Hello everyone, welcome to options with Doug streaming live daily on bookmap discord and the bookmap YouTube channel at 1 30 p.m.. Eastern Time Before I get started I need to go through the disclosures General disclosure all book map limited materials information and Presentations are for educational purposes only and should not be considered specific investment advice nor recommendations risk disclosure training futures equities and options involve substantial risk of loss and It's not suitable for all investors past performance. It's not necessarily indicative of future results And before I go any further I need to pause for a PSA Bookmap is requesting everyone to fill out a form for bookmap discord That will provide you with some additional benefits webinars services beta programs free add-ons and Also help to cut down on spammers in Bookmap discord It does require a bookmap license if you are not as currently a bookmap subscriber. You can subscribe to our free Free license that is for crypto primarily and also does provide Delayed stock and futures data, I believe All right, so everybody you can just scan this with your phone fill out the form and you should be good to go Here's my contact information the best way to get in touch with me is through discord My name on discord is Doug P. Also in bookmap discord There's an options dash Doug chat channel. That's a great place to post questions comments and content Related to the topics of my presentation and the topics of the channel that I'll go through in just a moment and Note the bookmap discord is a great Great community a lot of active traders there. They're a wide variety of topics options stocks futures Crypto in a wide variety of languages and again a number of traders working together To help each other become better traders I'm also on X formerly known as Twitter. My name there is at Doug plus The focus of my presentation today and the focus of the options dash Doug chat channel is options order flow The impact of options markets on stocks and futures and the influence of market maker hedging flow on price action I have a two-step process for trading and the first is planning and I use positional analysis I look at how traders and market makers are positioned at the options market and how those positions change from day to day To develop a thesis regarding the expected trading range and volatility for the day As well as a directional bias and the second step on my process is Execution I look at real-time order flow and book map and real-time market maker hedging flow and spot gamma hero to confirm my thesis and for setups for entries and exits and when I talk about setups today I will be focusing on an underlying asset and Setups and that asset can be taken any number of ways For example the SME 500 setups can be taken with ES futures spy shares spy options SPX options or even ES options Questions and comments are welcome and I will be watching both the options dash Doug chat channel and Discord as well as the chat and YouTube for your questions and comments Please feel free to post and I'll do my best to answer your question and hello Stephen. Welcome. Glad you're here Yeah, it's been an interesting trading day. We'll we'll get right to it All right, here's my agenda for today Monday, February 5th First of all, I want to go over news items economic data events and earnings for the week Then I'll go through my positional analysis Then I'll review some setups from earlier today And then I'll take a look at the live market and when I get to the live market if anyone has any stocks They want me to take a look at please let me know and I'll be glad to do that All right, let's start with news items So this week is a very very light week for news and the only thing that Really that I noted of significance high impact was PMI data that came out at 10 a.m. Eastern Time That came in greater than expected greater than the previous number also above 50 indicating expansion So that was the services PMI at 10 a.m. Let's take a look at the reaction to that and This is the ES futures and book map And here's the reaction at 10 a.m. Sharp drop lower below the 493 level that spy 493 All right, so the again, that's the only Significant or high-impact news item that I'm aware of for the week. There are a variety of Fed speakers out during the week All right, again, this is the ES futures and book map and Before I take a closer look at this chart I want to take a look at a larger time frame also go to the underlying index Which is SPX and just to point out one of my key tenants for trading is that? options trades and for the SP 500 options trades and SP X and spy are a key driver of price action in ES So when traders buy and sell puts and calls and spy and SP X Market makers hedge those positions with ES futures so again my one of my key tenants is that Trades in those underlying index products are a key driver of price free x and I focus on When I take when I watch ES, I'm focusing on the underlying index levels All right, so let's start again. Let's go to a larger time frame Oops All right, so this is let me go to SP X Sorry, I forgot to change that chart So this is SP X. This is a one-day chart and think or swim current rally began at the October 30th last year Rallyed up found resistance at 4,800 at the end of the year then on Friday January 19th. That was options expiration SP X broke above that level and then found resistance at 4,900 So let's go take a look at that And now I'm going to zoom down in time frame Whoops, sorry, and I'm having an issue an issue with with think or swim Yeah, I'm gonna have to keep it just a moment here Okay, sorry about that. Give me just a moment. I'm gonna restart think or swim all right, let's go now to our One hour chart So this is the top portion of the chart that we just looked at the one-day chart again Sorry about that. We're back on track now. So here's that break out above 4,800 and Then resistance at 4,900 Then last Monday a week ago SP X wrong tool SP X broke above that level and found resistance and Price did move above the 4,950 level on last Friday closed Just above that level That was the call wall at the time and Then we'll take a look at a one-minute chart in just a moment to get a More clear picture of what's going on today All right, let me point out the levels on this chart First of all the dash purple line showing the lower and upper weekly expected move that's based on the options market I update that once a day Then the dash blue line showing the lower and upper Daily expected move also based on the options market and note that SP X did test that level earlier today All right, so again SP X Last Friday traded above the 4950 call wall then moved back down and Ended up just above that level and then traded down below that level today right the Other lines on this chart are spot gamma levels I'm going to point out the key daily levels First of all the 4930 level That is the put wall. That's a strike when large is net negative gamma that can be expected to act as support and Price did move below that level earlier today That's also the volatility trigger that a spot gammas proprietary gamma flip level Below that level market makers position on the gamma curve is negative in a negative gamma environment Market makers have to trade with price to hish their delta exposure on the other hand above that level Market makers position on the gamma curve is positive in a positive game gamma environment market makers have to trade against price to hish their delta exposure and note both those levels did move up from From Friday And for the put wall there was a pretty significant significant shift higher Now the put wall from forty nine hundred forty five hundred up to forty nine thirty All right, the next level up is the call wall That's a five thousand That's a strike with largest net positive gamma that can be expected to act as resistance. That's also the absolute gamma strike That's a strike with largest absolute Positive and negative gamma. So that's where most of the gamma weighted open interest is concentrated So Gamma weighted open interest kind of concentrated in two levels here, although we'll see that I'll take a look at the absolute gamma strikes in just a minute see that this forty nine thirty level is not Significant and almost all the gamma weighted open interest is concentrated at 5000 all right finally let's take a look at a one-minute chart and Then we'll get to book ma'am Take a look at about two days worth of data here note that SPX did trade down below the forty nine fifty level That's an L4 level and just below that that's a combo three level combining SPX and spy gamma weighted open to interest into one level here shown in terms of a SPX price most important level here is the 4930 that's the put wall also the volatility trigger note that price did move below that It acted as resistance Probably so also move below the lower daily expected move and then SPX recovered supported lower daily expected move and then supported the put wall and now back up toward the Towards the high of the day at the forty nine forty Forty nine forty nine fifty level All right, so key levels and play for SPX All right, let's take a look at book map now and a book map. I have my own cloud notes So I can show SPX levels There's that forty nine forty nine fifty level remember last week forty nine fifty was the call wall There's the forty nine three Forty nine thirty put wall Acting as price broke below it acting as resistance and now support again Right. I also have spy levels on this chart Here's the spy 493 level very good entry point for a short this morning right after the data release Those also I have the lower day. They expect and move for ES acting as support right now SP 500 ES back above the spy 493 level All right note. There is a difference of price between ES and SPX and Today it's trading between 20 and 21 This morning. It was closer to 20. So that's what I'm using right now. It looks like it is closer to 21 So I'm using ES minus SPX Equal 20 so the put wall at forty nine thirty. I'm showing it ES forty nine fifty note that I do post the index Relationships that I'm using every day and discord. I've been trying to post the preliminary index relationships before the cash open and of course the ES minus SPX and then Q minus ND X that's not available until after the cash open when ND X and SPX started to trade and We'll talk about setups in a few minutes. So those are the key levels for today the forty nine fifty forty nine forty nine level Up above also