Track / 03
2 min read
Playbooks
Five recurring setups. What the board shows, what dealers are forced to do, and what invalidates the read.
0 of 5 read
Amplifying day
GEX negative, spot below the flip. Dealers short gamma trade with the move; trends extend and sell-offs accelerate.
Setup: net GEX is negative and spot sits below the flip. The book is short gamma.
Forced trade: short gamma dealers buy strength and sell weakness to stay hedged. Their hedging leans with the move.
What usually happens: trends run further than they should, ranges widen, and down moves accelerate as selling begets selling.
What invalidates it: spot reclaims the flip and GEX turns positive. The same move that ran now gets sold back.
Dampening pin day
GEX positive, spot near a heavy strike, low time to expiry. Dealers long gamma fade both sides onto the magnet.
Setup: net GEX is positive, spot is close to a heavy gamma strike, and expiry is near.
Forced trade: long gamma dealers sell rallies and buy dips into that strike. Their hedging leans against the move.
What usually happens: the range compresses, each swing smaller than the last, and the close settles on the magnet.
What invalidates it: a wall breaks on real size, or GEX flips negative. The magnet stops winning the moment the sign turns.
Wall rejection
Spot approaches the heaviest call strike in positive gamma. The book sells the test to stay hedged.
Setup: spot runs up toward the heaviest call-side strike while GEX is positive.
Forced trade: to stay flat as spot rises into the strike, the book sells into the test.
What usually happens: price is turned back below the wall, often on the first touch, and the level holds.
What invalidates it: the wall is absorbed and price closes above it. The old resistance then reads as support.
Void traverse
A stretch of strikes with little dealer gamma between two walls. Nothing leans against the move.
Setup: between two walls sits a band of strikes carrying almost no dealer gamma.
Forced trade: there is nothing to hedge inside the void, so no one leans against price there.
What usually happens: price crosses the void fast, in one push, because nothing slows it until the next wall.
What invalidates it: new open interest fills the void overnight, or a wall stops the run. The void is a path, not a target.
OPEX week
Large gamma concentrated at Friday expiry. Pins strengthen into the close as charm unwinds hedges.
Setup: gamma piles up at Friday’s expiry, heavier than any other day on the board.
Forced trade: as the clock runs down, charm bleeds delta out of the book and pins tighten around the heaviest strike.
What usually happens: price gravitates to the max-pain strike, the book empties Friday afternoon, and Monday opens on a fresh regime.
What invalidates it: a macro shock overwhelms the pin. Positioning bends the tape, it does not outrank news.
Self-check
Give the two conditions that set up a dampening pin day.
Positive GEX and spot near a heavy strike into expiry.
Long gamma dealers fade both sides onto the magnet, so the range compresses.
State what invalidates an amplifying day.
Spot reclaims the flip and GEX turns positive.
The regime inverts; the move that was running now gets sold back.
Explain why price crosses a void fast.
There is no dealer gamma inside it to lean against the move.
Nothing slows price until the next wall, so it traverses in one push.