What is SpotGamma?
What is SpotGamma? According to the website, SpotGamma is an options software and market analysis platform.
But what exactly does SpotGamma provide? There is a very long list that can be viewed when signing up for the various packages that SpotGamma provides to clients, but these long lists can be overwhelming and difficult to understand.
SpotGamma is very clear on one thing. They do not offer market or investment advice. They do not confirm when the market is going to rise or fall, but simply attempt to provide information on large level trends through the use of SPX and SPY Options data. So let's look at a breakdown of only some of what SpotGamma offers.
What are SpotGamma's Key Features?
The most critical piece of information delivered by SpotGamma is what the company calls levels. These levels are provided every day, and can be imported onto various trading software. Below, an example can be seen using Bookmap, which seems to work the best with SpotGamma features
On the left, the imported SpotGamma levels can be seen. These are each called something else and can have a unique purpose, but the most important thing to remember about these levels is that they are all support and resistance levels of some sort. They are all tied to support and resistance lines that have been observed in the SPX or SPY.
What is great about this is that you do not necessarily have to understand how support and resistance lines work and calculate them yourself, which can be a time consuming process depending on the markets.
Instead, the support and resistance lines are already worked out for you and can be imported in an easy to read format.
All that you need to know is that you need to be very wary of these positions as this may be when other traders decide to buy or sell, possibly affecting the trend of the market.
SpotGamma provides information on the general market Gamma every day. Gamma is a complex mathematical derivative which attempts to ascertain the potential for movement in the market at a given moment.
Deriving Gamma is a highly complex process that can only be done through the use of software, and cannot simply be calculated through the use of an Excel spreadsheet as some other risk related Greeks can. Gamma can prove to be incredibly useful alongside other information.
A positive Gamma would indicate that a trader might want to be more bullish, as a short term strategy. This would be where a trader attempts to buy when the market dips and sell when it peaks.
Negative Gamma on the other hand may indicate that a trader should look for longer, directional trades.
Again, what is great about this is the fact that you do not need to understand exactly what Gamma is, and how it was calculated in order to be able to take this information into account when preparing to place a trade.
As long as you understand what the values mean, you are able to make use of the information.
3. Daily Market Analysis
Every day, customers of SpotGamma get sent a daily market analysis document. This document can be a little bit overwhelming and involve a variety of different charts with numbers scattered all over them.
This can be a lot to take in for a trader who is not familiar with these figures and values, or what they mean.
But for a seasoned trader it becomes almost like a one-stop-shop for all the information that you could want on a market.
New traders can also benefit from this provided that they do not allow themselves to get overwhelmed and only focus on the values that actually mean something to them.
It also provides an opportunity for learning. As a new trader, you might not know of the existence of a specific analytical figure, such as delta.
Additionally, if large tables of numbers do not work for you, there are also various analytical paragraphs which explain, although in far less detail, the general trends for the day ahead.
However, it is important to remember that technical analysis such as this is not a guarantee. Just because the values from the previous day lead to mathematical predictions of certain trends, does not mean that they are guarantees.
What is SpotGamma?: Cost
What is the cost of SpotGamma? They are very transparent with their pricing as can be seen below. They offer a variety of different packages, ranging from $67 at the time of writing this article, to $187. Although this can be quite expensive for some traders, it is not entirely inaccessible, and ranges on the cheaper side of most analytics software.
However, it is important to remember that the software is a recurring subscription, not a one-time purchase. This is important to keep in mind when considering which package, if any, is suitable for you.
Is SpotGamma Worthwhile?
Any additional information that can be gathered by a trader before entering or exiting a trade can assist in the profitability of the trade.
For that reason, it is highly recommended to use some form of analytical software such as SpotGamma before making any trading decisions.
However, there are still some things to remember. Although the cost of SpotGamma is relatively low in comparison to other software that does similar things, it is still quite expensive. Unless this sum is a very small amount of your total portfolio, it might not be worth the investment.
Likewise, it is important to remember that although SpotGamma can provide additional information, it cannot magically predict the future and should not be used in isolation. Instead, it is a helpful tool to give additional information that can be used above and beyond additional research.
Trading contains substantial risk and past success does not guarantee future profit. It is important to take this into account before placing any sort of trade regardless of the software or information that you use trade responsibly.