Dealer Gamma Exposure (GEX) Explained

What Is Gamma and Why Dealers Matter

Gamma is the rate of change of an option's delta with respect to the underlying asset's price. It measures how much delta changes for a one-point move in the stock. Market makers who sell options often end up short gamma, meaning their delta exposure increases as the stock rises and decreases as it falls.

To remain delta-neutral, dealers must adjust their hedges: buying stock when prices rise and selling when they fall if short gamma. This behavior can amplify price moves. When dealers are long gamma, they do the opposite—selling into strength and buying on weakness—which tends to stabilize prices.

The aggregate gamma exposure across all dealers in a stock is what FinzData calculates nightly as Dealer Gamma Exposure (GEX).

Positive vs Negative Gamma and Hedging Flows

Negative GEX indicates dealers are net short gamma. In this case, as the stock price rises, dealers must buy more shares to hedge increasing delta exposure; as it falls, they must sell. This creates a feedback loop where price moves trigger hedging that pushes prices further in the same direction.

Positive GEX means dealers are net long gamma. Here, rising prices cause dealers to sell shares to reduce delta, while falling prices trigger buying. This opposing hedging acts as a stabilizing force, reducing volatility and often pinning the stock near key levels.

The sign and magnitude of GEX help traders anticipate whether dealer hedging will amplify or dampen price action, especially around expiration dates when gamma exposure peaks.

What Is a Gamma Squeeze?

A gamma squeeze occurs when a sharp move in the underlying stock forces dealers to adjust their hedges rapidly, which in turn accelerates the price move. This often starts with heavy buying in out-of-the-money call options, leaving dealers short gamma.

As the stock rises, dealers buy shares to hedge, pushing the price higher, which forces more hedging buying—a self-reinforcing loop. The squeeze can be especially powerful when combined with short interest, as short sellers are forced to cover.

FinzData’s gamma squeeze screen scores each name from 0 to 100 and labels its stage as setup or ignition, using call-heavy options flow, how close the price is to the call wall, short interest and days to cover, and how much stock dealers would need to buy to hedge a 10% rise relative to normal volume.

How FinzData Publishes Dealer Gamma

Every night FinzData scans the listed options of 3,700+ US stocks and ETFs. For each name it publishes net dealer gamma, the gamma flip level, the call wall and put wall, put/call ratios and at-the-money implied volatility.

The gamma flip is the price where estimated dealer gamma changes sign. The call wall and put wall are the strikes with the largest call and put gamma, which often act as reference levels for hedging flows.

Subscribers to Squeeze & Gamma Alerts ($29/month, included with Institutional) receive the full screen in a pre-market email before 7:30am ET on trading days, through the API at /v1/alerts/squeeze and /v1/alerts/gex, and as CSV. Every day's screen is stored, so past dates can be pulled for backtests.

Using the GEX and Squeeze Screen Data

Traders use GEX levels to assess market structure: extreme negative GEX may signal potential for acceleration on breaks, while strongly positive GEX often correlates with range-bound behavior or 'pin risk' near expiration.

The squeeze screen combines dealer gamma with call-heavy flow, distance to the call wall, short interest, days to cover and float. It is a positioning screen built from options data, not a forecast: it shows where dealer hedging could add fuel to a move, not what to buy or sell.

A free preview of the top three names appears at finzdata.com/squeeze, and the free FinzData Daily Brief email carries liquidity, dealer gamma and the top three squeeze names each morning.