Market Regime

What is Positive Gamma?

A market regime is the kind of behavior you are seeing across the market: moves keep slowing down, or they keep following through. Gamma is one possible reason for that behavior.

A dealer is a firm that trades options. Options are contracts linked to a stock or other market. Dealers may buy or sell stocks or futures to balance the risk of those contracts. These balancing trades are called hedges.

When dealers have positive gamma, their hedge adjustments can work against a price move. They may buy as price falls and sell as price rises. That can help slow movement.

On your indicator: watch whether moves away from major areas keep failing. C1 is the main Call Wall and P1 is the main Put Wall. Price could turn near either area without touching the exact line.

This behavior can fit a positive-gamma explanation, but the chart alone cannot confirm dealer holdings. Other buyers and sellers can create the same pattern or overpower a hedging effect.

What is Negative Gamma?

When dealers have negative gamma, their hedge adjustments can add to a price move. They may buy as price rises and sell as price falls. Those balancing trades can help movement continue.

On your indicator: look for price moving beyond a marked area, returning near it, then continuing on the new side. That return is called a retest. A quick poke past a line, followed by a reversal, is weaker evidence of a lasting break.

A major level or several labels close together can still interrupt the move. A pause or bounce in one area can happen while the broader market remains prone to fast moves.

Fast movement is not proof of negative dealer gamma. News and other orders can also drive it. Likewise, one bounce does not prove the market switched to positive gamma.

How to know what environment you are in

Build a working view from several clues, then check whether price agrees. You cannot know the full dealer position from a line or a few candles.

1. Check what your data covers. 0DTE means options that expire today. Other expiration dates can matter too. Make sure the update is current and you know which dates are selected.
2. Find the nearby areas. Mark FLIP and the main levels above and below price. Notice a stack—several labels at the same or nearby prices.
3. Watch several moves. Do attempts to leave an area keep failing, or does price keep moving beyond areas and staying on the new side?
4. Keep the local reaction separate. A bounce near one level tells you about that area. It does not automatically describe the whole session.
5. Update your view. A quiet range can turn into a fast move, and a fast move can slow down. If the data is mixed or price disagrees, treat the environment as unclear.

If you use an overall gamma estimate, check whether it estimates dealers' holdings, which markets and expiration dates it includes, and how it assigns positive and negative signs. A C1, P1, or D+ label is not that whole-market estimate. D+ describes delta, a different measurement.

Being above or below the 0DTE FLIP

Below the 0DTE FLIP does not automatically mean negative dealer gamma. Above it does not automatically mean positive dealer gamma. The line helps organize your chart; price's position relative to it is only one clue.

0DTE means options that expire today. In this indicator, FLIP marks a selected change between positive and negative gamma readings at nearby option prices. It does not calculate the point where every dealer's combined position changes sign.

A major or stacked area can help slow a move on either side of FLIP. The nearby buying and selling matters too. Several labels sharing an area make it worth watching, but the stack does not tell you who is trading or guarantee that it will hold.

Example: a bounce while still below FLIP

Made-up NQ prices: FLIP is at 20,000. Price falls toward 19,900, where P1, Ab1, and De1 sit together. P1 is the main Put Wall; Ab1 marks the biggest combined call and put gamma amount; De1 marks the biggest delta reading by size.

Price turns at 19,903, a few points before the line, then rises to 19,940. It is still below FLIP, but the decline has slowed near the stack.

• What supports a local floor: another approach to the 19,900 area turns upward, and price starts moving away from it.
• What changes that view: price moves below the surrounding area, fails to recover it, and continues lower.
• What you can say: “This area is holding for now, even below FLIP.” The bounce does not prove positive dealer gamma, and P1's negative reading does not guarantee continued selling.

Example: a rise slows while above FLIP

A separate made-up map: FLIP is at 20,000. C1 and Ab1 share an area near 20,100. C1 is the main Call Wall; Ab1 marks the biggest combined gamma amount. Price rises to 20,097, then turns lower while remaining above FLIP.

• What supports a local ceiling: repeated attempts near 20,100 fail and price moves lower.
• What changes that view: price moves beyond the area, returns near it, then rises again.
• What you can say: “The rise is slowing near this stack.” Being above FLIP never guaranteed an upward move or a hold at the level.

What if price keeps moving through the levels?

Price can also be above FLIP and show fast, continuing moves through several areas. That behavior can fit negative-gamma hedging, or strong orders from other traders. Being above the line does not rule either out. Below FLIP, repeated fading moves can fit positive-gamma hedging or other balancing flows. Price alone cannot settle which explanation is correct.

The few-point offsets in these examples are illustrations, not a fixed rule. Define your area and risk before a trade instead of widening them after price moves against you.