Positioning & Flow
Gamma Exposure (GEX)
Also called: GEX, dealer gamma
Gamma exposure aggregates the gamma of all open option contracts on an underlying, weighted by open interest, to estimate how much stock dealers must buy or sell to stay hedged as price moves. Positive GEX tends to dampen moves; negative GEX tends to amplify them.
The common convention assumes dealers are long the calls customers sold and short the puts customers bought, so call gamma counts positive and put gamma negative. When net GEX is positive, dealers sell into rallies and buy dips to stay delta-neutral, which suppresses realized volatility and pins price near high-gamma strikes. When net GEX is negative, hedging flows chase the move and volatility expands.
GEX is reported per strike as well as in aggregate. The "gamma flip" is the price where net GEX crosses zero, and strikes with the largest positive gamma act as magnets into expiration. Because open interest is published once a day and dealer positioning is inferred, GEX is a structural estimate rather than a measurement.
Formula
GEX ≈ Σ gamma × open interest × 100 × spot² × 0.01, calls positive and puts negative: dollar hedging flow per 1% move
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Frequently asked questions
What does negative gamma exposure mean for the market?
Dealers are net short gamma, so their hedging buys strength and sells weakness. Moves in either direction tend to extend, and realized volatility usually rises.
Why does GEX change so much on expiration days?
Large blocks of open interest expire, removing their gamma from the aggregate. Monthly and quarterly expirations can flip the sign of net GEX and unpin price.