How to use GEX to Determine Direction for Day Trading. How to use gamma exposure to trade. lesson #1

With these videos, you will learn how to understand the gamma exposure profile, learn how to build gamma levels, what signals they send us, understand what primarily affects price, movement, and learn how to make money from it. In this video, we will look at a signal that will indicate that you can safely take a long or short position. Well, let's go straight to specific examples because it will be clearer this way. This is the gamma exposure profile. On January 21, 2025, we can see that the price is in a positive gamma exposure. The orange line is the current price at the top and bottom, or on this chart on the right and left respectively, the price is surrounded by blue bars. We also see that positive gamma significantly exceeds negative gamma. The first conclusion we can draw is that the day has just begun and we already understand that it will be controlled by the bulls and it is almost impossible for the market to fall on such a day. This is exactly the case when you could blindfold and just buy. However, even in such a situation, we can still identify support zones below which the market will not go away and from which we can open a long position to maximize profits. And we can also identify targets to which the market can grow. During the day we see that at around 6,000 points there is a surge of positive gamma, which is a prominent blue column, and absolute gamma, which is a purple zone, is also there. Since this level is below the current price and the absolute Gamma zone is 90% likely to prevent the market from falling below, we could identify the 6,000 point level as support. Now we are looking for the level to which the price should rise. We see that the maximum positive gamma is at around 6050 points. This is the largest blue column. At the same time, after the level of 6050, gamma exposure begins to decrease, and within the framework of this day, it was logical for the price to reach the level of 6050. But it no longer made sense to break through this level just because gamma exposure began to decline. For ease of orientation on the chart, these levels looked like this. At the level of 6050, the P1 zone passed, which corresponded to the maximum value of positive gamma, or it is the largest blue column. The maximum volumes for call options also passed at the level of 6050. The maximum values of absolute gamma were applied at around 6,000 in the form of a purple dotted line, and below that, the maximum volumes for put options and the maximum value of negative gamma. On that day. Given the strong preponderance of positive gamma, these values were not particularly important. But for the sake of completeness they are also plotted on the chart. That is once again, after looking at this chart visually, all the stars have already converged here in favor of the fact that the day will be growing and the price will go towards 6050. Actually, in the comments to these posts, at the beginning of the trading day, I wrote that the price is in positive gamma. The nearest strong support is 6,000 points, the magnet level. This is 6,050. If we look at how events unfolded that day, we can see that at the beginning of the day there was a downward movement to the level of 6,000 points which was a powerful support. From there the price turned around, began to rise and as a result, the day closed at around 6050 points and all the goals worked out just perfectly. Moreover, please note that the price approached this level even earlier. And then I wrote another post that in principle, the price reached magnet 6050. There is no special reason to grow above 6060 today. At the same time, taking into account the overall positive gamma exposure and the strength of 6050, it should not fall either. What could have been done that day? There were several options. The simplest one, following the blindfold and by principle you could just open a long position anywhere and wait until the price reaches the target. The second option is to go long from the support level. If you trade options, you could either build spreads or aiming at the 6050 level. You could build directional strategies like a butterfly, an iron butterfly or a butterfly with a broken wing. I opened call butterfly myself. This position was opened at the beginning of the day and at the moment of the first touch of the 6050 level. This strategy brought a very good profit. Before the expiration, there was no need to hold this position. I constantly repeat and will repeat that when it comes to intraday trading and especially credit strategies, a profit of 30% will already be acceptable. If the profit is 60 or 70% and there are still some hours left before the end of the trading day, then the position can be closed without thinking. Lets look at another example and it was Tuesday, December 24, half an hour after the market opened. The SPX was at around 6,000 points. If you look at the gamma exposure profile, then at that time it looked like this. What we see here, we can see that the price is at the maximum values of the positive gamma. At the same level of 6,000 points, the maximum values of the absolute gamut are also passed. This is the purple zone. And in addition, the maximum volumes for call options were also passed. Here the price was surrounded by positive gamma from all sides, which indicated that the day would also be completely controlled by the bulls. What growth goals could we identify for ourselves? At the level of 6035, the last more or less large surge of positive gamma took place. After which, starting from the level of 6040, gamma exposure began to decline. Well, in the case of the example above, on this day the price had reasons to rise to this level, but there was no reason to break through it. As A result, Tuesday December 24, closed at exactly this level. Another small life hack that day. Coincidentally, at the time the market opened at around 6,000 points, both call option volumes and absolute gamma values were passing. But if, for example, the maximum call options volumes were at around 6040 or 6050 points that day, then we could use these values as a guide for growth. Well, let's look at another example. This is the 26th of December. The day began with a fall. The price stopped at the level of 6010 points. And if you look at the gamma exposure profile at that time, we see that it was the gamma flip level. That is this zone acted as support. What goals could we set ourselves? We see that at the level of 6050 there were maximum values of positive gamma. And also at this level there were maximum values of absolute gamma. Well, then a post was written about the fact that gamma exposure is skewed towards the positive. The 6050 level is a strong zone that can be targeted as a growth target for today. The 6000 level is a strong support from which there should be a rebound. As a result, the price turned around from the support level and went to test the level of 6050 which stood out as a growth target. Further, this level acted as resistance until the end of the day. But the main goal that it should have been tested at that time was fulfilled. Let's fix it. We have two schedules. Here's the first one. Here's the second one. Both of these charts indicate bullish market sentiment and that the day will be growing once again. Here's the first chart. Here's the second one. On both of these charts, the positive gamma value is much higher than the negative gamma value and the price is in positive gamma exposure. The more bullish chart of these 2 is the first one. We see that there is a strong positive gamma advantage here. The price is at the highest values of positive gamma and the blue bars are decreasing slightly from above relative to the current price. But they are not decreasing much. That is, there is a mad bull bravery attraction in such a situation. You don't even have to wait for a rollback, you can safely bet on growth and expect the price to reach at least the level of 5,950. There is a surge in positive gamma and you can see that this column is slightly different in its growth from what surrounds it. In the second example, there is also a bias towards positive gamma. In general, the price above and below is in the territory of positive values. But there will be a slightly different approach to trading. That is, if in the first case we can buy anywhere at all, then here we can already identify support and resistance levels for ourselves. The support level is a range of 5,975 points. There is a gamma flip. The resistance level is 6020 to 6025. These are the maximum values of positive gamma. And at the same time this resistance level will also be a magnet level where the price should come during the day. Similarly, all this will work only in a mirror way when it comes to a possible market decline. If the price is in negative gamma exposure. If below the current price we see large negative gamma values, we see the absolute gamma value. We see that below the current price there are large volumes on put options that exceed the volumes on call options. Then we can focus on these levels as a goal to reduce the market in general. In this lesson we have analyzed situations where you can open a position in a certain direction and not expect that as the price moves towards its intended goals, some obstacles may arise. In the next lesson, we will look at situations in which you can open a position to break through the support or resistance level. In conclusion, I will answer another question that may arise and where to get all these values. All this is on our website. All members of our community have access to it. And there you can look at these parameters in real time and not only using SPX. You can watch shares of ETFs and much more. And on this site, in addition to the parameters described above, there are also graphs on which these values are plotted. And there are graphs that show key support and resistance levels. But we will have a separate lesson about this later.