in this unusual whales platform video we are going to cover the gamma exposure dashboard now simply put gamma is the rate of change of a given contract's Delta to make a bit of a physics analogy here Delta would represent your velocity and Gamma would represent acceleration now gamma hits its peak at the money as the spot price of the underlying stock moves around at the money strikes will have the maximum gamma value on the options chain but there are situations where the total gamma accumulated On Any Given strike might be larger than the gamma of an at the money strike this just means there's a ton of contracts there in the open interest a lot of trading going on the basic expression of gamma exposure on the first chart here shows you that the total gamma exposure for Amazon in our example here has largely been positive over the last 6 months maybe even longer now if we roll back here to September for example to around early to mid October 2023 we can see these brief periods here where total gamma was negative rather than positive the easiest way to kind of think of this total gex or gamma exposure positive or negative is to think about the option Market counterparty commonly referred to as Market maker the way to think about Market maker reactions here is in a positive gamma environment the market maker is going to sell into rallies and buy into dips to offset their total exposure in a negative gamma environment similar to what we looked at here in September to October 2023 the market maker is going to sell into dips and buy into rallies to offset their exposure so these negative gamma environments can lead to higher price volatility because not only do you have the market participants buying and selling options and shares as they normally would but the market maker can frequently be acting in alignment with the market participants instead of counteracting them you can kind of see a few points where there's a little bit lower gamma exposure and again these small points where gamma exposure was net negative but for the most part for most of recent history on Amazon anyway the gex environment has been positive so market makers have been gently selling into rips and gently buying into dips the next graph here is gamma exposure by strike now one important thing to consider here is this table ignores expiration dates of these contracts so for example here if there's a lot of action on the $185 strike that is valuable information to have but you don't immediately know the expiration dates of that call andp put gamma now with that being said gamma is a shortterm phenomenon we can even go look at the options chains here and see that the nearer dated options have higher gamma than further dated options so for example here in the Amazon chains looking at the expiration for 531 2024 which at the time of recording is just one day away the gamma for the $180 strike pretty close to at the money is35 now if we go further in time let's say the July 5th expiration date that gamma drops significantly to 027 so we can see fairly clearly that the near dat call gamma is much higher than the far dat call gamma so back to our gamma exposure by strike it is worth knowing that the expirations that are closest in time as of right now are likely to be the biggest contributors to These Bars and if it turns out that one of those bars is really large and all the open interest happens to be further dated it just speaks to the sizing of those particular trades so here we see that at the $185 strike there's this big gamma bar if this happened to be in December 2024 for example we could say wow there's a ton of open interest here because we know that near dated expirations have way more gamma than longer dated so next let's phase out this net gamma and just look at the call and put gamma puts on the left calls on the right this shows you by strike where those gamma concentrations are so here on the call side the biggest gamma concentration was at the $185 strike while for the puts the biggest gamma concentration is on the $180 strike you can see there's this sort of curve here from top to bottom on the strikes because remember the at the money strike has the highest gamma value regardless of expiration so you'll see as we move in price from Strike to strike either up or down the further away from at the money we get gamma exposure tends to drop now for a bit of a different view here let's flip the table from call and put gamma individually to just net gamma this will show you the call gamma plus the put gamma this is a bit of a naive calculation meant to show you where we've built up up open interest by strike where that gamma is really concentrated what's interesting when you look at the net gamma view is that it's showing us that the $185 strike holds by far the most gamma it's likely that market makers that we discussed earlier are long this contract market makers are suppressing volatility around that 185 level as the stock price moves toward the strike and Gamma Rises market makers will be forced to sell more shares suppressing that upside movement as the stock moves back down they will slowly buy back those shorted shares overall suppressing any large stock movement volatility we can actually see here on the daily chart how those daily candles are pretty uniform and small there's been a steady uptrend without much volatility dayt day for another example here here's a look at meta's Daily gamma exposure which has had much less of a positive gamma environment than the Amazon we viewed when meta was in a consistently large positive gex environment the share price moved in that same steady uptrend we observed in Amazon but when the gex environment is significantly less positive and a times