Lesson 2 of 6 · GEX & Dealer Positioning
Positive vs. negative gamma
Positive gamma dampens. Negative amplifies.
In a positive GEX regime, dealer hedging opposes price moves. Rallies meet dealer selling. Dips meet dealer buying. The result is a compressed, mean-reverting tape. In a negative regime the same mechanics push price further in whatever direction it is already moving.
Two zones, one level separating them.
The left zone is POSITIVE GAMMA: MOVES DAMPEN. The right zone is NEGATIVE GAMMA: MOVES EXTEND. The gamma flip line is the dividing level. Candle ranges widen once price crosses into the negative zone.
What this means in practice.
In a positive regime, buying dips and fading rips tends to work better. In a negative regime, letting winners run and cutting losses fast matters more, because moves travel further. Check the regime before sizing a trade.
Price is in a positive GEX regime and drops sharply. Dealer hedging will likely...
Show the answer
A. Buy into the drop, slowing it. Positive-gamma dealers buy dips and sell rallies to stay delta-neutral, which dampens moves in both directions.