Putting it all together

Start with one line at a time

You do not need to understand every label before you can start reading your chart. Begin with one nearby line and ask: does price turn near the area, or move beyond it and stay there?

A level is a marked price on your chart. A wall is the name given to an important options level. The word does not mean price cannot pass through it.

Keep these three ideas handy. Delta describes how much an options position responds to price. Gamma describes how that response changes as price moves. Dealer hedging means buying or selling to balance that risk. Those balancing trades may slow a move or help it continue.

Example 1: Price turns near C1

Made-up example: Price rises from 20,050 toward C1 at 20,100. C1 is the main Call Wall, a large gamma level in the options data.

What you watch

Price reaches 20,097 and falls back without touching the line. A second attempt briefly reaches 20,103, then turns lower again. Both are reactions near the 20,100 area.

What that could mean

The area is acting like a ceiling for now. Dealers who need to sell as price rises could help slow the move. A dealer is a firm that trades options; its balancing trades are called hedges. The chart cannot prove those firms caused the turn.

What supports the idea

Price keeps failing to move beyond the area around 20,100 and starts moving lower. The next marked area below is 20,025 in this example. Watch what happens if price gets there.

What would change the idea

Price moves beyond the area around 20,100, returns near it, and rises again. It is no longer behaving like a ceiling.

If more labels share this line: De1 means the biggest delta reading by size. D+ means the most positive delta reading. COI means the most open call contracts. Together they make the area worth a closer look; they do not guarantee a turn.

Example 2: Price gets through C1

Made-up example: C1, the main Call Wall, is at 20,100. Price moves beyond the surrounding area, pulls back near 20,100, then rises again. The return might turn a few points before or past the exact line.

What you watch

Whether price can keep trading above the surrounding area. Coming back to check that area is called a retest. One brief poke above the line is less convincing than a return near the area followed by another rise.

What that could mean

The area may now be acting like a floor. Some dealers may need to buy more as price rises to balance the changing risk of their options. That buying could help the rise continue. The label alone cannot tell you whether this is happening.

What supports the idea

Price holds above the area around 20,100 and moves higher again. C2 at 20,200 is the next marked area above in this example. C2 means the second positive net-gamma rank; its number does not guarantee that price will reach it.

What would change the idea

Price drops back below the surrounding area and cannot recover it. The idea that the area would hold as a floor no longer fits; a single tick below the line would not establish that.

Example 3: Price falls through P1

Made-up example: Price falls toward P1 at 19,900. P1 is the main Put Wall, the most negative net-gamma level in the options data. It is a possible place to watch for a bounce, not a guaranteed floor.

What you watch

Price falls beyond the area around 19,900, comes back near it, but cannot recover the area. Then it falls again. The return can end a few points short of the line or briefly go past it.

What that could mean

The old floor may now be acting like a ceiling. If dealers need to sell more as price falls to balance their options risk, their selling could help the decline continue.

What supports the idea

Attempts to recover the area around 19,900 keep failing. In this example, the next marked area below is VOL at 19,880, followed by P2 at 19,800. They are places to reassess if reached, not promised destinations.

What would change the idea

Price gets back above the area around 19,900, returns near it, and holds from above. Getting back across a lost level is called a reclaim. That would suggest the earlier break below did not last.

If the line also shows De2 and D-: De2 means the second-biggest delta reading by size. D- means the most negative reading. They describe options exposure; they are not instructions to sell.

Example 4: Price keeps crossing FLIP

Made-up example: FLIP is at 20,000. Price moves up to 20,010, back down to 19,990, and repeats. Neither side lasts.

FLIP marks a change between positive and negative gamma readings at nearby option prices. It is one reference line. Being below it does not prove the whole market has negative dealer gamma; being above it does not prove positive dealer gamma. Major or stacked levels can still slow a move on either side. A stack means several labels share a nearby area.

What you watch

Whether price can finally stay on one side. Constant back-and-forth movement is often called chop. Each crossing does not need to become a new trading idea.

What that could mean

The market has not shown a lasting direction in this small area. The line alone cannot tell you whether dealers have changed how they are hedging—buying or selling to balance risk.

What supports a new direction

Price moves away from 20,000, comes back near it, and then continues on the same side. The next marked area is 20,025 above or 19,900 below in this example.

What would change the idea

Price immediately returns through 20,000 and starts the same back-and-forth pattern again.

Example 5: Price keeps returning to Ab1

Made-up example: Ab1 is at 20,025. Ab1 marks the largest total amount of call and put gamma, counting both sides by size.

What you watch

Price rises a little above 20,025, then returns. It falls a little below, then returns again. The swings get smaller.

What that could mean

Price is staying around the area for now. Dealers buying falls and selling rises could help slow movement, but the Ab1 label does not prove that they are doing this.

What supports the idea

Attempts to move away keep failing, and price repeatedly returns near 20,025.

What would change the idea

Price leaves the area, stays away, and continues in that direction. The next marked area is 20,100 above or 20,000 below in this example.

If AbOI is on the same line, it also has the largest total number of open options contracts. That is another measurement of the area, not proof that price must return to it. Several labels together can identify a place to watch for slowing on either side of FLIP. Their size or overlap does not establish whether dealers are buying or selling.

What the extra labels add

You can learn these after you are comfortable watching price at C1, P1, and the other main lines. Extra labels give more information about the options at a level.

A call gives its buyer the right to buy at an agreed price. A put gives the right to sell. Volume counts contracts traded during a period. Open interest, or OI, counts contracts still open.

A simple example: C2 and CV share a line at 20,200. C2 says the area has a large gamma reading. CV says more call contracts traded at that option strike than at the other strikes in the selected data. It is worth watching how price behaves there.

High call volume does not tell you whether customers were buying or selling those calls. Several labels can also come from the same activity, so more labels do not guarantee a better trade.

Check that the data is current and uses the option end dates you intended. A label moving after an update may simply mean a different strike now ranks higher.

A simple routine for your chart

1. Pick one nearby line. Read its label. Keep the next marked price above and below in mind.
2. Watch as price approaches. Does it turn near the area, or move beyond it? It does not need to touch the exact line.
3. Watch what happens next. If price returns near the area, does it hold on the same side or cross back?
4. Say what would change your view. For example: “I think this area may act like a floor. If price moves below the area I defined and cannot recover it, that idea no longer fits.”

You can add delta, volume, and open-interest labels as you learn them. Start by understanding the price reaction. Before making a trade, use clear rules for your entry and how much you are willing to lose.