What is Gamma Exposure (GEX)?

Defining Gamma Exposure

Gamma Exposure (GEX) is a measure of the total gamma-weighted hedging obligation at each strike price. It tells you how many shares market makers need to buy or sell for every $1 move in the underlying.

The formula is straightforward: for each strike, you take the open interest, multiply by the contract's gamma, and multiply by 100 (shares per contract) and the spot price. Call gamma is positive (dealers buy as price rises). Put gamma is typically negative at a portfolio level (dealers sell as price drops — depending on positioning).

The result is a dollar-denominated number that shows the directional hedging pressure at every strike price. Positive GEX = dealers buy dips and sell rips (stabilizing). Negative GEX = dealers sell into drops and buy into rallies (destabilizing).

Why GEX is the Most Important Metric

GEX matters because it quantifies the invisible hand that pushes price around.

When you see a stock repeatedly bounce off the same level, it might not be "support" in the traditional technical analysis sense — it might be a gamma level where dealers are forced to buy every dip. When a stock breaks through a level and accelerates, it might be entering a zone of negative GEX where dealer hedging amplifies the move.

Traditional technical analysis observes patterns. GEX explains the mechanism behind them. That's a fundamental difference — you're not just seeing what happened, you're understanding why.

Reading a GEX Chart

In GammaLens, the Gamma Profile displays GEX as a bar chart across strikes:

Green bars above the zero line = positive GEX at that strike. Dealers buy dips and sell rips here. These strikes act as magnets and stabilizers.

Red bars below the zero line = negative GEX. Dealers amplify moves through these zones. Price tends to accelerate, not stabilize.

The tallest green bar is typically the call wall — the strongest ceiling. The tallest red bar (or deepest negative) often aligns with the put wall — the strongest floor.

The spot price relative to these levels tells you the current regime: trading above the bulk of positive GEX = stable. Below it = volatile.

Net GEX vs Call/Put Components

GammaLens shows both net GEX (the combined picture) and the individual call and put components.

Net GEX is what you use for quick structural reads — where are the walls, what's the regime, where does price pin?

But the components matter too. A strike might have moderate net GEX but massive call AND put gamma that largely cancel out. This "gamma overlap" zone tends to be volatile because both sides are hedging aggressively.

Looking at the call/put split reveals the character of each level — is it a clean call wall, a clean put wall, or a contested battlefield?

What GEX Doesn't Tell You

GEX is powerful but not predictive in isolation. It tells you the structural landscape — where hedging pressure exists — but not the catalyst that will trigger movement.

Earnings, economic data, Fed decisions, and news events can overwhelm any structural level. A call wall will eventually break if buying pressure is strong enough.

GEX is also a snapshot. It changes throughout the day as options are traded, OI shifts, and prices move. The levels you see at 9:30 AM may look different by 3:00 PM. This is why GammaLens refreshes data regularly — stale GEX is misleading GEX.

Use GEX as context for your existing strategy, not as a standalone signal.