What the absolute gamma strike is
The absolute gamma strike is the strike with the largest total option gamma across the chain, counting calls and puts together and ignoring sign. It answers a narrower question than most gamma levels do: not which direction hedging pushes, but where the most hedging is anchored.
SquawkFlow publishes it on the SPX gamma page as the largest absolute gamma strike, alongside the call wall, put wall and zero-gamma flip.
Why sign is dropped
Most gamma levels are built on a positioning convention, that dealers are net long calls and short puts against customer flow, which gives call gamma a positive sign and put gamma a negative one. The net GEX figure is the sum after those signs are applied.
Dropping the sign changes the question. Net GEX at a strike can be near zero because there is genuinely little gamma there, or because a large positive and a large negative cancelled. Those are very different situations. The first is a quiet strike. The second is a strike where an enormous amount of hedging is anchored, in both directions, and net GEX conceals it entirely.
Absolute gamma separates the two. It is the measure of how much is happening at a strike, before any assumption about who holds which side.
That independence is worth stating plainly, because it is unusual: the absolute gamma strike is one of the few levels in this family that does not depend on the dealer positioning assumption. Open interest and gamma per contract are observable. Which side a dealer holds is not. Flip the convention and the call wall, put wall and net GEX all change sign, but the strike with the most total gamma stays exactly where it was.
How it differs from the call wall
They are frequently confused, and they answer different questions.
The call wall is the strike above spot carrying the largest positive call gamma. It is directional and it is anchored above the current price, a ceiling candidate.
The absolute gamma strike has no directional constraint and no side constraint. It can sit above spot, below it, or on it. On many days it coincides with the call wall, simply because call open interest at round strikes above the market tends to dominate the chain. When it does not coincide, that divergence is informative: it usually means put positioning at a lower strike has grown large enough to outweigh the call side.
What it implies for price
The mechanical claim is about hedging density rather than direction. Wherever the most gamma sits, dealer hedges have to be adjusted most aggressively as price moves through that area, small moves in spot produce large changes in the delta that has to be covered.
Under the standard convention, with dealers net long gamma, that concentration tends to act as a magnet: hedging flow leans against moves away from the strike, and price gets sticky nearby. That is the mechanism behind gamma pinning, and it is why the absolute gamma strike is watched most closely on expiration days, when time decay has concentrated gamma into a narrow band.
Under the opposite condition (dealers net short gamma) the same concentration works in reverse, and price tends to be pushed away from the strike rather than held near it. The density is the same; the sign of the response is not.
Reading it honestly
Two limits are worth carrying with the number.
It is a snapshot of open interest, and open interest is a settlement figure published after the fact. Intraday, positions have already changed. This is why a strike that looked dominant at the open can matter less by the afternoon.
And a large gamma concentration is a description of where hedging pressure would be greatest if it materialises, not a forecast that price will go there. Strikes with enormous gamma get traded straight through on days when directional flow overwhelms hedging flow, most obviously around scheduled macro events, when the reason for the move has nothing to do with options positioning at all.