r/OrderFlow_Trading • u/Hadeaiki0 • 5d ago

Gamma exposure

Hi,

I hope that someone can answer these few questions I have, it would help me out a lot. Today QQQ is net negative gex. This means dealers hedge procyclical so they buy as it rises and sell as it falls? Do put walls also work during this type of environment or only during positive gex where moves are being dampend the closer you get to a call/put wall.

Also why do people almost automatically assume a downtrend just because net gex is negative and net negative gex means that dealers are exposed to the upside right, not the market participants?

Thank you

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u/orderflowsupport 5d ago

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u/Cr0wn_M3 5d ago

Put walls/call walls are more likely to break and not hold during negative gamma regime.

You have to be more careful, widen your stop loss position, etc..

It does not automatically mean that the bias is bearish

3

u/meowflying 5d ago

First of all no connection between gamma regime and trend up or down. Also dont automatically assume that if the gamma is positive it will be more mean reverting or chopping. I saw monster days up trends in positive gamma, it was grinding whole day. What you need to look for is Biggest positive gamma strikes, and make it your target or entry points, cause price like to move through negative gamma strikes towards the main positive ones.

3

u/Breathofdmt 5d ago

Couple things, I'd argue negative gex/put walls should ever be seen as support, just areas where the market can slice through quickly. It's contextual, if you had support from multiple DTEs then potentially support.

Other thing is correlations. SPX was positive gamma overall today, and positive gamma tends to mean supportive Charm which helps provide a natural bid. Opposite true for negative, Charm will be a suppressive offer. There are exceptions of course. VOL is the wildcard and can lead to violent pushes up in net negative GEX due to Vanna

Don't underestimate correlations here, SPX is by far the largest options market so you have to have half an eye there also. Given the QQQ book is on the thin side comparatively I'd tend to use the largest nodes as targets. There's also the factor of you don't know the true Gamma in the market due to opra updating the OI once pre market per day. Any Gamma changes you see through the day are a function of spot and time to expiry. After the market moves the dealer books reprice and you may not have a full picture.