Zero Gamma
Zero gamma is the price at which a symbol's net dealer gamma exposure equals zero — the boundary line between the regime where dealer hedging dampens price moves and the regime where it amplifies them.
What it is
Zero gamma cannot be read off any single strike. It is a whole-chain quantity: take every strike and expiry, compute each contract's gamma at a hypothetical spot price, sign it by the dealer convention (calls positive, puts negative), weight it by settled open interest, and sum. Repeat across a ladder of hypothetical prices. Where the sum crosses zero — interpolated between the two nearest rungs — is the zero gamma level.
It is also called the gamma neutral level, and it is the same level other vendors label the gamma flip. Profit Builders' methodology page uses the flip name; the underlying quantity is identical: the sign change of net dealer gamma.
Because it nets the entire chain, zero gamma usually sits somewhere in the region between the put wall and the call wall — but it is not their midpoint, and in a chain dominated by one big strike it can sit far from both. What matters is which side of it spot is trading on, not its distance from either wall.
How traders use it
- Marking the regime boundary on the chartDrawn before the open, zero gamma splits the day into two characters: trade above it expecting hedging to lean against moves, trade below it expecting hedging to lean into them. It is the single most common level GEX traders put on a chart.
- Watching the level migrateDay over day, watch where zero gamma sits relative to spot after each new settle. A level migrating toward spot means positioning is concentrating nearer the money — the regime boundary is getting closer, and a regime change is getting cheaper to trigger.
- Framing catalyst riskInto an earnings print or a macro release, spot's side of zero gamma tells you which hedging response the move will meet: absorption on the long-gamma side, acceleration on the short-gamma side.
What it is not
- It is not a magnet. Price is not drawn to zero gamma, and treating it as a target confuses a regime boundary with an attractor — the walls are where hedging flow concentrates, not this line.
- It is not exact to the cent. It is an interpolated estimate from a model, sensitive to the sign convention and to which strikes and expiries are included. A level shown to the penny is false precision.
- It does not say price will reverse there, cross there, or respect it at all. It says: if price moves through here, the hedging flows on the other side push the other way.
On SPY, in practice
For SPY, zero gamma is the line index traders mean when they say the market is 'in positive gamma' or 'in negative gamma' for the day. SPY spending the morning above zero gamma and the afternoon below it is a complete character change in the same session — the morning's failed breakouts and the afternoon's follow-through are the same market under two different hedging regimes.
Today's SPY zero gamma level, computed from the settled base stamped on the page, is on the SPY gamma page alongside the walls.
Frequently asked questions
Is zero gamma the same as the gamma flip?
Yes. Zero gamma is the level (net dealer gamma = 0); gamma flip is the name for spot crossing it. Vendors pick one label or the other — SpotGamma popularized 'gamma flip' — but the computed quantity is the same sign change in the net GEX profile.
Why does another platform show a different zero gamma level?
Because the inputs are choices, not facts: the dealer sign convention, the strike and expiry windows included, and whether the vendor models intraday open-interest changes on top of the settled base. Profit Builders publishes its choices — settled OCC open interest, standard sign convention, gamma computed in-house — on its gamma exposure methodology page, so a difference can be traced to a stated assumption rather than a black box.
Is zero gamma the same as gamma neutral?
Yes — gamma neutral, zero gamma, and gamma flip all name the price where net dealer gamma crosses zero. The terminology varies by vendor and by trading community; the definition does not.
What happens when price crosses zero gamma?
The hedging response inverts. Above the level, dealers hedge against moves (selling strength, buying weakness), which dampens volatility. Below it, they hedge with moves (buying strength, selling weakness), which amplifies volatility. The crossing changes the character of subsequent movement — it does not pick a direction.
How these levels are calculated, with the model's stated limits: the gamma exposure methodology · Today's levels for all 194 symbols: the GEX hub.
Profit Builders provides market-data analysis and educational information, not investment advice. Options trading involves substantial risk. Past performance does not guarantee future results.