Gamma Exposure (GEX)

Gamma exposure estimates how much option dealers must buy or sell to stay hedged as the underlying moves. Each contract's gamma says how fast its delta changes; multiply by open interest and aggregate across the chain, and you get a dollar figure for the hedging flow a 1% move would force.

The sign matters more than the size. When dealers are net long gamma, their hedging leans against moves — they sell into rallies and buy dips, dampening the tape. Net short gamma flips it: hedging chases the move and amplifies it. The strike where cumulative GEX crosses zero, often called the flip level, marks the boundary between those regimes. The standard calculation assumes dealers are long calls and short puts, which is a convention, not an observation.