net gex

Net GEX = Total Call GEX Imbalance - Total Put GEX Imbalance

Understanding Net GEX

• Net GEX condenses the GEX Profile into a single measure.
• When Net GEX is high and above 0, there are more holders of call $\gamma$ than put $\gamma$.
• When Net GEX is low and below 0, there are more holders of put $\gamma$ than call $\gamma$.
• $\gamma$ is a measure of convexity. If it is high, that means there is more upside convexity than downside convexity, and vice versa.

Market Implications

• If upside convexity is high and increasing (Net GEX is very positive), and bars are relatively equal, a squeeze is likely. If upside convexity is high and rising, and a single bar above price predominates, look for reversion there.
• If downside convexity is low and decreasing (Net GEX is very negative), and bars are relatively equal, a selloff is likely. If downside convexity is low and decreasing, and a single bar below price predominates, look for reversion there.
• Reading Net GEX in tandem with Net Convexity can be quite powerful. It can tell you at a glance whether there is more gamma exposure bought or sold as calls or puts.