Gamma Exposure (GEX)

What is Gamma Exposure (GEX)?

Gamma Exposure measures the concentration of gamma at specific price levels where market makers must hedge their options positions. This hedging activity creates predictable buying and selling pressure that forms support and resistance levels.

Key GEX Mechanics:

Market makers maintain delta-neutral positions
High GEX levels require aggressive hedging
Hedging flows create price level magnetism
GEX polarity determines market behavior

Example: High call gamma at $100 means market makers will buy stock as price falls toward $100, creating support.

Positive vs Negative Gamma Environment

🟢 Positive Gamma Environment

Market makers are net long calls

• Price drops → MM buy stock (support)
• Price rises → MM sell stock (resistance)
• Result: Range-bound, low volatility

🔴 Negative Gamma Environment

Market makers are net short puts

• Price drops → MM sell more stock (acceleration)
• Price rises → MM buy stock (momentum)
• Result: Trending, high volatility

GEX Market Impact Simulator

See how market maker hedging affects price action based on GEX levels:

Current Stock Price:

GEX Level:

GEX Magnitude:

Gamma Environment:

GEX Trading Scenarios

Scenario 1: Positive Gamma Support

Setup: Stock at $102, large call gamma at $100

Action: Price drops toward $100

MM Response: Buy stock to hedge calls → Creates support

Trade: Look for bounces off $100 level

Scenario 2: Negative Gamma Acceleration

Setup: Stock at $98, large put gamma at $95

Action: Price breaks below $98

MM Response: Sell stock to hedge puts → Accelerates decline

Trade: Follow momentum toward $95

Advanced GEX Analysis

Factors That Amplify GEX Impact:

High open interest at strike levels
Low market liquidity conditions
Options expiration proximity
Institutional flow concentration

GEX Flip Zones:

Areas where gamma environment can rapidly change from positive to negative (or vice versa), causing dramatic shifts in market behavior.

Risk Warning: GEX effects are strongest during regular market hours when market makers are most active. After-hours and low-volume periods may not follow GEX predictions.

Reading GEX Charts

Key GEX Indicators:

GEX Magnitude: Size of potential price impact
Strike Concentration: Number of strikes with high gamma
Time to Expiration: Urgency of hedging needs
Volume Profile: Actual trading activity confirmation

Pro Tip: The strongest GEX levels often occur at round numbers ($100, $105, $110) where retail traders concentrate their options activity.

GEX Strategy Integration

Combining GEX with Technical Analysis:

Use GEX levels as entry/exit points
Confirm GEX support with volume
Watch for GEX breaks as trend signals
Time entries around options expirations

Risk Management with GEX:

Size positions based on GEX magnitude
Set stops beyond significant GEX levels
Monitor changing GEX throughout the day
Be aware of gamma squeeze potential