What is GEX trading? Dealer gamma exposure explained

Options dealers try to stay delta neutral, so they trade the underlying as prices move. Gamma tells them how much their delta changes per move. GEX adds that up across every strike: gamma times open interest times the 100 share multiplier, scaled to the price, with calls counted positive and puts negative.

The sign convention assumes customers mostly buy options and dealers mostly sell them. Nobody publishes who holds each contract, so every GEX figure is an estimate built on that assumption. Good GEX software says so and publishes its method.

Positive gamma regime. Dealers sell rallies and buy dips to stay hedged, which tends to narrow the range. Traders in this regime often fade moves toward the call wall and put wall and expect price to drift back toward the largest gamma strike.

Negative gamma regime. Dealers hedge in the same direction as the move, so trends can extend and ranges widen. Traders tend to respect breakouts, use wider stops and size down.

The gamma flip, where net GEX changes sign, marks the line between the two. A move across it is often watched as a change in how the market will behave for the rest of the session.

Check four things before you pay for any dealer GEX tool: whether it publishes its method, how often it refreshes during the session, whether it covers the tickers you trade, and what it costs per month. Our comparison of gamma exposure tools lists prices read from each vendor's own page.

GEX does not give direction. It describes how hedging may react to a move, and news, earnings and large orders can overwhelm it. Open interest updates once a day, so contracts opened and closed inside a session are invisible until the next morning.