Options dealers are on the other side of every trade you make. To stay neutral, they hedge — and how they hedge depends on their gamma exposure (GEX). That hedging is a massive, mechanical flow that quietly shapes the tape. Understand it and intraday moves stop looking random.
Positive vs negative gamma
- Positive GEX: dealers hedge against the move — they sell rallies and buy dips. This dampens volatility and pins price. Ranges, mean reversion, "boring" days.
- Negative GEX: dealers hedge with the move — they sell weakness and buy strength. This amplifies volatility. Trends, gaps, fat-tail days.
The three levels that matter
- Zero-gamma: the price where dealer gamma flips sign. Above it, moves get faded; below it, moves accelerate. The single most important line on the chart.
- Call wall: the strike with the largest positive gamma above spot — acts as a magnet/ceiling.
- Put wall: the largest gamma below spot — acts as a cushion/floor.
How to actually use it
Check the regime first. Positive gamma above zero-gamma → fade extremes toward the walls, sell premium. Negative gamma below zero-gamma → stop fading, respect breakouts, buy optionality. Northtape computes this daily from end-of-day options data and surfaces the walls, zero-gamma line and regime on every ticker.
Key takeaways
- GEX is dealer hedging flow — positive gamma dampens moves, negative gamma amplifies them.
- Zero-gamma is the line that flips the market between "fade it" and "chase it."
- Backtested edges on QQQ: fade the walls in positive gamma (~65% hit); expect breakouts in negative.
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FAQ
What does GEX mean in options?
Gamma exposure — the aggregate gamma dealers hold. It predicts whether their hedging will suppress volatility (positive) or amplify it (negative).
What is the zero-gamma level?
The price at which total dealer gamma flips from positive to negative. Above it moves tend to mean-revert; below it they tend to trend and accelerate.
What is a call wall / put wall?
The strikes with the largest gamma above (call wall) and below (put wall) spot. They act as a ceiling and floor because dealer hedging clusters there.