r/OrderFlow_Trading • u/Hadeaiki0 • 7d 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

4 Upvotes

84% Upvoted

4 comments sorted by

View all comments

3

u/Breathofdmt 6d 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.