What is GEX (Gamma Exposure)
When you buy a call option from a market maker, the market maker is now short a call. They do not want to be exposed to the stock going up. So they buy enough shares to neutralize their delta. As the stock moves, their delta changes (that change in delta is gamma) so they have to adjust their stock hedge.
GEX (Gamma Exposure) is the total amount of stock dealers have to buy or sell for a 1% move in the underlying, summed across all strikes. Big positive GEX means dealers are long gamma. Long-gamma dealers buy dips and sell rallies, which dampens volatility. Big negative GEX means dealers are short gamma; they have to chase the move, amplifying volatility.
Flip strike
The strike where total GEX crosses zero. Above flip, dealers are typically long gamma (calm regime). Below, short gamma (jumpy regime).
Max pain
The strike where the total value of in-the-money options across all open interest is minimized. At expiration, this is the strike most painful to option buyers. Markets often gravitate toward max pain into expiration days.
How we compute it
For each open contract: gamma per share x open interest x 100 (contract multiplier) x spot squared x 0.01.
Sum across all strikes and expirations. Flip the sign on puts (dealers are typically long the calls, short the puts).
The full formula is on the methodology page.
How to use it
- Big positive GEX near spot = expect range-bound day
- Big negative GEX = expect trending day, larger moves
- Spot near flip strike = inflection point; small moves can flip the regime
- Spot near max pain into op-ex day = strong magnetic pull