Overview
This episode of the Bear Trap Podcast features an in-depth discussion with Jess, the creator of Gexbot, a real-time gamma exposure visualization tool for options trading. The conversation covers the origin of the tool, practical use cases, live trading analysis, and future development plans.
Origin and Purpose of Gexbot
- Jess developed Gexbot to visualize intraday gamma levels, initially inspired by Spock Gamma's pre-market levels.
- Early versions involved manually updating images; real-time refresh was later added for practicality during trading.
- The tool's sharing began on Discord, expanded to Twitter, and eventually evolved into a website with live data.
- Gexbot is designed to help traders intuitively understand the impact of gamma exposure on price movement.
Understanding Gamma and the Tool’s Mechanics
- Gamma nodes act as dynamic pivots where price action often stalls or reverses, similar to points of high liquidity.
- Live visualization provides an intuitive sense for market "flow," akin to watching real-time order flow.
- Gamma levels are not fixed boundaries but regions with a gradual transition that affect hedging and liquidity.
- The tool uses a price ladder format: vertical axis as price, horizontal as gamma exposure, with colored dots representing historical changes.
Practical Intraday Usage and Case Study Analysis
- Major gamma levels ("North Stars") serve as targets or boundaries for expected price action during trading.
- Range (balanced) days often see price auctioning between major gamma nodes, with zero gamma as a central pivot.
- On trending days, dominant gamma nodes in the trend direction become the primary targets.
- Analysis of April 6th showed active engagement and volume shifts at key strikes (4075, 4090, 4100, 4105), helping define intraday support, resistance, and trade opportunities.
- Observing changes in gamma exposure (via dots) helps anticipate shifts in market direction and momentum.
Advanced Observations and Best Practices
- Highest gamma exposure typically concentrates at "at-the-money" options; shifts in open interest or volume can signal potential moves.
- As price approaches major gamma nodes, activity intensifies, leading to either breakouts or reversions based on participant positioning.
- Close to market close, strong pinning behavior is observed near dominant gamma strikes due to liquidation and hedging effects.
- Building skill with Gexbot requires screen time and experience, much like mastering other market profile or order flow tools.
Future Features and Roadmap
- A zero-DTE (zero days to expiry) filter is in development to refine intraday signal precision.
- Integrations with charting platforms (e.g., CRS, MotiveWave) are upcoming to allow direct plotting of gamma levels.
- Plans include adding support for more tickers, such as QQQ and SPY.
- Continuous focus on making gamma data more actionable and accessible for traders.
Recommendations / Advice
- Develop familiarity and screen time with Gexbot to interpret its real-time data effectively.
- Use major gamma nodes as reference points for both entry and exit decisions in intraday trading.
- Combine gamma analysis with other order flow or market profile tools for a comprehensive trading view.