matches Zero Gamma.

   

7. 07

   Configure Minor Gamma (3)

   Minor Gamma marks the secondary concentration, in purple, with the same settings and the same caveat on Subgraph Style (BrokerLine in the text, Line in the screenshot). It is a softer level than Major Gamma, useful to spot intermediate reaction zones. If you display the simple version at the same time for comparison, change the color or Line Style of one set of lines: six overlapping yellow, green and purple lines quickly become unreadable.

   

8. 08

   Read the three lines during the session

   The read is the same as Gamma Bands, with a real time edge: the yellow line reflects positioning actually in place rather than an estimate drawn from trading. Price above Zero Gamma, dealers tend to be long gamma and the market calmer; a break below, dealers tend to be short gamma and the market can turn more volatile. The green Major Gamma lines are where real positioning is most concentrated, with the reaction depending on the direction price comes from and the regime; the purple Minor Gamma plays the same role to a lesser degree. Levels step around through the session as open interest changes. Help center tip: run the simple version alongside, since a clear divergence between the volume read and the real positioning read is information in itself.

   

Settings, tab by tab