Learn · options market structure
What is gamma exposure (GEX)?
Gamma exposure (GEX) estimates how much stock options dealers must buy or sell to stay hedged as the price moves. It is computed from options open interest and each option's gamma at every strike. When dealers are net long gamma their hedging leans against moves; when they are net short gamma it chases moves.
Dealers amplify moves: trending and higher intraday volatility.
How it is calculated
For every strike, multiply open interest by the option's gamma, by 100 shares per contract and by the price, with calls and puts signed by the side dealers are assumed to hold. Summing across strikes gives net GEX; the strikes with the largest values are the gamma walls.
Why traders watch it
Hedging flows are mechanical, so they shape intraday behaviour: positive gamma tends to compress ranges and pin price near large strikes, negative gamma tends to extend moves. GEX describes positioning; it does not predict direction.
The assumption behind it
Public data does not say who owns each option. GEX models assume customers are net long calls and puts and dealers hold the other side. That is a reasonable average, not a certainty, so treat GEX as a map of likely hedging pressure.
Related
- What are gamma walls in options?
- What does negative gamma mean for the stock market?
- What is the gamma flip level?
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