How to Trade Futures

How to use Location

In this lesson, you’ll discover how to identify optimal trading locations by combining multiple MenthorQ models to find high-probability entry and exit points. Understanding location is about finding areas where you feel confident entering trades based on strong technical confluences.

When analyzing location, focus on extremes—highs and lows where price action shows clear reactions. The key is watching reaction zones and how price behaves around these critical levels. Location trading should give you a sense of confidence where you feel “common and secure” rather than jittery about your entries. By combining gamma levels and blind spots, you can identify overlapping areas that become highly significant reaction zones.

For gamma analysis, pay special attention to primary levels including the core resistance, put support, hival level, one day max, and one day minimum. Additionally, zero DTE levels have become increasingly relevant due to significant growth in short-dated option volume. The core resistance zero DTE and put support zero DTE can create important reaction zones, especially in the hour before expiration when these options move very fast and impact the underlying asset.

The hival level is particularly critical because it dictates the shift between positive and negative gamma, which changes how market makers hedge their positions. This can bring significant volatility and create powerful reaction zones. Use the net gamma exposure chart (net JAX) to identify the largest gamma levels and monitor how levels change from day to day. When the core resistance shifts higher, it indicates increased option activity at higher strikes, representing bullish force pushing the market upward.

Understand that GEX1 represents the highest net gamma exposure, making it stronger than GEX2 through GEX10. We provide 10 GEX levels ranked by their total net gamma value. For blind spots, while blind spot 1 has more overlapping than blind spot 2, don’t focus too heavily on the numbers themselves—sometimes blind spot 2 and blind spot 3 may have equal overlapping strength. Instead, view blind spots as areas with strong correlation and overlapping, regardless of their numerical ranking.

Access the option matrix to monitor changes in gamma and open interest, which helps you understand shifting market dynamics. Combine these gamma tools with blind spots to find the highest conviction trading locations where multiple models confirm the same zones.

Video Chapters

  1. 00:00 – Introduction to using location in trading
  2. 01:30 – Identifying optimal locations using gamma levels
  3. 03:16 – Understanding zero DTE levels and their impact
  4. 04:20 – How to use GAGS levels for location analysis
  5. 06:00 – Understanding GEX level rankings and strength
  6. 08:08 – How to interpret blind spot numbers versus levels

Key Takeaways

  1. Look for extremes at highs and lows where multiple models overlap to identify the strongest reaction zones
  2. Zero DTE levels have become increasingly important due to explosive growth in short-dated option volume
  3. The hival level marks the shift between positive and negative gamma, creating potential volatility zones
  4. Focus on blind spot levels as areas of high correlation rather than worrying about whether blind spot 2 or 3 is stronger
Video Transcription

[00:00:04.17] - Speaker 1
How do you use location when we're speaking about location?

[00:00:11.08] - Speaker 2
Everything that you gentlemen have covered is exactly what I, I do or I try to do every day. And just like Dean suffered through this, Dean and I are trading partners, by the way, and we were in the same kind of a trade situation today, and we were kind of nervous because the candles all seemed nervous to us today. However, I will say this. Because of the roadmap, you're able to pivot and recover a lot quicker and take smaller losses. You can set your stop losses. Like we're talking about risk and reward. That's the most important. When I look for location, I'm looking for extremes. I'm looking for highs and lows. I think that's the best location for me. I see it rejecting at a high. Just up there, where we were talking about blind spot one, we know we're coming down, then we think there's a reversal, and we get into a call and we get faked out. But then we see that it doesn't break blind spot three, and we get back into the put. So it keeps you calm. So the location has to be something where I feel confident, and confidence is common and secure.

[00:01:17.21] - Speaker 2
So if I'm feeling jittery, I'm not entering. So that's. For me, location is all about a feeling, as well as watching where the reaction zones are and how it's reacting, if it's going up or down.

[00:01:30.08] - Speaker 1
All right, Fabio, what is for you? The right location? So you are developing and you have the idea about Mentor Q, and you deliver us all the great stuff that with the gamma levels, with all other stuff, he was helping to developing the blind spot. So what is for you? A really good location. And what gamma levels do you really like, and do you think people should looking for for a good location?

