Spot Gamma Exposure: Real-Time Hedge Insights

Spot Gamma Exposure (GEX) represents the dollar value market makers must hedge for every 1% change in a stock's price. Updated every minute during market hours, Spot Gamma provides a real-time snapshot of gamma exposure, distinguishing between long gamma (positive) and short gamma (negative).

• Investors hedge risk by selling calls and buying puts. Market makers, who provide liquidity for these trades, typically buy calls and sell puts, creating gamma exposure. Spot Gamma calculates this exposure in real time by summing the impact of all open contracts, based on daily open interest (purple) or volume (yellow).

• Spot Gamma takes a step further by factoring in directionalized volume using bid/ask spreads. Trades near the ask imply market makers are selling contracts, while trades near the bid suggest they are buying. This adds precision to the gamma exposure analysis.

Gamma exposure drives market behavior:

• Positive Gamma: Market makers hedge by buying as prices drop and selling as prices rise, reducing volatility.
• Negative Gamma: Hedging amplifies volatility, with buying as prices rise and selling as prices fall.

Spot Gamma gives you real-time insight into these dynamics, helping you anticipate volatility and market maker activity. Use it to make informed trading decisions in any market scenario.