the spy 493 and the lower day. They expect to move on the on the downside All right shifts and levels for the SB 500. I mentioned before the volatility trigger put wall and call wall for SPX all shifted higher and that is bullish and For spy the volatility trigger also shifted higher and the put wall shifted lower and the absolute gamma strike shifted higher So overall Somewhat bullish shifts higher and levels for the SB 500. All right. Let's take a look at NASDAQ now We'll take a look at the levels and play and we'll take a look at setups in a few minutes So this is the NQ futures and book map and I'm going to take a quick look at the underlying index products for NQ and In the case of NQ first of all, we'll take a look at QQ Q So when traders buy and sell puts and calls and QQ Q Market makers hedge those positions with NQ futures. Let me zoom in just a little bit So the levels and play for QQ Q 429 on the upside and This can't get any better Exactly 425 on the downside And that's the zero gamma level for QQ Q So this is just showing the importance of those levels both the round number levels and the spot gamma levels Here's also a combo level at 48 420 802 acting as support then resistance Resistance Then support so the round numbers for QQ Q if you're trading QQ Q or NQ very important All right, let's take a look at NDX and then we'll get to Get the book map NDX 17600 level So right now prices trading between 17600 and 625 600 is an L2 level and 625 it's no for level Good launching points for shorts in the morning. All right, let's take a look at book map now so just like the ES futures, I have my own cloud notes here so I can show NDX levels, there's the 600 and the 625 levels That I just talked about here's the QQ Q 425 Acting as support to the tick and then there's this 428. It's actually 428.02 Now acting as support and again, we'll talk about setups in a few minutes. All right shifts and levels for the NQ and NDX For NDX both the volatility trigger and put wall shifted lower and for QQ Q the put wall shifted lower and The absolute gamma strike shifted higher. All right. It's kind of so kind of a mixed picture For Nasdaq not as bullish as the S&P 500. All right, let's take a look at a couple of other things and then we'll get to some setups All right, so first of all, I want to take a look at gamma notional This is market makers position on the gamma curve at the beginning of the day and this gives me a sense of the implied the Volatility for the day what to expect volatility higher volatility lower volatility wider training range lower training range And this is gamma notional market makers position on the gamma curve at the beginning of the day for the S&P 500 Nasdaq and Rosso 2000 Note for the S&P 500 and Nasdaq all these numbers are positive In a positive gamma environment for an NDX spot gamma assumes that Traders are short calls market makers the long calls hence the positive gamma environment and they have to trade against price to Hish their delta exposure. No, these numbers did shift higher from Friday and Except for IWM which shifted more negative All right, so all these numbers are positive positive gamma environment so on a positive gamma environment, and I'm looking for more range day rather than a Big trend day looking for more mean reverting price action And that's what we'll see in the Nasdaq and S&P 500 today All right, let's take a look at one other thing This is the absolute gamma strikes for SPX and remember I pointed out the 4930 level Let me just zoom in on this just a little bit Which is the put wall So there's the put wall right there at 4930 What this chart is showing is absolute gamma the orange bars are showing call gamma or positive gamma the blue bars are showing Negative gamma or put gamma so the put wall the definition of the put wall is the basically the blue bar minus the orange bar and Looking for the the largest number there so that mathematically Fits the definition of the put wall, but it's not very convincing otherwise and then this is the 5,000 level that I mentioned before this is where most of the gamma weighted open and interest is concentrated Next 4900 also 4950 is it an important level This is 4800 down below All right, so this is the put wall 4930 again not very convincing All right, let's take a look at some setups So the first thing that I want to do is take a look at what options traders have been doing today So everything that we've looked at so far other than book map is based on static data Spot gamma takes open interest data. It's updated once a day sometime overnight They take their that data apply their algorithms to come up with the levels that I was showing on the charts and The gamma notional all the other information. So now we're going to shift to the execution process go to real time So first of all, this is the hero chart hedging impact real-time options So this is showing me what options traders are doing and market makers are how they're hedging in real time This chart is showing price for SPX with a white line and the hero signal showing options trades of market maker hedging activity for a Combined signal of SPX spy XSP and ES futures So whatever form of SMB 500 year trading, this is the chart. You will really want to take a look at it It's the most complete The purple line is the hero signal when the purple line is falling that in Kate's traders are taking negative delta positions they are buying puts and or selling calls and Price usually responds so when traders buy puts for example market makers sell the puts and they have to Sell futures to hitch their delta exposure on the other hand a rising hero line indicates traders are Taking positive delta positions. They're buying calls and or selling puts Market makers take the opposite side and they have to buy futures to hitch their delta exposure So note their turnaround there about 1045 And again, that was at the lower day. They expected move Lower than the lower day. They expected move for SPX and around the lower day. They expected move for for ES All right, let's zoom in on this chart now and what I want to focus on is this move in the morning The setup short so remember there was an important data release high-impact data release at 10 a.m That's right here So note until then The SP 500 was chopping the NASDAQ was a little bit different. We'll see that in a minute Also the hero signal no clear signal there up and down and then right at the 10 a.m. Data release options traders start taking negative delta positions and Hero reverses lower and the SP 500 reverses lower Are this good book map and we'll take a look at the setup be zoom in on this event All right, so we know that traders started taking negative delta positions immediately after the data release These lines in the sub chart are showing CVD. That's the blue to pink line dark blue to pink The yellow line is showing stop orders those lines were almost perfectly flat until 10 a.m Then they shifted lower Also note this light blue line showing iceberg waters. It did shift slightly lower as well That indicates large traders were selling with iceberg waters they used to hide their size and the I Thought the best entry point was right there at the retest of the spy 493 level The volume dots are showing market buy minus sell Magenta dots indicate more sellers than buyers note all the aggressive sellers coming in right at 10 a.m Kind of weak buying the smaller green volume dots. So the magenta dots again are showing more sellers than buyers Green volume dots indicate more buyers than sellers. So there were a lot more sellers than buyers retest of the 493 level and price moves lower and Eventually all the way down to the lower daily expected move and that lower daily expected move I have it forty nine forty point five That's where ES So there's the short set up. Let's just zoom in on this So I thought it was a pretty easy read here and in book map break lower retest again of 493 And price continues lower as traders take negative delta positions Market makers sell futures and Aggressive sellers move Move ES lower. All right, let's take a look at See what's going now on now and as to be 500 We'll take a look at this reversal higher and then we'll move on to Nasdaq All right, so for the reversal higher right around 1045 See all the aggressive sellers all the magenta volume dots on the way down Stop run that's shown by the on-chart indicator Stop start to dry up get smaller and smaller So the all the red Dots there showing sell stop orders getting smaller and smaller Aggressive buyers start to come in that's shown by the magenta volume green volume dots and price moves higher and again remember in a positive gamma environment we're looking for Not looking for an all-day trend looking for a reversal at some point and the lower day they expected move is a Great place to look for a reversal reversal higher so again positive gamma environment Looking for mean reverting price action. All right, let's go back to hero now. Let's see what Options traders were doing around that time and note the shift in hero Traders start taking positive delta positions and price moves higher and I'm going to shift to puts and calls Let's see what traders have been doing during the day Note in the morning the blue line is showing puts Traders are buying puts market makers sell the puts. They have to sell Futures to hedge their delta exposure. Sorry about that. So right around 1045 they stop Buying puts start selling puts. They also start buying calls So note starting around 1045 both the orange line showing traders buying calls and the blue line showing traders selling puts Both start moving in the same direction And that's a very powerful direct directional signal Very difficult for the underlying product. Whatever it is to move against that So again starting right around 1045 Traders start buying calls and selling puts Market makers take the opposite side and they have to buy futures to hedge their delta exposure and then finally right around 1240 Call buyers take the foot off the gas wrong tool Call buyers take the foot off the gas and Traders had already started buying puts again And price consolidates Or let's go back to book map So now you can see price up toward the high of the day Before the data release So that move is complete Back up to the 4950 level and now prices consolidating as options traders Call buyers took their foot off the gas. They started buying puts again. So yes Back to the scene of the crime All right, let's take a look at NASDAQ now I'm going to zoom in on the The morning