GEX (Gamma Exposure) measures the total hedging pressure that market makers (dealers) must apply to the underlying stock as its price moves. It is not a sentiment indicator — it is a structural, mechanical force that can push price toward certain strikes or accelerate moves away from others.

Who are dealers? When you buy a call or put option, a dealer (market maker) takes the other side and immediately becomes exposed to price movement. To stay neutral — to not have a directional bet — they hedge by buying or selling shares of the underlying stock. The amount they must hedge changes as price moves. That changing hedge is driven by gamma.

Why does this move markets? Dealers are not small players. On heavily traded stocks like SPY, AAPL, or TSLA, dealer hedging can represent a significant fraction of daily share volume. When thousands of contracts share a strike, the mechanical buying/selling from hedging becomes a real price force — large enough to visibly slow, stop, or accelerate moves.

Every option has a delta: the number of shares a dealer must hold to be hedged. A call with delta 0.5 means the dealer who sold it must hold 50 shares per contract (100 shares × 0.5) to offset their exposure.

Delta is not fixed — it changes as the stock price moves. When the stock rises, call delta grows (the call gets more in-the-money, so the dealer needs more shares). When the stock falls, call delta shrinks (dealer sells shares).

This means dealers are constantly buying and selling shares just to stay hedged — not because they have a view on the stock, but because the math forces them to.

Gamma is the rate of change of delta per $1 move in the stock. High gamma = delta changes a lot per dollar move = dealer must rebalance heavily with each tick.

Gamma is highest at-the-money (ATM) and near expiration. A $5 OTM call one week from expiry might have gamma 0.02. The same strike on expiry day might have gamma 0.15 — meaning the dealer's hedge changes 7.5× faster per dollar move.

This is why GEX levels strengthen near expiration. As gamma spikes on expiry week, the mechanical hedging force at high-OI strikes becomes very large relative to normal volume.

The direction of the hedging force depends on whether the dealer is long or short gamma at that strike.

Dealer long gamma (call-heavy strike, +GEX):
The dealer sold calls to retail, so they are long gamma. As the stock rises toward this strike, the dealer's delta increases — they must buy more shares. But wait — they already hedged by buying shares when they first sold the call. Now delta has grown, so they buy even more. As price rises further, they keep buying more. But here's the key: as price peaks and starts to fall, they now have too many shares. They sell. Then price stabilizes, delta shrinks — they sell more. This cycle of buy-the-dip / sell-the-rally dampens the move. The dealer acts as a stabilizer. Price is pulled back toward the strike like a rubber band — this is the pinning effect.

Dealer short gamma (put-heavy strike, −GEX):
The dealer sold puts to retail, so they are short gamma. As the stock falls toward this strike, the dealer's put delta becomes more negative — they must sell more shares to stay hedged. But selling pushes the price down further. Further price drop = more negative delta = more selling. This is a pro-cyclical feedback loop. The dealer amplifies the move. A −GEX strike is not a floor — it is a trapdoor. Breaking through it often triggers a sharper, faster leg down.

For each strike K, gamma exposure is:

GEX(K) = (Call OI × Call γ − Put OI × Put γ) × Spot Price × 100

Where γ (gamma) is computed via Black-Scholes from the option's implied volatility, since yfinance does not consistently return gamma directly.

The × 100 converts per-contract gamma into per-share-lot terms (1 contract = 100 shares).

Positive GEX(K): Calls dominate at this strike → dealer is long gamma → stabilizing force.
Negative GEX(K): Puts dominate at this strike → dealer is short gamma → amplifying force.

Net GEX = sum of GEX(K) across all strikes. Tells you the overall regime: positive = the whole chain is net stabilizing; negative = the whole chain is net amplifying.

Every time you load a chart, the GEX tip panel above shows one of these seven cases based on Net GEX sign, where price sits relative to the flip level, and whether price is pinned at Max Gamma. Use this table as a quick reference for the trading implications of each state.

1. Check Net GEX first. Green (Pinning) = choppy, range-bound day ahead. Red (Trending) = expect bigger moves, mean-reversion less reliable.
2. Locate current price relative to the Flip Level (teal line). Above the flip = stabilizing regime, dealers are a headwind to large moves. Below the flip = amplifying regime, dealers add fuel. This single relationship changes how you should interpret everything else.
3. Identify your range boundaries. +GEX #1 above price = resistance ceiling where dealer selling increases. −GEX #1 below price = trapdoor where dealer selling accelerates a breakdown. These are not guaranteed reversal points — they are zones of intensified mechanical force.
4. Use the Pin Strike on expiry week. In the last 3–5 days before expiration, gamma spikes and the Max Gamma Strike becomes a strong gravitational pull. Watch for price to converge toward it by end of day Friday.
5. Confirm with OI changes between dates. Rising OI at a strike (primary bar taller than comparison bar) = new positions being built = GEX at that strike is growing stronger. Falling OI = positions closing = level weakening. A +GEX level that is also gaining OI day-over-day is the most reliable resistance. A −GEX level with growing put OI is the most dangerous trapdoor.
6. Watch IV overlay (orange lines). High IV at a strike means bigger expected moves priced in there. If IV is spiking on the put side at a −GEX level, large institutions may be hedging a known risk — treat that level with extra caution.

The strategy panel above selects from the following playbook based on GEX regime, IV level, price location, and DTE. Each strategy is only surfaced when the options structure supports it. This section explains the mechanics and when each one applies.

