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Gamma exposure (GEX)
GEX summarizes option gamma across a selected set of strikes and expirations. It helps locate concentrations of sensitivity to underlying price changes. Interpreting those concentrations as dealer hedging pressure requires assumptions about who holds the options.
Start with delta and gamma
Delta estimates an option’s premium change for a small change in the underlying, with other inputs held constant. A long vanilla call has positive delta; a long vanilla put has negative delta. Gamma measures how delta changes when the underlying moves.
For example, a call with 0.50 delta and 0.04 gamma might have roughly 0.54 delta after a one-point rise, before allowing for changes in time, volatility, and gamma itself. The estimate is local, not a forecast over a large move.
Long vanilla calls and puts both have positive gamma. Selling either reverses the gamma exposure. Gamma is typically concentrated near the money, particularly close to expiration; it is not equally large across all strikes.
From one option to a profile
A gamma profile weights the Greeks by contract quantities, applies the relevant contract scaling, and aggregates them by strike. TanukiTrade’s Net GEX compares call-side and put-side gamma exposure; Abs GEX adds their magnitudes. Netting can hide a large concentration when the two sides are similar.
If the call and put contributions at a strike are 12 and 11 on a common scale, Net GEX is +1 while Abs GEX is 23. The small difference does not mean little option exposure exists there.
Always identify the aggregation method. A profile for one weekly expiration and a profile accumulated through a later monthly date contain different positions, even on the same underlying.
The hedging mechanism
Long gamma
In a simplified delta-neutral model, a long-gamma book would sell the underlying after a rise and buy after a fall—rebalancing that can oppose the move.
Short gamma
In the corresponding short-gamma model, the hedge would buy after a rise and sell after a fall—rebalancing that can reinforce the move.
These mechanics describe an assumed book and its theoretical hedge. The HVL and transition zone organize TanukiTrade’s model into regime regions; a classified region is not proof that all dealers hold that gamma position.
What the chain does not reveal
Open interest records outstanding contracts. Every contract has both a long and a short holder. It does not identify the dealer side, reveal the full portfolio, or show its hedge in stock, futures, other expirations, or correlated products. Market makers also manage risks beyond delta.
As a result, a put-heavy profile does not establish that dealers are short those puts. A large call concentration does not establish whether the next hedge will be buying or selling. See dealer hedging for conditional examples.
Use the profile as a map
Locate nearby concentrations, compare their size and distance, and observe how price behaves there. GEX does not supply the catalyst, the direction, an executable order price, or a guarantee that a level will be reached. News and other flows may dominate the session.
Continue with call and put walls, then confluence. The original GEX foundations article develops the intuition with charts. For the underlying Greek, see OIC’s gamma explanation.
Where you see it
GEX Live Table, GEX Live Chart, GEX Matrix, and GEX Profile PRO.
TanukiTrade documentation. Levels are context, not a recommendation. tanukitrade.com