Asset: Fixed Income

In this guide we will show how to use the MenthorQ Data for your morning preparation. It takes only a few minutes.

1. Liquidity Snapshot

You can access the Liquidity Snapshot by typing the /liq_snapshot command on the Query Bot. Within this screen we particularly monitor the following data points:

• Negative Gamma indicates potential for sharp price swings.
  • Negative GEX: Dealers hedge into trend, regardless of direction = Removes liquidity
  • Positive GEX: Dealers hedge against trend, regardless of direction = Adds liquidity
• Bullish Momentum signals upward price movement.
• IV30 vs HV30: Implied volatility is lower than historical volatility, which suggests the market may be calming down after a period of higher actual volatility. This combination can influence both directional and volatility-based trading strategies.
• The Put/Call Open Interest Ratio compares the number of open put options to call options. A ratio of 2.56 suggests that there are more put options being traded compared to calls, which might indicate a bearish outlook from option traders, despite the bullish momentum.

2. Option Matrix

Next we will look at the Option Matrix. The Matrix simplifies the read of the Option Chain for any assets within our coverage. You can access the Matrix using the command /matrix in the Query Bot.

• When GEX is positive, expect a more stable market with limited price swings. It’s often a signal that mean reversion trades (buying dips, selling rallies) could be effective.
• When GEX is negative, expect more volatile markets with larger price swings. In this case, you might look for momentum trades, riding trends rather than fading them.
• When DEX is positive, expect potential upward pressure on the market. If you’re seeing strong support levels and rising prices, it could be a sign to enter long positions, especially if you’re riding the momentum.
• When DEX is negative, expect downward pressure. In this case, you might want to be cautious with long positions or look for opportunities to short if the market shows signs of weakening.
• High Positive GEX + Positive DEX: Indicates a potentially bullish environment with stable upward pressure. You can look for long setups, especially if the market shows resilience on pullbacks.
• Negative GEX + Negative DEX: Indicates a potentially bearish and volatile market. Here, you might look for short setups or be cautious about long trades.
• Mixed GEX and DEX (e.g., positive GEX with negative DEX): This could indicate a choppy market, where the price might be stuck in a range or show unexpected volatility. In this scenario, shorter-term trades with tighter stops might be necessary.
• Expiry Exp. Move. This column leverages our Option Implied Move Model to forecast how many points up or below the price can move by the expiration date.

3. Net Gamma Exposure (Net GEX)

Next we will look at the Net Gamma Exposure Chart or Net GEX. You can access the chart by using the /netgex command.

This is how we can use this chart:

• Predicting Volatility: The chart helps traders identify where market makers’ hedging activity may stabilize or destabilize the market. For example, heavy negative GEX at lower strike prices indicates higher volatility if the price starts to drop.
• Support and Resistance: The GEX distribution gives clues to important support and resistance levels (e.g., $540 put support and $570 call resistance). Traders can use this information to make decisions about where to enter or exit positions.
• Volatility Zones (HVL): The High Vol Level ($550) marks a zone where price swings could become more unpredictable, which is critical for risk management.

To learn more about Market Reaction Zones check out our Free Course on Gamma Levels.

4. Net GEX Multi-Expiration Chart

On top of the Net GEX Chart we can also analyze Net Gamma Exposure across multiple Expirations. This is very important as we can monitor 0DTE Options Flows and Reaction Zones. You can access this chart by using the /netgex_multiexpiry command on the Query Bot.

This is how we can use this chart:

• Anticipating Price Reactions: By studying GEX across different expirations, traders can anticipate how the asset might react at certain strike prices during different trading sessions. This is especially useful near major expiration dates or Mopex (monthly expiration).
• Volatility Management: Knowing where negative GEX clusters are across multiple expirations helps traders avoid-or take advantage of-potential spikes in volatility.
• Enhanced Strategy Development: This multi-expiration GEX data enables traders to layer their trades around multiple key levels and expiration dates, improving the precision of their strategies.

5. Swing Trading Model

Then we want to look at our Swing Trading Model. We have two time horizons: 5 days and 20 days. You can access it by using the commands: /swing_5d and /swing_20d. You can also add the Swing Levels to TradingView.

To learn more on how to use the Swing Models we have created a Swing Trading Guide and a Swing Trading Course.

This is how we can use the model:

• Predicts Key Levels for Entries and Exits: The upper band, lower band, and risk trigger provide clear price targets that day traders can use to set entry, exit, and stop levels.
• Upper Band: The upper band gives day traders a target for price resistance. If SPY nears this level, it may encounter selling pressure, and traders might look to take profits or initiate short positions.
• Lower Band: (Not visible on this portion of the chart but typically shows as a lower boundary) The lower band is the opposite of the upper band and acts as a support level. Traders could use it as a potential buy signal or target for covering short positions, expecting a bounce.
• Risk Trigger: This level indicates a key price point where the model expects an important reaction, either as a support or potential breakdown level. Day traders can use this as a decision point, either to tighten stops or prepare for larger moves.

6. Gamma Levels on VIX

After looking at our asset we want to confirm our analysis by looking at the VIX Index. In particular we can look at the VIX Matrix.

• Understanding GEX and DEX for VIX options helps traders predict upcoming volatility spikes or calming periods. For example, if GEX is negative and DEX is high, traders can expect heightened volatility, which can influence decisions in both options and futures markets.
• The VIX is a direct reflection of market fear and uncertainty. By observing the call resistance and put support levels, traders can get a sense of how much fear (or calm) the market is pricing in at different VIX levels.
• Large GEX and DEX values suggest that institutional players are making significant hedging moves, which can influence both VIX options and the broader market. Traders can use this information to manage their positions effectively, particularly during major market-moving events.
• The chart gives a granular view of volatility expectations across multiple expirations, helping traders position for both short-term swings and long-term trends in market volatility.

7. CTAs and Systematic Models

The last step is to look at the MenthorQ CTAs Funds Model. Systematic Funds and CTAs are key drivers of liquidity and monitoring their flows is key for any investors. With this model we simplify how you can analyze their liquidity and positioning.

This is how we can read the chart:

• CTA Position Today, Yesterday, and 1 Month Ago: These columns show how much CTAs are currently positioned in each index, today, how much they were positioned yesterday, and one month ago. This helps traders and analysts track the evolution of CTA positions over time. For example, in the E-Mini S&P 500 Index, there was a slight decrease in the position from yesterday to today, but the position has increased significantly from one month ago. This shows that CAs have been building a long position, potentially influencing upward market moves.
• Percentile (1M, 3М, 1Y): These columns indicate how current CTA positions compare to historical positions over 1 month, 3 months, and 1 year. Percentiles show how extreme the current positions are compared to historical data. For example, the E-Mini S&P 500 Index has a 1M percentile of 0.29, meaning the current position is in the 29th percentile over the last month, which suggests it is a relatively moderate position. Higher percentiles indicate more extreme positioning, which can precede large price moves if CTAs start reversing positions.
• 3M Z Score: The Z score tells us how far the current position is from the mean position over the last three months. A high or low Z score can indicate overbought or oversold conditions. For instance, the E-Mini S&P 500 Index has a Z score of -1.30,
  indicating that the current CTA position is significantly lower than the 3-month average, suggesting that the index might be oversold and could see buying pressure if CTAs reverse positions.

We have also created a dedicated Course on how to use the CTAs Models.