Confidence stars (★): ★★★ = all primary conditions met (regime, IV, DTE, GEX levels aligned). ★★ = most conditions met; one factor is sub-optimal. ★ = situational — a valid structure but requires a specific catalyst or entry timing.

Important limitations: Strategy recommendations are derived from a single-day options snapshot. They do not account for earnings dates, dividends, macro events, or bid/ask spreads on specific strikes. Always check liquidity (open interest > 500 on target strikes) before entering. GEX levels weaken as expiration approaches and can shift overnight on large OI changes.

The Put/Call ratio measures the relative weight of put vs call contracts in the options chain. Two variants are shown — OI-based (structural, slow-moving) and Volume-based (today's activity, fast-moving). Neither ratio is a standalone signal — their value multiplies when combined with the GEX regime.

Color coding in the GEX panel: Red = put-heavy (P/C > 1.3) · Green = call-heavy (P/C < 0.7) · Gray = balanced (0.7–1.3). These thresholds are approximate — context matters more than the exact number.

Important note on P/C ratio interpretation: A high P/C OI (>1.3) does NOT automatically mean the market will fall. Put OI includes protective puts held by institutions to hedge long equity portfolios — these are NOT directional bets. When put protection is rolled or expires, it can actually trigger a relief rally. Always cross-reference with GEX regime, recent OI changes (primary vs comparison bars), and IV trends before drawing directional conclusions.

The GEX Flip level (teal dotted line) is the regime boundary. Above it, dealer hedging dampens moves (positive GEX = stabilizing). Below it, dealer hedging amplifies moves (negative GEX = trending). Knowing which side of the flip current price sits on is the single most important piece of information before placing any trade.

The flip as a confirmation signal: A daily close below the flip on volume = regime change to amplifying. Dealers shift from buying dips to selling dips — "the floor drops out." A reclaim of the flip after a sell-off = stabilizing forces re-engage. Price oscillating around the flip = ambiguous regime, expect choppy action.

The IV curve on the Volume chart (orange lines, right axis) shows implied volatility across strikes. Solid = calls, dashed = puts. IV is displayed as a percentage (e.g. 107%).

Why IV rises away from the current price (the volatility smile / skew):
Options far from the current price — both deep OTM puts and deep OTM calls — carry higher IV than at-the-money options. ATM options are priced most "fairly"; OTM options carry a premium for tail risk (puts) or speculative demand (calls). A U-shaped IV curve is normal and expected. A flat or inverted curve (ATM IV higher than OTM) would indicate a data quality problem.

Near ATM, call IV and put IV should be very close (within 1–2%) due to put-call parity. Significant divergence at the same strike would be arbitraged away immediately. Divergence is normal and informative away from ATM.

Normal skew vs inverted skew:
For most equity ETFs (SPY, QQQ, IWM), put IV is higher than call IV — this is normal skew. Institutions constantly buy put protection, bidding up put premiums. Call IV is lower because upside hedging demand is structurally weaker.
Inverted skew (also called reverse skew) is when call IV exceeds put IV. This means call buyers are paying higher premiums than put buyers — the market is implying that an upside move is more likely or more violent than a downside move. This is unusual for broad market ETFs and worth watching when it appears.

What "market pricing upside more aggressively" means:
When call IV > put IV, option buyers are paying a larger risk premium for upside exposure than for downside protection. This reflects a collective expectation — or fear — of a sharp move higher. The signal is strongest when call OI is also rising: new buyers are entering, not just existing positions.

Squeeze conditions explained:
A gamma squeeze occurs when a stock with large short interest (many investors have sold shares they do not own) begins to rise. As call buyers accumulate OTM calls, dealers who sold those calls must buy shares to delta-hedge. That buying pushes the price higher, which forces short sellers to cover (buy back shares to close losses), pushing the price even higher. Dealers then face even larger delta on their calls and must buy more — a self-reinforcing loop.
Watch for: inverted IV skew + rising OTM call OI + negative net GEX (dealers short gamma, amplifying instead of dampening the move) + high short interest. The GEX flip level is critical: if price breaks above the flip while dealers are short gamma, the mechanical hedging turns pro-cyclical and the move can accelerate sharply.

The gamma curve on the OI chart (orange lines, right axis) shows how fast dealer delta hedges change per $1 move at each strike. It peaks at-the-money and falls toward zero far OTM. Solid = call gamma, dashed = put gamma.

Should call and put gamma overlap?
Not exactly. The Black-Scholes gamma formula has no call/put distinction — at the same strike, IV, and DTE the raw gamma is identical. When the curves diverge, calls and puts have different IVs at that strike (the volatility skew expressing itself through gamma). Higher IV → flatter, lower gamma peak. Lower IV → sharper, taller gamma peak. The gap between the two curves is a visual measure of the skew at each strike.

Ideal shape: a bell curve centered at the current price, roughly symmetric. The further from ideal, the more information the shape carries.

Gamma vs GEX — two views of the same force:
The gamma curve shows raw per-contract gamma at each strike. GEX weights it by OI (gamma × OI × 100 shares) to get dollar-denominated dealer hedging pressure. A strike can have high gamma but low OI (low GEX impact) or moderate gamma with large OI (high GEX impact). Read both together: the gamma curve shows the shape of the force; GEX shows where it is largest.