Every options chain creates a hidden map of where the dealers who sold those options must hedge. Gamma levels are the price points where that hedging is concentrated — and where price often reacts. This page explains what they are, in plain English, before you ever open a chart.
A gamma level is a price. It is not a buy or a sell, and it is not a prediction. It is the strike where the options market's hedging flow is largest, which makes it a place traders watch for a reaction: a bounce, a rejection, a stall, or an acceleration through it. That is the whole idea. The level tells you where something is more likely to happen; the tape tells you what actually did.
The reason it works at all is mechanical rather than mystical. When a dealer sells an option, they take on risk that changes as the underlying price moves. To stay neutral they buy and sell the underlying itself. At certain prices they must do a lot of that buying and selling at once — and that forced flow is what shows up on the chart.
Options dealers who sell contracts hedge their risk in the underlying. The size and sign of that hedging — their gamma exposure (GEX) — changes with price, and it concentrates at specific strikes. Near heavy positive gamma, dealers buy dips and sell rips, so price tends to pin; past the flip into negative gamma, they hedge with the move, so price tends to accelerate. Those concentration points are the levels we publish.
We compute them from publicly available options data — the listed chains for each instrument — back-solving implied volatility and summing dealer gamma per strike and expiry. The inputs are public; the read is ours. We don't fabricate, hand-pick, or back-date a single level.
Gamma levels are a map of where reactions are likely, not a trade list. A common way to use them is as context: mark the flip, the walls and the expected-move band before the session, then read how price behaves when it arrives. Holding above a wall, rejecting it, or slicing through it are three different pieces of information — and all three are visible only after the fact.
They are also useful mechanically. Stop placement, targets and risk sizing all become more concrete when you know where the forced flow sits. We publish levels, not calls, because structure is verifiable and a signal is just an opinion with a timestamp.
Next: see how the flip and the walls work together on the gamma flip & walls page, how SPECTRE grades these levels in public on the grading page, or read the full methodology.