here and this was just a beautiful setup note in the case of NASDAQ Before the 10 a.m. Data release. That's right here NASDAQ was already making Lower highs So NASDAQ already weak and there were a cluster of levels there the 429 625 also the NQ 700 10 a.m. Data release Price breaks lower and the 600 level Good entry point for short also the QQQ 428 note aggressive sellers start to come in Show them by the magenta volume dots More magenta volume dots Pullback increase as price continues to make a series of lower highs and Then finally as I pointed out before ending up ending up at QQQ 425 the zero gamma level to the tick Which is pretty unusual for NQ such a large index a Large volatile index and notice during the time in this case of NASDAQ Both CVD and stops were Instead of being flat like e.s. We're moving slightly lower and then that shifted Lower after the 10 a.m. Data release All right, let's go take a look and see what options traders were doing now All right, let's go to first of all. We'll take a look at NASDAQ. So this is a combined signal for Ndx and QQQ zoom in on the morning and unlike the S&P 500 hero signal which was chopping up and down Hero was making also making a series of lower highs just like Ndx this chart is showing price for Ndx then break sharply lower After the 10 a.m. Data release All right, let's take a look at one other signal I'm going to take a look at this mag 7. So this as I said before this is a combined signal for Ndx and QQQ Let's take a look at this mag 7 signal and this is Something that I always look at a very Very important signal to look at For both especially the NASDAQ and also the S&P 500 So what this chart is showing this is another combined signal combining Options trades and market maker hedging activity for a combined signal for the stocks known as the magnificent 7 That's Apple Amazon Google Meta Microsoft Nvidia and Tesla and these stocks make up a very large component of The NASDAQ 100 especially also the S&P 500 So it's always important to see what traders are doing with these stocks and just a few minutes After the cash open traders started taking negative delta positions And in this case both price and the hero signal this is shown in terms of price for QQQ We're both moving lower and also making lower highs before the 10 a.m. Data release And then we'll take a look at the turnaround at 1045 Traders started taking positive delta positions and price responds higher Let's just separate outputs and calls see what traders are doing Blue line showing puts following blue line traders of buying puts. They suddenly stop So that line levels off So they stopped buying puts then Looks like around 1042 They start buying calls So right around that time they stopped buying puts That activity stopped and they start buying calls and price responded higher Let's go back to Come back to NASDAQ now, and there's the reversal higher at 425 Aggressive sellers on the way down All of the magenta volume dots CVD moving sharply lower Note in the case of that NASDAQ here where there was also a Stop run down shown by the following yellow line also the on-chart indicator and then One additional confirmation for NASDAQ is large traders buying with iceberg orders that shown by the rising light blue line So large traders were buying weakness. That's pretty typical of their behavior. They bite weakness sell strength Until they get what they want. So these are reasonably sized iceberg orders for NASDAQ that is 454 contracts in this case 11 executions if I zoomed into that level Those separate executions would be separated out So large traders buying with iceberg orders on the way down once they get their way icebergs level off and Aggressive buyers start to come in shown by the green volume dots and Then by stop orders shown by the small green dots start to fuel the move higher as traders were taking positive delta positions in NASDAQ as well as the mag 7 stocks. All right, let's go back to hero. So it looks like NASDAQ has returned to the Toward the high of the the cash session Trading between 428 and 429 Let's see what options traders are doing. So we're on the mag 7 signal. So note that has turned lower Starting 1245 so to two hours later Traders have started taking negative delta positions again. And so far NASDAQ is just consolidating Let's check the NASDAQ signal same thing 1245 Traders start taking negative delta does it now negative delta positions in QQQ and NDX All right, let's take a quick look at some stocks and then we'll get to the live market First of all, I want to take a look at AMD Note 180 is the call wall keygamma strike Pricer versus lower at that level Traders take neg as traders take negative delta positions No, the floor there indicating significant options activity This is a very typical pattern in the morning traders taking negative positive or negative delta positions in this case negative Somewhere between 1030 and 12 or so they take the foot off the gas and price consolidates Let's go take a look at the book map Go to AMD Wrong symbol. That's Apple. We'll go to AMD All right, so there's that 180 level reversal price moves lowers traders take negative delta positions Note liquidity in the chart here. This is the heat map and book map showing history the limit orders so in the case of AMD here This is showing limit buy orders Let's stay in the order book. This is very typical of a stock They stay and they come in the order book at 9 30 a.m Eastern time cash open stay in the order book until they're filled and These levels of higher liquidity act as magnets for price So now AMD trying to move higher Back up to the liquidity at 175 So far finding resistance there All right, let's go on Next stock. I want to take a look at as meta Remember how bullish that was last week. I think after reporting earnings. It was up 80 plus points So today it looks like traders may be taking profits falling hero signal Timely alert right after the cash open Traders take negative delta positions about till about 1015 take their foot off the gas And price consolidates now. It looks like they are Starting to take negative delta positions again. All right, let's go take a look at book map. Go to meta There's the move in the morning Pretty sharp move lower Now meta training at a pretty wide range. This is pretty typical price action of meta a sharp move recently Sharp move higher or lower and mostly higher for meta but today lower and Let's take a look at Microsoft Also moving lower Let's go take a look and see what options traders have been doing Go to Microsoft Pretty similar action. Note that 410 is the key gamma strike Traders take negative delta positions in the morning Price moves lower Take their foot off the gas and price consolidates one thing that you can do with this This type of pattern is to If you'd like to sell credit spreads or buy call spreads Often in the move higher Consolidation you can sell a call spread or buy a put spread Then on this type of move lower Sell a put spread All right, let me check for questions and Robert asks says nice Intel. Thank you. Do you have a live signal room? I do have a room in book map discord I really don't post it's not a live trading room. It's not a You know, that's not what I'm doing My intent here is to teach people how to use this information book map and spot gamma to To Find their own trades now I do post some information when I have more time I I will post if I see something That's interesting. I will post that in discord But this is a book map discord the option stash dug channel chat channel that is free and I don't Do not post live signals. I do post Helpful information, but again my intent here is to Rather than give people a fish for the day teach them how to fish themselves so they have a Skill the way of looking at the market they can use for lifetime and Caesar ask do you consider the options flow the chicken or the egg? Yeah, that makes perfect sense So like I said before I consider the options trades to drive price action. I think it is Let's just take a look at Let's go to meta I've just shown shown hundreds of examples of Of the way this works. So let's take a look at puts and calls So traders starting from the open We're selling calls in meta that's shown by the falling orange line. All right. Sorry about that I mean, this is just very obvious to me that Options traders are driving price action I know for sure that market makers want to remain delta neutral and When traders buy and sell puts and calls market makers take the opposite side and they have to hedge With stock so in this case Net for the day traders are Buying puts shown by the negative notion of value. They're also selling calls call sellers more aggressive and Market makers take the opposite side of those they have to Sell stock to hedge their delta exposure So if I'm a trader and I want to sell a call, I want to sell a call at 472 rather than 465 or 462 notice the call sellers just Stop at that level. So In this case of meta, it's gone down ten points No, not not much point in selling a call at that point Right so Caesar, I hope that makes sense I think options trades are driving price action and Caesar says it is unquestionable how it drives. It just makes me question everything I know about auction theory, but at the end of the day They are still buying and selling the stock the same direction as options so I've thought a lot about the auction market auction theory versus The way I'm looking at the market and all I'll say about that is that Again, I think options trades are a key driver of price action both in stocks Not every stock not all the time every day, but certainly in the stocks that I trade on a regular basis these large cap tech stocks Mag 7 plus a couple of others Options trades key driver of price action and when traders buy and sell puts and calls Market makers, they don't care anything about what price they're they're paying or selling All they're doing is hedging their delta exposure So they don't care about price. They don't care about prices too high or too low They're hedging their delta exposure. They want to remain delta neutral So they do whatever they can have to with the stock or with futures to hedge their delta exposure So that you know, that's the way I I see the market All right, let's go let's go back and First of all, if anybody has any stocks, they want me to take a look at please let me know I'll be glad to do that. Otherwise, let's circle back to the first of all the ESP 500 So now it looks like around 130 Traders have started taking positive delta