Options trading
Gamma exposure (GEX)
Definition
An estimate, built from open interest, gamma and an assumption about dealer positioning, of how much dealers’ hedges would change for a given move in the underlying, often expressed in dollars per 1% move.
Example
Say a tool estimates an index’s GEX at +$2 billion per 1% move, based on the assumption that dealers are long those options. If the index rises 1%, dealers would sell about $2 billion to stay hedged, and buy about that much after a 1% drop, leaning against the move. If the dealer assumption is wrong, both the sign and the size of the estimate can be off.
Hypothetical numbers, for illustration only.
UpTickFlow is our product. These guides are education, not financial advice. Trading involves a substantial risk of loss.