Options dealers are not trying to guess direction. They sell options to traders and then hedge that risk in the futures market. How they hedge depends on gamma, and gamma changes the character of the whole session.

Positive gamma vs negative gamma

When dealers are long gamma, they buy dips and sell rips to stay hedged. That flow leans against the move, so ranges tighten, breakouts fail more often and mean reversion works better.

When dealers are short gamma, they have to sell into weakness and buy into strength. Their hedging adds fuel to the move. Ranges widen, trends run further and stops get hit faster.

So what is the flip?

The gamma flip is the price level where net dealer gamma crosses from positive to negative. Above it, the market tends to be calmer. Below it, the market tends to be faster and more directional.

It is not a support or resistance line by itself. Think of it as a regime line. It tells you which playbook to use.

How to use it

• Above the flip, favour fading the edges of the range and taking profits sooner.

• Below the flip, respect momentum, give trades more room and avoid fading strong moves.

• Watch how price behaves the first time it crosses the flip. A clean acceptance below it often starts the most volatile part of the day.

Where to find it in HOC

The HOC Terminal plots the gamma flip on the Options page and on HOC Charts through the GEX Levels indicator. It updates through the session as the options chain changes, so check it again after the open and after big moves.

Next episode: call walls and put walls, and why moves so often stall right at them.