negative the price action on meta becomes quite volatile with much larger swings both up and down down in the share price like we see here on this yellow line to give a closer look at this volatility suppression by market makers let's take this Amazon chart down to a tighter time frame on the 15 minute from May 22nd and look what happened when Amazon approached that $185 mark on the underlying stock price now remember our assumption is that the vast amount of open interest on that $185 call strike rests with market makers as Amazon breached above 185 on the underlying market makers gently sold shares to suppress volatility above the strike this led to a gentle intraday pullback in the Amazon stock price however if you refer back to that daily chart we can see fairly clearly again that Amazon has enjoyed a steady uptrend with very little downside volatility this is the result of our positive gex environment and volatility surprise R by those market makers now remember the Assumption of gamma exposure is that most of the open interest on these strikes are riskmanagement plays by institutional investors but we also have to keep in mind some trading activities are done by active Traders so some of this open interest encompasses them as well I'll offer more perspective on this with the next charts and finally the next chart shows us the gamma exposure by both strike and expiry now this one may possibly be the most instantly useful for gamma exposure information because it could potentially show you some places where you might find a mean reversion trade or you might find that speculators are overpowering the potential for mean reversion that they may just be running over Market participants trying to fade the move at the top you can select which expiration date you want to view but for now we're going to stay on the nearest date expiration even though it's not currently the largest source of gamma we know that short-dated options can be like a hot potato you don't just hold on to that bad boy and pray to the market Gods it goes the direction you want participants trading these options are likely to be doing faster trades in and out so one thing we can do here is hide the net gamma and just look at the call and put gamma again to see the biggest call strikes and the biggest put strikes now again this is based on open interest and gets built out each morning when open interest updates so we can see that at open the $185 strike has the highest call gamma while the $180 strike has the highest put gamma down below we can see that for example the $170 strike is about even so these are kind of close if we turn on the net gamma and turn off call and put gamma that 170 Strike should be about flat and here we can see that it indeed is now on the $85 strike there's absolutely zero splitting of hairs there's significantly more call gamma than put gamma and shown again here on net gamma it's very clear that call Traders are in control on the $185 strike for the 531 2024 expiration what makes these values interesting is the nature of short-term speculating for example a Trader who's purchased the 185 strike calls on Amazon to speculate on the upside if Amazon was trading at let's say you know 183 then traded up to 185 a 185 strike call buyer might be looking to monetize that contract as soon as the price trades up into that 185 area they may say hey look this contract was out of the money and now it's in the money the most rapid price appreciation on the contract has already occurred Fast Money traders may be looking to get out or reposition given The Nearness of the expiration so we may see holders of long calls fall off in this area so to give an idea of what I mean with that let's go back to the Amazon chart so looking at the Amazon chart and zooming way in we can see that on the beginning of the day of Wednesday May 22nd the market opened and there was some price appreciation pretty much immediately Traders got the price of Amazon up to a little above 185 and in fact the high of day here was right around 18522 but you'll notice here on the 5 minute chart that it didn't hold on to this 185 level for very long we tapped above 185 and then Amazon had a nice little pullback as low as 18352 before bouncing and continuing its downtrend one potential explanation of this is that long call speculators on that stacked $185 strike monetized their contracts and took profit here when we tapped above so what happens here is when your counterparty the market maker in this example was short a call by selling the long call you opened to you they don't want that directional exposure so to offset set their short call they buy some stock to hedge it as soon as you sell that call they're buying that call back once you no longer have a long call the Market maker no longer has a short call either once you realize that profit on your long call the counterparty no longer has this hedging requirement so they dump their Equity exposure which can have a negative impact on the price of the underlying stock as we see here so when you have enough of this action Happening notated by how large the gamma exposure is at any given strike sometimes we can see what happened here occur the spot price reaching the strike in question here we're talking the $185 strike we can see some pullback potential and Mark that as a possible place to take profit if you're in a gamma exposure-based trade all right everyone I hope that helps you better understand what exactly you're seeing in these gamma exposure chart charts and how you can relate it to the options chains and the stock chart itself to Garner some insight into how you can utilize gamma exposure both in picking a strike to trade as well as points on the chart to take profit