01
The mechanics
A dealer who is long gamma has a delta that moves against the market: as the index rises their delta grows, so they sell futures to rebalance; as it falls they buy. That trading leans against the move.
A dealer who is short gamma has the opposite: they must buy as the index rises and sell as it falls. That trading adds to the move.
02
What each regime tends to look like
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Positive gamma: Smaller intraday ranges, reversals near large-OI strikes, pinning into expiry.
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Negative gamma: Larger ranges, trends that extend, gaps that do not fill quickly.
These are tendencies, not rules. News and flows from other participants can override hedging effects.
03
The gamma flip
The gamma flip is the spot level where the modelled net GEX changes sign. Spot above it implies a positive-gamma regime, below it a negative one. Because the profile is recomputed as open interest and volatility change, the flip moves during the day.
04
Frequently asked questions
Is negative gamma bad?
It is not good or bad. It describes an environment of larger, more directional moves, which raises risk for some strategies and opportunity for others.
Why does gamma matter more near expiry?
Gamma is largest for at-the-money options close to expiry, so hedging flow becomes concentrated at a few strikes.
Where can I see the flip level?
In the Dealer Positioning workspace, the gamma flip is drawn on the GEX profile for the selected index.
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