What it is. gamma exposure: Gamma exposure (GEX) estimates the net gamma dealers are short or long across all listed options on an index or stock, expressed in dollars per 1% underlying move. Positive dealer gamma means market-makers must sell rallies and buy dips to stay hedged (volatility-dampening); negative dealer gamma means they must sell dips and buy rallies (volatility-amplifying).
How to read it. Positive GEX = mean-reverting, low-realized-vol regime. Negative GEX = trending, high-realized-vol regime. The gamma flip level is the spot price where net GEX crosses zero — it's the single most-watched intraday pivot on SPX/SPY. Large positive GEX walls at specific strikes act as magnets into monthly OPEX; large negative GEX regions accelerate moves through them.
Why it matters. GEX explains a huge share of intraday behavior in index products, especially SPX, QQQ, and IWM. It's why Fridays before OPEX often pin to round strikes, why VIX crushes into positive-GEX regimes, and why breakouts through the gamma flip can trigger cascading dealer buying or selling. Pro traders check GEX before scaling into short-vol trades.