Gamma exposure
A modeled estimate of the gamma option dealers hold across strikes, used to gauge how their hedging may dampen or amplify price moves.
Gamma exposure, or GEX, combines open interest, each contract’s gamma and an assumption about which side dealers are on, then sums the result across strikes and expirations. When the model shows dealers long gamma, their hedging tends to sell rallies and buy dips, which can dampen moves. When it shows dealers short gamma, hedging tends to chase moves.
Open interest does not reveal who is long or short, so GEX is a model estimate of positioning. The level where modeled net GEX changes sign is often called the gamma flip level.
Illustrative example (hypothetical numbers, not a real trade): a strike has 10,000 calls of open interest with a gamma of 0.02. The share-equivalent gamma there is 10,000 × 0.02 × 100 = 20,000 shares, so dealers on one side of those calls would trade about 20,000 shares for each $1 the underlying moves to stay hedged.