# GEX

### What is Gamma Exposure (GEX)?

Gamma is an option greek that measures the rate at which the delta for an option contract will change based on +/- $1 change in the underlying price. Since market makers seek to maintain a delta neutral (delta = 0) portfolio, gamma "exposure" gives insight into specific strikes where there is a high amount of gamma that could cause market makers to re-hedge to maintain a delta neutral portfolio. This insight can help traders make timely trades in anticipation of predictable price action. 

The charts in Option Alpha calculate gamma exposure (GEX) based on a +/- 1% move in the underlying price.

### **Call vs Put**

The 'Call vs Put' view displays the direct call vs put GEX to highlight the amount of call strike and put strike gamma exposure, open interest and volume for each strike price.

The green bars represent call GEX and the red bars put GEX.

### Absolute Gamma

Absolute Gamma is total Gamma for a strike price calculated by summing the positive call gex and negative put gex into 1 positive gex value. 

For example, if there is 9.6b call gamma exposure and -1b put gamma exposure, the absolute gamma is 10.6b.

![](https://option-alpha.s3.amazonaws.com/uploads/175493370211213370581.png)

### Net Gamma Exposure

Net Gamma Exposure shows the combined total of positive call gex and negative put gex.

For example, if there is 9.6b call gamma exposure and -1b put gamma exposure, the net GEX is 8.6b.

### Daily Volume (background chart colors)

The orange shading shows the total put volume for the day; the blue shading shows total call volume for the day. Grey is where they overlap.

### GEX Ratio

The GEX ratio is the ratio of negative to positive gamma exposure, and it flips based on current ratio. It only includes displayed bars so it can be adjusted for only closest to the current price.

{% hint style="info" %}
**Example**:\
2b neg and 3b pos = 3b / 2b = 1.5x positive to negative GEX ratio (green)\
3b neg and 2b pos = -3b / 2b = -1.5x negative to positive GEX ratio (red)
{% endhint %}

### GEX Sentiment

GEX sentiment is the % of bars nearest to the current price that are positive.

In this chart, there is 8.2 times as much negative gamma as positive and only 43% of the included bars are positive:

![](https://option-alpha.s3.amazonaws.com/uploads/175493350775516773171.png)

In this chart, there is 6.5x as much positive gamma as negative and 55% of 40 bars nearest the money are positive with a net total gamma of 14.6b:

![](https://option-alpha.s3.amazonaws.com/uploads/175493351292912099411.png)

### How to leverage GEX as a trader?

For more information about how we use gamma exposure to trade, check out this [**Gamma Exposure playlist**](https://www.youtube.com/playlist?list=PLhKnvfWKsu413dNhE8LrDNLlGL61bhwFt) on YouTube. 


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