FAQ

The questions traders ask about options flow, gamma exposure, and dealer hedging — answered plainly.

What is a gamma wall?

A gamma wall is a strike with very large options open interest where dealer gamma concentrates. Because market makers must hedge that exposure, price tends to be pulled toward the wall and pin near it — so it acts like a magnet and, often, support or resistance.

How does dealer hedging move the market?

Market makers must stay delta neutral, so as price moves they buy or sell the underlying to offset the options they hold. Near a large or fast-growing wall, that forced flow is significant and predictable — it can pin price, or, when the wall grows quickly, push it.

What are 0DTE options and why do they matter?

0DTE options expire the same day. Their gamma near expiration is extreme, so dealer hedging and price become highly reactive to order flow. Sudden size on a normally-dead 0DTE strike is one of the clearest signals that something is happening.

What does "market makers must at all times be delta neutral" mean?

It means dealers hold no net directional bet — they continuously trade the underlying to cancel out the delta of their options book. That constraint, not any market view, is what generates the repeatable hedging flow you can position around.

What is a gamma flip level?

The gamma flip level is the price where aggregate dealer gamma changes sign. Above it, dealers dampen moves (buy dips, sell rips); below it, they amplify moves (sell rallies). Crossing it often marks a change in how the tape behaves.

How can I tell when unusual options flow is actually meaningful?

Look for relative volume, not absolute size: a spike versus a strike's own recent baseline. Sustained abnormal volume beats a single flash, correlated bursts across nearby strikes strengthen the signal, and agreement with an independent trigger (like a technical cross) is the strongest confirmation.

Full glossary → · Read the articles →