What is gamma exposure?

Gamma exposure (GEX) estimates how much options dealers may need to buy or sell the underlying market to stay hedged as price moves.

Why it can matter

Market makers who sell options usually hedge with the underlying. How much they need to adjust that hedge as price moves depends on gamma. When dealers are net long gamma, they tend to sell into rallies and buy dips, which can dampen volatility. When they are net short gamma, hedging can push in the same direction as price, which can amplify moves.

The three levels

Gamma flip

The price where estimated dealer net gamma changes from positive to negative.

Call wall

The strike with the largest positive gamma. Price often slows or stalls near it.

Put wall

The strike with the largest negative gamma. It is often watched as an area of support.

Why "pin"?

Into expiration, price sometimes gravitates toward strikes with heavy open interest — traders call this pinning. That is where the name Pin Levels comes from.

Limits

• GEX relies on assumptions about who holds each position. Those assumptions can be wrong.
• Levels are calculated from the prior session's data. Positioning changes during the day.
• News, macro data and large flows can override any options-positioning effect.
• Nothing here predicts price. It is one lens on market structure, for education only.