Lesson 4 of 6 · GEX & Dealer Positioning
Call & put walls
The strike with the most gamma is a wall.
A call wall is the strike where estimated dealer call gamma is highest. Dealers are assumed long those calls, so as price rises into it they sell stock to stay neutral, adding supply that slows the rally. A put wall often acts as support, but the hedging there is less clear-cut: dealers short puts sell into weakness, so a break can speed up.
Approaching the call wall.
Price grinds up into the CALL WALL level and stalls. Dealer selling meets buyers. The level holds while the gamma distribution behind it remains unchanged.
The put wall as a floor.
Price dips toward the PUT WALL line and holds this time. Large positioning sits at the level, so reactions are common, but a hold is not guaranteed. A clean break can accelerate as short-put hedging adds selling.
Both walls on the dealer map.
The CALL WALL bar at 5,580 and the PUT WALL at 5,520 frame the current range. Price at 5,553 sits between them. The gamma flip at 5,540 is also visible: price is above it, in the dampened zone.
This one is an animated diagram in the app. See it in Vero.
Price is rising toward the strike with the largest call gamma. What is the dealer's hedge action?
Show the answer
C. Sell stock to stay delta-neutral. In the standard model, dealers long those calls must sell stock as the calls gain delta with rising price, to stay neutral.