What is Gamma Exposure?
Gamma exposure (GEX) estimates the total gamma that options market makers hold across all strikes and expirations for a given underlying asset. It is an estimate because nobody publishes dealer inventory: it is built from public open interest plus an assumption about which side dealers hold. It expresses how much hedging the modelled book would need as prices move, and that hedging can lean against moves or add to them depending on its sign.
To understand GEX, you first need to understand gamma itself. Gamma is the rate of change of an option's delta with respect to a one-dollar move in the underlying price. When market makers sell options to retail and institutional traders, they delta-hedge their exposure by buying or selling shares of the underlying. As the price moves, their delta changes, and gamma tells them how fast that delta is shifting.
How GEX Creates Support and Resistance
When aggregate GEX is positive, market makers are "long gamma." This means that as the price rises, their delta becomes more positive, forcing them to sell shares to stay hedged. As the price falls, their delta becomes more negative, forcing them to buy shares. This creates a natural dampening effect: market makers sell into rallies and buy into dips. That is why positive GEX is associated with damped, mean-reverting price action.
When aggregate GEX is negative, the opposite occurs. Market makers must buy into rallies (chasing price higher) and sell into declines (accelerating the drop). Negative GEX is associated with larger ranges and moves that extend rather than fade. How much force that hedging carries depends on its size against the liquidity in the underlying, which is covered in negative gamma explained.
How it is calculated: for each listed contract, multiply gamma by open interest by the contract multiplier (100 for SPX) by spot squared by 0.01. That gives the dollar change in dealer delta for a 1% move in the underlying. Sign calls positive and puts negative, the usual convention that dealers are long calls and short puts, and sum across strikes and expirations. The result is net GEX in dollars per 1% move, the unit SquawkFlow publishes. Some providers quote a per-point version instead (spot rather than spot squared times 0.01); the two differ by a factor of spot divided by 100. The GEX formula walkthrough works through it term by term.
Key GEX Levels Every Trader Should Know
Call Wall: The strike with the largest positive gamma from call options. The standard convention (the one this calculation uses) signs call gamma positive, meaning dealers are assumed long gamma there. A long-gamma desk sells into strength to stay delta-neutral, and that selling is the headwind that can cap upside moves.
Put Wall: The strike below spot with the largest put gamma, usually described as a support floor. The delta math does not actually mirror the call wall, and this is where most explanations go wrong. A short put has positive delta that grows as spot falls, so a dealer short puts sells into the decline, amplifying it rather than supporting it. The level still tends to matter, but through different mechanisms: gamma collapses once price trades through the strike, so the selling pressure simply stops, and holders closing protection near the strike mechanically buy back the dealer's short stock.
GEX Flip (Zero Gamma Level): The price at which aggregate gamma transitions from positive to negative. Above the GEX flip, the model has dealers hedging against the move; below it, with the move. It is the line where the model's description of hedging changes sign, not a forecast of what the session will do.
How to Use GEX in Your Trading
GEX is context, not a signal. Read it in order: the sign (which way the modelled hedging leans), where spot sits against the flip, and where the walls are. None of the three says which way price will move, and all three rest on the dealer-side assumption above.
GEX also changes through the week. Large options expirations (monthly OPEX, quarterly OPEX) remove big blocks of open interest at once, so the profile after an expiration can look quite different from the one before it.
How SquawkFlow Displays GEX Data
SquawkFlow publishes the call wall, put wall, and GEX flip computed from daily-settled open interest. The levels do not update from intraday options trades, and dealer positioning remains a model assumption rather than an observable. Each published level carries its open interest settlement date.
GEX describes where the modelled hedging flow concentrates and which way it leans. It does not say that the flow will appear, or that it will outweigh everything else trading that day.