positions Let's check the mag 7 so they're still Taking slightly negative delta positions in the mag 7 All right, so let's go take a look at the book map now All right, so Caesar. Let me know what you think about that All right, so the SP 500 Continues to consolidate and let's go Nanny wants to take a look at SM SMCI I don't have that a book map. We can take a look at hero So very bullish day here and SMCI Looks like it is Not quite up a hundred points for the day Let's separate outputs and calls. So this is almost guaranteed The traders of buying calls and this kind of move in a stock Oops, sorry my microphone slipped. Hope everybody could hear that. So I'm talking about SMCI Super micro computer Sorry about that All right, so again Caesar in case I wasn't clear I I think Options trades are a key driver of price many stocks Certainly this stock today traders are buying calls Market makers are selling calls and they have to buy stock to hedge their delta exposure notice also the call wall breach That's where most of the Calls are concentrated. That's also the key Amistrike So spot gamma assumes that for a stock traders are long calls market makers are short calls as that As those calls go further in the money, they're delta increases. So they're Delta is increasing market makers are short the calls. They have to continue to buy stock to hedge their delta exposure All right, great Caesar says it's clear Thanks, like you said Traders buying at any price market makers buying at any price Made a life light bulb go off for me. So yeah, it's a different way of looking at the market. It's a newer way That makes a lot of sense to me, all right, so let's go back and take a look at and nanny there you go very very bullish day and SMCI as traders buy calls and Call wall breach price goes higher Take a look at SB 500 Traders starting around 130 continue to take positive delta positions Go to book map. Sorry about that Having trouble with my pen tool All right, so now it looks like SB 500 may be trying to break out above the 4950 level remember now the call wall is at 5,000 so room to run higher for SB 500 also the Spy call wall is at 495. So again room to run higher For the SB 500 traders are taking positive delta positions Large traders now in this case They're buying strength with iceberg orders as shown by the Rising light blue line not significant size, but I like to look at the iceberg signal in the sub chart in some mode so I can see the the cumulative action Right, so SMB 500 again trying to break above the 4950 level All right, Steven says find the hero app so interesting Gives a different per second perspective on the options market on the markets movement. Yeah, it does it takes a Again, this is a newer way a different way of looking at the market and it takes some time to Maybe shift your thinking or thinking this way All right Abu wants to take a look at NASDAQ. Let's do that. So NASDAQ still can Stuck in this consolidation range between 428 and 429 Let's go back and check a hero see what options traders are doing Go to NASDAQ first again trouble with pen tool Gonna NASDAQ So the signal for the NASDAQ was moving lower starting to consolidate now Let's go to the mag 7. Let's zoom in a bit So maybe slowing down consolidating a little bit Let's just change change the look back period to Maybe get a little bit more clarity. So now instead of looking at the entire data Days worth of data for the hero signal. I'm just looking at the last 30 minutes So now the hero signal starting around 115 starting to shift higher Looks like price price might be responding So often in the afternoon, I do like to shift this Rolling window look back period to a shorter time frame to get Kind of eliminate the earlier day and just see what's going on right now So when we look at just the last 30 minutes, it looks like Traders may be starting to take positive delta positions in the mag 7. Let's check NASDAQ again so now when we take a look at the Shorter time frame traders are starting to take positive delta positions in In the NASDAQ signal as well All right So NASDAQ at the high end of this this range that started about 1230 At the 429 level Let's take one last look at the SB 500 then I need to Wrap it up for the day All right, so NASDAQ the SB 500 has definitely broken above the 4950 level and Note what drove the price higher?  I want to thank everyone for watching Thank you very much for your questions and comments. I really enjoy it when you when you're posting questions like this I love your questions Love this interactive sessions. So again, thank you very much for watching. Thanks for your questions and comments And I will see you tomorrow. Bye


Good morning. The US Institute for Peace is pleased to welcome you to a conversation on strengthening strategic stability between the US and China. This is a very rich and important discussion with many aspects, including the need to find ways to reduce the risks of military and especially nuclear conflict, the need to find ways to manage the tensions created by emerging technologies, and the need to find ways to prevent a destabilizing arms race. Last year, USIP convened a group of 12 leading security experts, six Americans and six Chinese, to engage in a series of dialogues and write parallel essays on the perception gaps, challenges and opportunities that impact strategic stability between our two countries. The report that we are launching today is based on these dialogues and essays. It shows striking differences, but also commonalities between US and Chinese assessments of the root causes of instability and the drivers of conflict. The report also offers concrete recommendations for consideration by Washington and Beijing. We are very pleased to have six of the report's authors with us this morning to share their findings. We invite everyone to engage with us during this conversation on Twitter with hashtag USIP China. With your permission, we are very pleased to introduce Dr. Patricia Kim, a member of our Chinese program at USIP and the director of this project. Dr. Kim will be introducing our speakers and facilitating our discussion. Patricia, over to you. Well, thank you very much, Lisa, and I want to thank our speakers and our audience for joining us today for this virtual panel and report launch event. My name is Patricia Kim, and I had the privilege of directing this project on US-China strategic stability for over the last nine months or so, and it's a real pleasure to be able to publicly share the edited volume that arose from the series of workshops that we held late last year with American and Chinese experts on how Washington and Beijing can enhance strategic stability in an era of growing strategic competition. As Lisa mentioned, our report features essays by 12 experts, six American and six Chinese, who contributed parallel essays on the drivers of US-China conflict and potential steps to shore up stability in the nuclear, missile, and missile defense, space, cyber, and emerging technologies realm. And a very interesting feature of this volume is that all of the authors were asked essentially the same set of questions on how they view each state's respective capabilities, the challenges and opportunities that they see for the United States and China to strengthen stability in their specific realms and to offer suggestions on concrete steps the two sides can take in the near term. So by reading these essays side by side, you can really see the gaps, some big and some small, as well as areas of common interests in US and Chinese perspectives, which I think many readers will find very useful. Although each of the essays in the volume stand on their own with their own distinct observations and recommendations, some common themes that repeatedly arose during our workshop discussions and across the volume include the recognition that US-China relations today are beset by a profound lack of trust and mutual skepticism of each other's strategic intentions. And the stark differences in the two states' nuclear doctrines, policies, and interests in arms control pose significant challenges to pursuing strategic risk reduction. In addition, the growing entanglement of conventional and nuclear systems and the potentially destabilizing impact of emerging cyber and AI capabilities have increased the risk of nuclear escalation. Also US-China strategic stability discussions are further complicated by the fact that they're not just bilateral in nature, but have critical implications for third parties, especially US allies, and are intertwined with regional challenges like the nuclear threat posed by North Korea. Many of the authors in our volume point out that the sharp deterioration in the broader US-China relationship and the disappointment, frankly, with past bilateral exchanges have impeded meaningful dialogue on security related issues and diminished the political appetite for cooperative measures. So recognizing these challenges, the authors broadly recommend that to strengthen strategic stability in the near term, the United States and China should recognize the growing dangers of military conflict, jointly affirm that nuclear war should never be fought, and work together to reduce the dangers posed by nuclear and increasingly sophisticated conventional weapons. All of the authors also recommend that the United States and China pursue sustained and substantive official bilateral dialogues in parallel track 1.5 and 2 efforts to increase mutual understanding and to begin exploring risk reduction, crisis management and arms control measures, and jointly work to establish norms of behavior and transparency measures, especially to govern the use of emerging technologies and to regulate developments in space, cyberspace, and the application of AI to military capabilities. And finally, the authors recommend that the US and China engage other key states in these efforts with an eye on strengthening regional and global strategic stability. So to go into greater detail on their respective chapters, five of the 12 report authors in addition to myself have joined this panel today. And we have Dr. Brad Roberts, who is the director of the Center for Global Security Research at the Lawrence Livermore National Laboratory and former US Deputy Assistant Secretary of Defense for Nuclear and Missile Defense Policy. We also have Dr. Tong Zhao, who is a senior fellow at the Carnegie-Chinghua Center for Global Policy. Professor Bruce McDonald, who teaches at SICE and served in the Clinton National Security Council, among many other government