[00:02:08.23] - Speaker 3
Yeah, and I think 100%. So we divide the gamma levels into primary levels. Those are the core resistance put support high Vol level, one day max, one day minimum. Then we also have the zero dte levels. So I think those are becoming very relevant. So the core resistance zero dte and the put support zero dte. So I would say basically combining gamma levels, blind spots, when there is overlapping areas, especially around the primary level, I think those become really important reactions on us. And then sometimes the zero dte levels are really having an impact. And another one that I would really pay attention to is the hival level, because that dictates the kind of shift between positive and negative gamma. So it dictates the way. The difference in the way Market makers would basically hedge. So that can bring a lot of volatility and can become a really important reaction zone.

[00:03:16.26] - Speaker 1
All right. All right. And if you be trading or if you would be a trader. So you, you will also looking for zero DT levels, correct?

[00:03:29.17] - Speaker 3
Yes. Because in the recent years there's a lot of stats and, and data the growth of option volume in 0dte. So short dated expiration has grown a lot significantly. Right. So especially if you look at major indices like spx, you see that sometimes even like an hour before expiration, those 0dt options tend to move very, very fast. So that obviously has an impact on the underlying as well. So monitoring those flow I think is very important these days.

[00:04:03.26] - Speaker 1
Yeah, yeah. And then also people asking about the GAGS levels. So how, how important for finding the right location are the GAGS levels? So can you, can you say something about this also?

[00:04:20.17] - Speaker 3
Yeah, and I think if you want to look at the levels, you should always combine it with all the other models that we have in particularly the. One of the major chart that we use is the net gamma exposure. So the net JAX chart. So essentially that chart shows you the largest gamma levels. So sometimes you know, you see a Jackson level, which is actually very, very important because maybe the, the strength of the bar that you see in the net gamma exposure is actually very, very close to the core resistance level. Right. So even having those levels is very important. So I think really it really depends on the, on the day. But monitoring those, monitoring the changes. So understanding like from one day to the other one, like how do the level change is also key. So for example, if the core resistance is shifting above versus the previous day, then you can see that there has been like an increase in option activity at higher strike levels. So basically that becomes kind of like a bullish force that forces you to move to the next kind of strike price. So I think yeah, monitoring like the change, monitoring the bars, monitoring the data as well.

[00:05:39.25] - Speaker 3
So you have access to the option matrix. The option matrix is really a table that basically decodes all this data. So you have all numbers, you have like changes in jacks. So monitoring those is very important. Monitoring the change in open interest is very important as well. Yeah, yeah.

[00:06:00.28] - Speaker 1
And we get always the questions from the people. And I will answer the blind spot question, but you can answer the GEX question. GEX1 is stronger than GEX2 or is GEX2 stronger than GEX1? What are the numbers meaning?

[00:06:18.23] - Speaker 3
Yeah, and I can answer that. So GEX1. So we provide 10 GEX levels 1 to 10. Number one is the highest net gamma exposure. Number 10 is the 10th highest net gamma exposure. So obviously GEX1 is more relevant than GEX10. Doesn't mean that GEX10 is not relevant. It's just more like looking at the total value of net gamma in those levels.

[00:06:45.11] - Speaker 1
So yeah, correct. And there's the same princip on the blind spots. So blind spot one is stronger than for example blind spot two. Why is blind spot one stronger than blind spot two? Because on blind spots we're looking always for high correlation, high overlapping and blind spot one have the most overlapping compared to blind spot two. But I would say for the blind spots don't look so much in the numbers. And I tell this any, any time. So because you have sometimes not the idea. So we have the idea on the back end how much overlapping there. So for example, maybe blind spot one have eight times overlapping. Then we have blind spots two, blind spot three. But blind spot two and blind spot three have both six overlappings. So who's no stronger, blind spot two or blind spot three? We cannot say this. It's. It's both strong. So for this reason the blind spots are more for you and information that we have in this area, strong overlapping, we have high correlation in this area. And this should be the only main information for you. The number one, the number two, the number three.

[00:08:08.26] - Speaker 1
Yes, they're giving you the information how strong this is. But look more only to the blind spot levels. Not so much in the numbers, it's not options. But in the options market. When we speak about GEX1 and GEX2, we can clearly define the GEX1 and GEX2 levels in the blind spots. We can do this also. But sometimes we have the same overlapping on two numbers like blind spot 2 or blind spot 3 or blind spot 6 and blind spot 7. So for this reason look on the blind spots on the levels, not so much on the numbers. So for example we have here blind spot 4. It was really strong supported and you will, if you will not look into this because you say oh man, that's only a blind spot for don't do this, don't do this. Remember yourself the blind spots helping you to identify areas. We have strong correlation, strong overlapping and that's it.