Gamma Exposure
a.k.a. GEX, Dealer gamma
An estimate of how much options dealers will need to buy or sell the underlying asset as its price moves,…
In plain English
An estimate of how much options dealers will need to buy or sell the underlying asset as its price moves, to stay hedged.
Gamma measures how fast an option's delta changes. Gamma exposure adds up dealers' gamma across all open options to estimate their hedging needs.
When dealers are 'long gamma', they tend to sell rallies and buy dips while hedging, which can calm the market. When they are 'short gamma', their hedging chases price, which can make moves bigger. GEX figures are estimates built on assumptions about who holds what.
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