Lesson 3 of 6 · GEX & Dealer Positioning
The gamma flip
One level changes the character of the tape.
The gamma flip is the price level where total dealer gamma crosses from positive to negative. Above it, dealers dampen moves. Below it, they amplify them. It is a model output built on assumptions about how open interest is distributed between customers and dealers, not a guaranteed pivot point.
Positive above the flip, negative below.
The GAMMA FLIP label marks the boundary. In the left zone, dealer hedging absorbs moves. In the right zone, it extends them. That shift in character is why the level draws attention.
It is not a guaranteed pivot.
Most GEX models assume dealers are long calls, which customers sell against stock, and short puts, which customers buy for protection. That holds on average but breaks around earnings, after large institutional selling of options, or when a single product dominates the flow. Treat the flip as a bias changer, not a certainty.
Price closes below the gamma flip for the first time in a week. What should a trader expect?
Show the answer
B. Wider ranges and faster moves. Below the flip level, dealer hedging amplifies moves rather than dampening them.