capacities, as well as at USIP. Dr. Jinghua Liu, who is the director of the Northeast Asia program at the Center for Humanitarian Dialogue, a retired PLA colonel and an expert on cybersecurity issues. And last but not least, Professor Qihao Ten, who is assistant professor at the School of International Studies at Peking University. And I also want to recognize the six other authors who are not with us on this panel today, but contributed excellent essays to the volume. And on the US side, the authors include Frank Rose of the Brookings Institution, Dr. Laura Salmon of the Stockholm International Peace Research Institute, Dr. Adam Siegel of the Council on Foreign Relations, and on the Chinese side, Professor Li Bin of Qinghua University, Professor Zhang Tianjiao of the Fudan Development Institute, and Dr. Guo Xiaoping of the China Institutes of Contemporary and International Relations. Now with that, I'll turn over to our panel of authors for a moderated discussion before we open up for Q&A. And I want to encourage members of the audience to begin submitting your questions through the event webpage on usip.org. All right, so the first question is for Brad Roberts, who, along with Li Bin, authored the chapter that provides a broad overview of US and Chinese conceptions of strategic stability. Brad, can you walk us through how thinkers in the United States and China conceptualize strategic stability? What would you say are the key differences or areas of convergence when it comes to US and Chinese conceptions? And what are some of the major roadblocks in your view that have prevented the two sides from advancing concrete measures to enhance stability despite years of dialogue? Brad? And you'd like me to do that in three minutes. Thank you. It is often said that the United States and China take different views of strategic stability, that the United States has a narrow view focused on its traditional concerns in the nuclear area about crisis stability and arms race stability. And in juxtaposition, China takes a broader view, goes the argument. It looks more at the structure of the international order and the nature of the nuclear problem it confronts in that order. There is some truth in this conventional wisdom. But at core, we share similar concerns about a desire to avoid instabilities that might lead to war and that might lead to nuclear conflict in war. So more similarities actually than differences, in my view. China is concerned fundamentally about the developments in the US strategic posture, its missile defenses and its conventional strike capabilities in particular. They call into question, or might call into question, China's confidence in its own nuclear deterrent. This is a very traditional or, quote, narrow understanding of the requirements of strategic stability. Where we have diverged is in our concerns about who's doing damage to stability as it currently exists. Who's making the situation more stable or less stable? And China's analysis is that US actions are the ones that make the situation less stable and more dangerous. Missile defense, conventional strike, for example. And the American view is that China's lack of transparency amidst a major buildup of its nuclear and other strategic capabilities is itself a source of instability. What are the barriers to narrowing these areas of disagreement? Well, we're not talking much. And when we're talking, we're not talking very effectively about these problems. The US contributes a barrier, which is we as a nation have been unwilling to answer China's most basic question, which is, does the United States accept mutual vulnerability as the basis of the strategic military relationship with China? We accept it with Russia. We reject it with North Korea. We've been ambiguous about China. That's a barrier to closure. And China also contributes something as a barrier. And that's this pursuit of more substantial, more diverse, more modern nuclear capabilities in a context of very limited transparency. So I hope I hit your three-minute mark. Great. Oh, that was excellent. And I realize it's a big question and possible to answer in three minutes, but you certainly got a soft choke at start. So you talked about some of the challenges in the roadblocks that have prevented advancing more concrete measures. What would you say are the opportunities for getting there in this era of growing strategic competition? What steps would you recommend that leaders in Washington and Beijing take in the near term? Well, it's a classic American answer talk. It's a part of our strategic culture that we believe we can tackle these problems, or at least understand them, but maybe mitigate them, maybe ultimately make them go away through dialogue. And the dialogue between our two governments on these topics has been very limited. Dialogue at the unofficial level, Track 1 and Track 2 and Track 1.5, has been more substantial and robust, but it hasn't translated into official dialogue. If we were to actually start talking at the official level about these matters in a sustained and substantive way, I think there are a couple of starting points. We should agree to disagree about the past and set it aside. Every discussion relives the argument about Americans' missile defense ambitions and China's no first use policies. And we should just agree to disagree and move into the present and the future. And secondly, we should stop asking each other to do things we know the other's not going to do. China has asked repeatedly that the United States abandoned its missile defense project in East Asia. It's not going to. The United States expects some changes in transparency practices by China that are just not going to happen for the time being. So, setting aside the old agenda and coming to a new agenda would serve us well. Great. Thank you, Brad. I'm going to turn now to Tong Zhao, who with Bruce McDonald contributed essays on conventional missiles and missile defense, both of which have been points of contention in the U.S.-China discussions about strategic stability. These discussions are further complicated by the fact that they're not strictly bilateral in nature, as Brad alluded to, but involve the security interests of U.S. allies in the region who face a growing missile and nuclear threat posed by North Korea and are also worried about an increasingly militarily capable and assertive China. So, Tong, can you walk us through some of the challenges that have stood in the way of risk reduction and arms control measures when it comes to conventional missiles and missile defense? Sure. And let me focus conventional missiles to start with. I think one obvious obstacle is conventional missiles are viewed as critically important for both China and United States to achieve their national security interests. In the case of China, China's conventional theater-range missiles play a very important role in China's plan to defend these territorial claims in the region and to achieve its national goal of unification with Taiwan. And also there is, unlike nuclear weapons, there is no international taboo on the development and employment of conventional missiles. It is viewed as a fair game for countries to compete in the development of conventional missiles and it's okay for countries to actually employ these capabilities. So, these are for real war fighting which makes such capabilities actually very dangerous and risky. And both US and China feel very confident in their capability to eventually out-compete the other side. China has a lot of experience in developing and employing these capabilities and the US has confidence because it has maybe better expertise and technological capability in the long run. So, that self-confidence is also driving arms competition dynamic. And internally in the United States, for example, it is widely agreed that conventional missiles will be very important for the US to check the perceived regional military threats from China. So, it's hard for people to argue against investing in such capabilities. And in the case of China, there is lack of domestic checks and balances on national investment into conventional missile capabilities. The lack of domestic check and balances is another driver in this bilateral competition. And lastly, I think if we look at theater range conventional missiles, in some cases, there is an increasing degree of entanglement between conventional missile capabilities and the nuclear missile capabilities. And that creates new risk of misunderstanding during crises and could lead to even inadvertent escalation. But currently the decision makers have not have not been fully aware of the potential risks. So, the obstacle is how do we raise awareness of the risks before we can take unilateral or cooperative measures to tackle those risks. Thanks. And in your essay, you talk about another concerning aspect of all of this. And that's an action reaction cycle between the United States and China that could lead to a costly strategic arms race. And you make the case that it's in both states' interests to prevent such a dynamic. What would you say are some of the factors that are driving this action reaction cycle? And what are some concrete steps that the two sides can take in the near term on this? Well, I think in terms of the development of advanced conventional missiles, in some cases, the programs are really driven by available technologies. Simply because, for example, the technology of hypersonic missiles are becoming available. Therefore, countries invest in them due to the perceived military potential that these technologies might offer in the future. But in fact, these investments are not sufficiently driven by specific and concrete military needs. So, it is a technology-driven program, and that makes it more likely to lead to action reaction cycles. China is watching the United States investing in such capabilities, and the Chinese investment will then cause concern in the United States. So, I think firstly, both countries need to do their own homework. They need to really study what are the real military objectives that these technologies could serve. So, that's the first step. And secondly, even though it's hard to talk about numerical limits on these capabilities in near term, the two countries can certainly work towards limiting the most dangerous methods of employing such capabilities and developing the most risky types of technologies. For example, do we want to have nuclear and conventional, dual-capable hypersonic missiles in the future? It's time to have such discussions