What GEX is, and why it works

The setup

When a customer buys an option, a dealer (option market maker) sells it. The dealer now has a directional exposure they don't want, they're in the spread-collection business, not the directional-betting business. So they hedge by trading the underlying.

The hedge isn't static. As spot moves, the option's delta changes, and the dealer has to re-hedge to stay delta-neutral. That re-hedging flow is what GEX measures.

Long gamma vs short gamma

The dealer's position determines the direction of their hedge flow:

• Long gamma, dealer is long an option (e.g. customer sold them an OTM call). As spot rises, the option's delta increases, dealer's overall delta grows positive, they sell underlying to neutralise. As spot falls, delta shrinks, dealer's delta goes negative, they buy underlying. Result: dealers sell rallies, buy dips. Stabilising flow.
• Short gamma, dealer is short an option (the common case, they sold optionality to a customer who wanted it). The math reverses. As spot rises, dealer's delta grows negative (more short), they buy underlying. As spot falls, they sell. Result: dealers buy rallies, sell dips. Amplifying flow.

Walls

When a strike has a large positive GEX, dealers are heavily long gamma there, and any move toward that strike forces them to hedge in the direction that pushes price away. The strike acts as a pin/anchor. Above spot, a positive-GEX strike is resistance; below spot, it's support.

That's a wall. The biggest wall is the strike most likely to act as an anchor for the day. TheLEVELS panel ranks the top-10 walls by absolute gamma; the GEX panel shows the strike profile across the entire chain.

The HVL, gamma flip line

The High Volume Level (HVL) is the strike at which cumulative GEX flips sign. Above HVL, the chain is net-long gamma overall, dealers tend to suppress moves. Below HVL, net-short gamma, moves get amplified. Crossing HVL changes the mechanical bias of the day.

You'll see HVL plotted as a horizontal line on the STUDY panel when the GEX-overlay toggle is on, and surfaced in the LEVELS panel.

Max pain

Max pain is a separate concept that often gets bundled with GEX, the strike at which option holders collectively lose the most at expiry (the dealers profit the most). It's a magnet on long-gamma days, especially into expiry, because dealer hedging mechanics push spot toward it.

On the MAXPAIN panel and as a tile on theGEX summary. The intuition: dealer flow naturally pulls toward the strike with the most net-positive option holder pain because that's where their hedging is most damped.

Pin behaviour

When the chain is heavily long-gamma at a near strike, spot tends to pin to that strike into expiry. Dealer hedging flow keeps price oscillating around the strike; natural drift is suppressed. The bigger the gamma concentration and the closer to expiry, the stronger the pinning effect.

0DTE pinning is the most pronounced version of this, see the next page on 0DTE vs all-expiry.