What a hedging-flow indicator is
A hedging-flow indicator is an intraday estimate of how much stock or futures options dealers need to buy or sell to stay hedged against the options trades they take on. It is usually drawn as a cumulative line through the session: rising when the estimated hedging is net buying, falling when it is net selling.
It answers a different question from a gamma exposure chart. GEX describes standing positioning, built from settled open interest, and says how dealer hedging would respond if price moved. A hedging-flow indicator describes the session's new trades and says which way the hedging attached to them points. One is a map of the terrain; the other is a running tally of traffic across it.
How one is built
The construction has three steps, and each one carries an assumption.
Classify each trade. Every option print is tagged as customer-bought or customer-sold, usually by comparing the trade price with the quote at that moment. Prints at the mid are ambiguous, and a large share of index options volume trades there.
Assign the dealer the other side. If a customer bought a call, the model assumes a dealer sold it. That is the same positioning convention every GEX model rests on, applied trade by trade instead of to the whole open interest. Open interest and trade data never record who the counterparty was.
Convert to a hedge. Each trade's delta, times its size and the contract multiplier, gives the shares or futures a dealer would trade to neutralise it. Summing those through the day gives the cumulative line.
What the assumptions cost
Not every option trade has a dealer on the other side. Customer-to-customer trades, spreads crossed as one package, and institutional blocks negotiated away from the screen all land in the tape, and the model treats them alike.
Dealers do not always hedge in the underlying the indicator watches. A book of SPX options is commonly hedged in ES futures, in SPY, or against other options, and a hedge placed elsewhere does not show up as pressure on the instrument being charted.
Trade classification is noisiest exactly where volume is heaviest. Same-day expiries now make up a large share of SPX volume, and many of those contracts open and close within the session, so the net hedge they leave behind can be far smaller than the gross flow suggests.
None of this makes the indicator useless. It makes it an estimate built on the same unobserved positioning as every other dealer gamma measure, with an extra layer of trade-by-trade inference on top.
Reading one honestly
A rising line says the model estimates net dealer buying from today's option trades. It does not say price will rise, and price can move against the line for the whole session if other flows are larger. A flat line in a moving market says option hedging is not what is moving it.
Two readings are more defensible than the rest. Agreement between the line and price says the estimated hedging and the move point the same way, which is a description of the session so far, not of the next hour. A line that sits near zero while the GEX levels put spot near a large strike says the session's new trades have not yet changed the picture that settled open interest drew that morning.
Where these indicators come from
Several paid platforms sell an intraday hedging-flow view; one competitor's is called HIRO, and our comparison with that platform sets out what each product publishes. The construction underneath is broadly the one above, and the vendors' exact trade classification and weighting are not public.
What SquawkFlow publishes
SquawkFlow does not publish an intraday hedging-flow indicator. The SPX gamma exposure page publishes the walls and the zero-gamma flip from a full-chain snapshot of settled Cboe open interest, each with the time it was captured, and reprices spot and the expected range every 30 minutes through the cash session. The levels themselves are fixed for the session, because the open interest behind them is. The overnight open interest change shows what the previous session's trades actually left behind once they settled, which is the part of hedging flow that can be counted rather than inferred.
Educational content, not financial advice. See our risk disclosure.