before any country has already started acquiring these capabilities. And another, I think, important example of this action reaction cycle is about the issue of missile defense. U.S. missile defense is really driving China's investment into its strategic capabilities, and China's development of greater strategic capabilities is again causing American concern and making U.S. worry that China is moving towards a more aggressive military posture. And the impact of third-party players, in this case, North Korea, is also increasingly important. North Korea's nuclear program is driving U.S. missile defense, which is then causing China to react by putting more investment into its offensive capabilities. So somehow U.S. and China needs to discuss how they can work together to contain North Korea's nuclear program. But in addition to working on addressing the North Korean threat, U.S. and China can start some near-term joint study. For example, they can jointly examine whether it is technically feasible for the United States to develop and deploy a strategic missile defense network that can only deal with the North Korean long-range missile threats without undermining China's strategic deterrent. I think that joint study using open-source data can be very helpful in mitigating unnecessary threat perception in a bilateral relationship and can contribute to some competence. I think there are other steps, but because of time limit, I will stop here. Great. Thank you, Tom. I mean, you've put some really interesting ideas on the table, and I'm sure there might be follow-up questions on that. But I'm going to turn to Bruce now, who I mentioned contributed the parallel essays to Tom's on conventional missiles and missile defense for the volume, but he's joining today in his capacity as an expert on U.S.-China space competition. And so in our volume, we had Frank Rose and Bo Xia being talk about the heightening U.S.-China strategic competition in space. And so, Bruce, can you walk us through from the U.S. perspective some of the concerning developments in space and the challenges to reducing U.S.-China risks and pursuing arms control in this particular domain, if that makes sense at all, and if this is something we should be looking at? Sure. Thank you, Patty. This is a matter of growing concern within the United States, the competition, the potential for conflict in space. The United States has far-flung allied responsibilities to many tens of countries, and given this worldwide commitment, we are exceptionally dependent upon communications and intelligence that our satellites gather for us. And so as a result, we are sensitive to issues of their vulnerability. China has developed a series of, a robust series of ground-based anti-satellite weaponry that poses a real danger to the United States space assets on which our forward-deployed forces depend. So this is a matter of some concern. Now, notice that I say ground-based weapons, not space-based. China and Russia have been, they're inclined to talk about space-based weapons and banning space-based offensive forces in space. But the reality is that most space-based weapons are highly vulnerable to attack, whereas ground-based systems, the kind that China has really focused on, and understandably from a technical point of view, that China has systems that are ground-based and are much less vulnerable to attack. Even China's first ASAP test was not a space-based weapon, but it was a ground-based weapon, as are, as I said, most of their counter-space weapons. And Chinese military writings make clear that the PLA sees this and understands, well understands, this U.S. dependence on its space assets as a vulnerability, given that most of our allies and the threats they face are thousands of miles away from the continental United States. And so China's arsenal of these ground-based space weapons pose a direct challenge to U.S. ability to help defend our overseas allies and are a big and growing worry for the United States. In particular, these U.S. satellites that provide important intelligence information, and the Chinese ASAP capabilities are a big worry. Now, that all said, there is the potential for doing something about that. And talking, I think one thread that goes through all of the essays is the matter of dialogue and discussion. And it would be great if the United States and China could resume its space security talks, the last edition of which were held in December of 2016. And it would be a marvelous thing if we could do that in 1.5 and 2, track 2 dialogues that I participated in on this subject. I think that there's a kind of a, there's a hunger on both sides to at least get the conversation going and sustain it. So I'm, I'm, I'm hopeful there are real challenges, but I'm hopeful. Great. Thanks. In our workshops, the issue of orbital debris featured prominently and many of our experts made the case that it's a serious concern that threatens the space systems of both nations and a potential opportunity for U.S.-China cooperation. Can you explain to us briefly sort of what, what is orbital debris? Why is it a problem? And how can the United States and China begin to address this challenge? If there is one issue that makes overwhelmingly good sense for the United States and China to pursue together, where our interests are very, very similar, it's the area of orbital debris. Orbital debris is in a way almost what it sounds like. It's a, it's trashed up in space. It consists of old, non-functioning satellites, the upper stages of the launchers that boost those satellites into orbit. And then from just operations there, bits and pieces will fall off. You say, well, what, what are bits and pieces? But these things at low Earth orbit are orbiting at 17,500 miles per hour. Even in the space shuttle, they found a fleck of paint gouged a big hole into the windshield of the space shuttle. Because when you're going 17,000, a federal miles an hour, you can create a lot of the, a lot of damage. And so if there's one thing, China, the U.S., and all space-faring nations have an interest in curbing space debris. One hopeful trend is there are even some private sector companies that are looking at the problem of, is it possible to clean up orbits in space? And one more technological challenge here is that in a good trend, the United States and China and other countries are looking at deploying what are called megaconstellations of very small satellites. But each one man's satellite is another man's debris. What do you do when these things reach there at the end of their useful life? And we have thousands, tens of thousands of these small satellites before long will be orbiting up there. It's a, it is a big problem. And if you have collisions, the collisions can produce still more debris. I mean, this is a problem for every country to deal with. And, and again, for China and the United States, we have, we have a similar concern. And the one thing is that there has been internationally some attention drawn to this, but nowhere near enough and a lot more steps are needed. We keep in mind that when China did its anti-satellite test in early 2007, that increased amount of debris with that one shot, one test by 15%. If we have any more of that, it's going to be a serious problem. I mean, one norm that we can maybe agree to, I hope, would be simply to not have any more tests of anti-satellite weapons that smash into and create debris. That's just unnecessary. There's been a de facto norm on that, although India conducted the test not too long ago. Although even there, India was careful and they conducted the test so that the debris would fall out of orbit very quickly. Not always the Chinese ASAD test debris will be in orbit for the next hundred years. So, and to its credit, China has not repeated a test like that. I think that there's a real possibility for joint cooperation on the field of space debris. Great. Thank you, Bruce. My next question is for Jinghua, who along with Adam Siegel wrote essays on the cyber domain, which is also becoming an increasingly salient domain of conflict with the potential for clashes in cyberspace to escalate into kinetic conflict. So, Jinghua, in your chapter, you talk about some key challenges and risks that the United States and China face in advancing stability in cyberspace. Can you give us a brief outline of these challenges and risks that you talk about? Sure. We all know that the issues in cyberspace has been already very complicated, but when it's interweaves with nuclear, it just adds more complexities. So, let me start from the difficulties in cyberspace. The first is because of the inherent nature of cyberspace, it usually makes it extremely difficult to understand the real time attribution and the capability to differentiate between cyberspionage and cyber attack, and also very difficult to control the damage of cyber activities. And because of the tensions between the two countries, when there is some cyber activity detected, it's very easy for one side to think that this is attack rather than espionage. This is deliberate rather than just a mistake of being over several activities to think this is being done by the other country or being done by the other country rather than being done by some other actors. So, the second challenge we have to face is China and U.S. are actually assizing their capabilities in cyberspace very differently. China view itself as a relatively weak side thinking that U.S. understands that China is not that ambitious and will not benefit from being pre-emptive, but U.S. seems to feel that very differently. They think China has already been quite similar in terms of capabilities. So, they really think China is very ambitious and also U.S. feels itself especially vulnerable because it's more dependent on cyber infrastructure. And the third challenge we have to understand is the third party. Unlike some other domains, we don't know who is the real originator of cyber activities. So, third parties can take advantage of that. And also, the two countries can use that to try to vary their intentions. And when it gets to the cyber nuclear dynamics, there are two, another two challenges that's really worth attention. The first is the lack of communication between the two domains because of the modernization of nuclear capabilities. We know there are more cyber vulnerabilities there, but no one can really understand it. So, there will be more motivations and more concerns. And also, the two people in two domains are viewing the security in a very different