BackQuant Glossary
Gamma Exposure (GEX)
The aggregate dollar amount that options dealers must trade per one-percent move in the underlying. Positive GEX means dealers hedge against price (suppressing volatility). Negative GEX means dealers hedge with price (amplifying it). The single most important options-derived signal for regime classification.
Related terms
Hedge
A position taken to offset risk in another position. Long spot can be hedged by buying puts. A short call book is hedged by buying delta in the underlying. Hedging defines market-maker behaviour and is the mechanical reason gamma exposure matters.
Regime
The character of price action over a period: trending or ranging, high-vol or low-vol, positive or negative gamma. Regime classification is the single most important input to strategy selection. A signal that works in one regime often fails in another.
Gamma
A second-order Greek measuring how much delta changes per one-dollar move in the underlying. Gamma is highest for at-the-money options near expiry. Long option positions are always long gamma; short options are short gamma. Gamma is the input to gamma exposure.
Gamma Flip
The price level at which net dealer gamma crosses from positive to negative. Above the flip, dealer hedging tends to damp moves. Below it, hedging amplifies them. The flip is the single most useful regime boundary on the chart.
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