Gamma exposure, explained
Gamma exposure measures how much dealers must buy or sell as the underlying moves, because of the options they are holding against customers.
Positive gamma dampens moves
When dealers are net long gamma, hedging means selling into strength and buying into weakness. That is mechanically stabilising — it compresses realised volatility and tends to produce quiet, range-bound sessions.
Negative gamma amplifies them
When dealers are net short gamma, the hedge runs the other way: they buy as price rises and sell as it falls. The same news produces a bigger move, because hedging pushes in the direction of travel.
The gamma flip
The price where net dealer gamma crosses zero is the flip point. Above it, moves tend to be damped; below it, amplified. It is not a support or resistance level — it is a change in the character of the tape.
What it cannot tell you
Gamma describes how a move is likely to behave, not whether one is coming. It is a volatility regime input, not a directional signal, and anyone presenting it as the latter is overselling it.