way. Cyber space, people always think the tax is something very normal. But in nuclear area, security means the real attack. So, cyber people may not understand how much threat they have posed, but people in nuclear arena will also over-interpret the intentions of cyber tax. So, let me stop there. There are a lot of challenges, so I hope that is helpful. Great. Thank you, Junhua. So, you listed out a variety of challenges and you talked about the issues of transparency in the cyber realm. And you make the case that in your essay that even if complete transparency of capabilities isn't possible, we might work towards transparency of intentions or postures as well as crisis management mechanisms and potential self-restraints to serve as stabilizing forces. Can you walk through some of the measures that you recommend in your paper that Washington and Beijing adopt to mitigate some of the challenges that you laid out? Yes, thank you for that question. So, I think there are quite a lot of things we can do. The first is just like you said, it's very important to understand each other at least about their intentions. So, I think the first thing is about to build a trust. It's not really, it's not so realistic to think the two countries can become friends again, but at least they can convey the basic understanding that no one is interested in starting a war with the other side, especially a nuclear war. And the second is about whether we can do some steps to improve the crisis management, like whether the two sides can have some track 2 or track 1 dialogues to identify those activities that are really destabilizing or the activities that can help stabilize the situation. And also about crisis management is important to expand the current collaboration on information sharing. We have some information sharing mechanism between the two source computer emergency response teams, but the strategic level information are not included. And also, I think the two countries can think of expanding the previous ifers about CBMs. They have two MOUs, a modification of major activities and user behavior in maritime and air encounter, whether we can think of expanding that into a separate space. And also, I think it's really important to have more chances for people from cyber domain and the nuclear war to talk with each other to understand the other side's basic logic and concerns. And the third idea I think that could help is to have some restraints. It can be mutual, but it also can be unilateral. So there could be some mutual agreement not to conduct cyber intruders into each other's nuclear command and control system. And they can also agree with each other that the cyber operations will be under the authorization of the high-level leaders from both sides. And they can also think about some measures to oversight the third party activities. And last but not least, the two countries should not give up their efforts on promoting international rules and norms in cyber space. It may be not directly relevant, but it will build trust and also promote stability in cyber space. So let me stop here. Great. Thank you very much. Finally, last but not least, we will turn to Chi-ao Tian, who is our expert on AI. And as Chi and Laura both point out in their respective essays, rapid advancements in artificial intelligence and its incorporation into military capabilities by both the U.S. and China have raised concerns about the impact of AI on current and future conflict dynamics. So, Hao Tian, can you describe for us where the United States and China are in terms of military applications of AI and the risk to strategic stability posed by these advancing capabilities? Sure. Thank you, Patty. The efforts of AI-enabled military modernization in both the U.S. and China share actually many features of structural, doctrinal, and technological transformations. As my dear colleague, Dr. Laura Selman, pointed out, the integration of AI in military capabilities in some areas, for example, nuclear forces remains limited. And yet we both believe that the two militaries are receiving increasingly stronger political and financial support, although the economic conditions and budget politics in both countries have actually been creating constraints. The both militaries invest very heavily and systematically in a series of projects in different mission areas and domains, such as autonomous command and control systems, predictive operational planning, a better fusion of intelligence, surveillance, and reconnaissance where ISR, decision support systems, indications and warning systems, amend vehicles and weapon systems with significant AI-driven components. So, all this development of AI-enabled capabilities have given rise to lots of concerns. We believe that, broadly speaking, the concerns can be categorized into several broad topics, safety and reliability, the use of AI in high-risk contexts, such as nuclear AI nexus, third transparency with respect to strategies, principles and doctrine, etc., fourth, accordance with international law, and then proliferation of AI military technologies. All these concerns include both technical risks, such as system errors or mistakes, a lack of relevant training data bias in algorithm or training models, as well as risks associated with human decision makers, such as human-machine interaction fields, and the potential for AI to compress decision cycles beyond the capability of humans to respond. In particular, we focus and pay attention to some specific issues that potentially influence or even can shape future strategic stability between and beyond the two countries, such as some inherent limitations of AI in the current state where someone would put in narrow AI, which largely relies on high-quality data for training. But when training data is limited, artificial neural networks are prone to making poor generalization, and system training with specific data sets are susceptible to adversarial attacks, biases, and data manipulation. And also a question of human-machine interaction. As many observers and practitioners point out, in various occasions, there's a lack of explorability, which creates uncertainties in human-machine interactions. Most algorithms are still in a black box stage. It's difficult for us to fully understand and assess why an AI system has made a particular choice, especially when it behaves unexpectedly. And also we focus on the new dynamics in nuclear AI nexus. Advancements in AI may give leading powers, leading nuclear powers, greater opportunities to limit the deterrence capabilities of a minor power. And that will create some cycling new dynamics, which leads to new type of instability in strategic balance. And also there is a question of borderline between conventional and nuclear forces, which is also being created problems with the rise of AI. We can discuss all these issues in more detail, but all in all, we believe that both beneath and beyond what is going on in the development of concrete projects capabilities, there's a kind of new system of language and understanding being created by state practices in AI-related capability. But neither side is effectively able to translate the signals sent by the other. And a similar dynamic could also be found in history when there was major technological and associated doctrinal strategic transitions in military and security domains. And that's why we think that it's a point of time that we really need to build some confidence-building measures and take concrete steps for better governance. Thanks, Haktian. In terms of confidence-building measures, as well as the strong interest that you talk about, that two sides have in developing common understandings of the implications of AI for the future of warfare, what would you say are some concrete steps that Washington and Beijing can take to address the concerns that you laid out in your answer to the earlier questions, and what kind of specific topics or agreements do you think should be prioritized in bilateral and or in multilateral settings? Both Laura and I believe that two countries should, broadly speaking, start establishing systematic confidence-building measures and develop a shared understanding of what a future AI-enabled military transformation might entail, as well as its strategic impacts. And in addition to that, a concrete step in the near term, we think is a direct talk. We may need more direct dialogue in the near to medium term, although there are many dialogues existing between the industry experts, academia, the same time in and between, both in and between the two countries, like what we have been doing over here. But more direct exchanges around the diplomats, military leaders, AI researchers, and multidisciplinary scholars is crucial for fostering mutual understanding and opening avenues for future cooperation. In the long run, there are some both not very feasible and feasible steps that we can envision and take. Transparency in the long run is crucial to building confidence between militaries. You can assist each other in assessing actions of coercion, concern, and avoid misperceptions which could lead to unintended escalation. There are some feasible things in the long run that we believe we can do. For example, the two sides can sit together and define and rep order some areas of concerns that each has with regard to the other. In addition, there is a shared interest in the counterproliferation of lethal autonomous weapons or laws. Given the broader political climate between the two nations at present, some things are not very easy. For example, it will be very beneficial and should be taken when circumstances allow that China and the United States increase transparency and it has mutual regarding their AI strategies, doctrines, and other related documents. But at present, it's probably very difficult to achieve that step. But just as JFK stated on the mission to moon, we do these things not because they're easy. He said that for winning a competition and we think that we need this idea now for regulating a competition. Laura, I will stop here for the Q&A session. Great. Well, thank you very much, Haotian. And I just want to thank all the authors for their initial remarks and we're getting a lot of questions in the chat function. And so if we're audience members, I encourage you to submit your questions and we'll be monitoring the box. But one of the themes that's been coming up in the chat box is the need for mill to mill dialogues, for track one dialogues between the United States and China to mitigate risks. And