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Understanding the Gamma Chart and Key Levels
Understanding the Gamma Chart and Key Levels

A Closer Look at Gamma Exposure Levels, also Called GEX Levels.

Team Sang Lucci & Wall St. Jesus avatar
Written by Team Sang Lucci & Wall St. Jesus
Updated over a week ago

Gamma exposure (GEX) significantly influences the market's behavior due to the hedging impact from market makers and dealers. Here is a quick primer on understanding the Gamma exposure chart and key levels.
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In the SPX chart above, there are three key Gamma exposure levels: the Call Wall (green), Zero Gamma (yellow), and Put Wall (red). These levels are derived from the net Gamma exposure across all future options expirations. On the left side, the levels are overlaid on a price chart; on the right side, the net positive, net negative, and gamma flip based on options strike prices are displayed.
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Call Wall

This level has the highest positive Gamma exposure across all options expirations. The Call Wall is often a significant resistance level. It represents the upper bound where the hedging impact from dealers and market makers is most pronounced. This level also tends to have high liquidity, often acting as a magnet that draws the price upward.

Zero Gamma

Zero gamma marks the point where overall market gamma turns negative or positive. Market gamma is negative below the zero gamma line; above it, it's positive.

When gamma is positive, market makers and dealers trade against price. They sell rips and buy dips, creating a "sticky" or mean-reverting price action.
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​When gamma is negative, market makers and dealers trade with price. They buy rips and sell dips, creating volatile price action and large ranges.
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Put Wall

This level has the highest negative Gamma exposure (GEX) across all options expirations. The Put Wall is often a significant support level. It represents the lower bound where the hedging impact from dealers and market makers is most pronounced. This level also tends to have high liquidity, often acting as a magnet that pulls the price downward.

Why are These Levels Important?

These levels are based on market structure and the positioning of dealers and market makers. This approach differs from levels based on chart history or lagging indicators. Market makers and dealers need to dynamically hedge to maintain a delta-neutral position, making them very reliable market participants. As mentioned, these are also areas of high liquidity, which often act as magnets for price movement and where we frequently observe strong reactions when reached.

What Does a Shift in the Walls Indicate?

  • Put Wall Rolling Up = Major Support Moving Higher (Bullish)

  • Put Wall Rolling Down = Major Support Moving Lower (Bearish)

  • Call Wall Rolling Up = Major Resistance Moving Higher. (Bullish)

  • Call Wall Rolling Down = Major Resistance Moving Lower. (Bearish)

Do you have any questions or suggestions?

Email contact@sanglucci.com or reach out through the chat if you have any questions or need assistance.


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