among many of the questions, people are asking, well, is there willingness in both countries to reinvigorate these channels? And Brad talked about this a bit earlier and how why there have been hiccups in previous dialogues and the disappointment with lack of progress. I want to turn to maybe our Chinese participants and ask, what would you say are the necessary conditions for Beijing and Washington to be able to engage in sustained and high level dialogues on strategic stability or broader conflict related issues? How ready do you think the two sides are and what could they do to lay the groundwork? So let me see if I could turn to Tong to get at this question first. And then maybe we can circle back to the American side to see if there are ideas as well that they'd like to put forth. So, Tong, over to you. Sure. Thank you. That's a great question. Given the great power competition between the two sides, it's really hard for countries to be really interested in restraining their capability to develop new military technologies. They are also unlikely to be interested in numerical limits on their strategic capabilities. But I think if you frame the framework of discussion not as arms control or numerical limits, but as strategic stability, just as this project does, or to emphasize the issue of risk reduction, I think on those topics, there are certainly very strong mutual interests and China very clearly recognizes that mutual interest. And there are a lot of things that I think can be done in order to strengthen strategic stability or to reduce risks of conflicts, including nuclear conflicts. And many of these measures involve new technologies that are covered by this project. So I will stop here without going into the specific technological areas, but I just say that it depends on how we frame the discussion and which specific issues we start with. If we are smart with it, we can do a lot of productive cooperation together. Great talk. Thank you. I'm going to actually turn it to Brad. Brad, I know you mentioned initially that one way that the two sides can maybe have a more productive conversation is to set aside demands that the other is not likely to embrace. Do you have some other suggestions for how to make a substantive and sustained Track 1.5 or one dialogue, given that you've been involved in many of these for years? Well, I think the substantive agenda is well set out in your product, Patty. It's comprehensive across these topical issue areas. It involves exploring mutual risks and mutual obligations to reduce those risks. I think there hasn't really been any great uncertainty about the content of a dialogue if we were to launch one. The reality is that the government of China has not seen it as in China's interest, and this is in part because your formulation, Patty, that we have mutual risk and it's important to reduce them, that hasn't been the traditional way of Chinese thinking about this, Chinese government way of thinking about this. China's government has been interested in creating more risk for the United States, because this is essential to deterrence, and China has feared the use of American military supremacy in ways that would touch on core interests in Chinese sovereignty. Now, we may be at a tip over point here where there's sufficient interest in risk and shared risk and reducing risk that new things are possible. Let me add one point on your question about how ready are we for this? How ready is the US? This project has brought out vividly the high quality of thinking in China on these questions. The papers are all excellent, the discussion was excellent. China has invested in the institutions and the people and the intellectual capital for this kind of dialogue. We held up our end of the bargain on the American side, but this isn't an area where the US has put much focus, investment, interest, and created much intellectual capital. We've heard from both Moscow and Beijing a general disinterest in dialogue in this area, so we put good people on to other topics. We have a little intellectual capital to create of our own in order to enable the needed dialogue, and kudos to the Peace Institute for putting some new ideas on the table in that direction. Great, thank you. I actually have a question from the chat that would be perfect for Bruce and Jinghua. So let me read it out for you. Is there a way for the United States and China to set rules to diminish the danger of a cyber war or a space war? So let's turn it to Jinghua first for her answer, and then I'll go over to Bruce. Oh wow, I think this is a good question, and I think this is why we are sitting here to try to think of, but I have to say that goal is still a bit ambitious in the current stage. Like I said before, there are still some very basic differences regarding whether there should be a militarized cyberspace, whether we should go to talk about rules regulating cyber operations or whether we should discuss more about how can we bring cyberspace back to a peaceful domain that can benefit every country. So, but the risks are already there, and so for me, I would say we should, maybe we should start from setting up some frameworks or dialogues to firstly understand each other's major intentions and explain their policies together and try to know what are the goals of the other side, and then we think about what are the shared risks and then think about how to mitigate them. So I agree that they are it's very important to talk about rules regulating operations, but I'd like to start from the more basic step. Thank you, Bruce. We are, if I were to sum it up, I would sum it up in two words. One would be for, especially for first steps in getting started would be norms and vulnerabilities. I think that there is a crying need to establish norms. Sadly, in the United States for space, sadly, in the United States, there was reluctance on the part of our defense department that seemed to me to be willing to engage on establishing norms, even though in air and maritime environments, there are rules to the road and norms of behavior, you want to reduce the possibility for inadvertent escalation. And I think there's a very productive discussion that we could have with China in that area. The other way is understanding, and Brad, I like particularly your comment about about risk and that China in some ways wants to increase United States risks, but that in the U.S. space structure, there now is a much greater appreciation than there was, say, a decade ago for the nephesis of resilience, so that the idea being to reduce the temptation for an adversary to want to initiate a hostile action. For example, to cite my colleague and for an author of the space, one of the space chapters, Frank Rose, he said the United States needs to stop building big fat juicy targets in space, and we're doing that with going through a disaggregated satellite structure so that it's much more difficult to gain a decisive advantage. So I think that the United States, for example, can do unilaterally, but the idea of norms and rules of the road is something that needs to be done cooperatively. That won't answer all our problems and not guarantee that you won't have isolation, but it sure would be a positive step in the right direction. Great. Thank you, Bruce. I have a question for Haotian. Haotian, in your essay, you talk about how AI was a very complex topic, and if you were to, you really need to bring a lot of different types of people into the room to have good conversations, whether it's industry experts or academics or military leaders and so on. Who do we need to engage? Who should be at the table? And what are some existing multilateral mechanisms that might be good venues for engagement between the US and China on the topic of AI? Thank you, Patty. I think I will start with what we are starting with with this group of excellent people and minds, because we are really still at a very early and initial stage of building a governance framework or frameworks. But more than often, we from different countries, different areas, different disciplines or different backgrounds cannot even reach agreement on even the meanings of very basic principles of AI governance. So what kind of people do we need? I think I would like to share one of my observations on one issue that AI observers in the United States care very much about the development in China, which is the military-civil fusion. The American observers tend to see this term in an active tone or as a way that China accumulates power from the market, from the civilian sectors, to increase military power, military might. It is not incorrect, but I will not say that the civil military fusion, per se, in China, also in the US in a different way, necessarily increase difficulties of security governance. There is both technological and social aspects of this fusion happening. The fusion has been helpful actually in nurturing a culture of professional and technically speaking acceptable level of transparency from the China side, for example. So if I bring a group of people here, I think that's the major goal of having the civilian, the military, the industry, and business research communities discuss together is to nurture this culture. And I think this culture and the habit of transparency of dialogue is also something that in the previous questions, very fundamental to a better interactive pattern between the two countries. Great. Well, thank you very much, Haotian. And on that note, we are at time, and so we're going to have to conclude our event today. But I want to thank all of our speakers for really thoughtfully working us through so many issues in just one hour. Again, I want to encourage folks who are tuning in who haven't seen the report yet to please go to the USIP website, take a look. There are fantastic essays by all 12 authors that really go into much greater depth on what the US and China need to do to shore up stability in across six domains. And so please go and take a look. I want to thank all of our speakers for joining today, especially our speakers who joined from China. I know it's a late hour. So appreciate you coming. And again, it's just a real pleasure to be able to launch this project after working together for nine months. And so my deepest appreciation again to all of the project participants, the authors, the USIP staff who made this possible, and Lise Grande who joined us today to open up this event. All right. So with that, I will bring the meeting to a close. Thank you again. And we look forward to keeping in touch.