Hermēs DocumentationWhat is GEX
Delta is speed, Gamma is acceleration. Why dealers must hedge, and what this looks like inside Hermes.
One-line positioning
Gamma decides how forced dealers are to hedge. GEX maps that "forced-ness" per strike — and the result is a market structure map.
Three mantras
1. Retail sells Calls → Dealers Long Gamma → Up-moves suppressed (chop market).
2. Retail buys Puts → Dealers Short Gamma → Down-moves amplified (blackout market).
3. Long Gamma compresses volatility. Short Gamma amplifies it. Position-agnostic — only regime matters.
Memorize these three lines. You've absorbed 60% of GEX.
Section 1: Two Greeks = Speed + Acceleration
You don't need a PhD in options. As a futures trader, you need exactly these two.
Delta = Speed
The underlying moves $1, the option moves Δ.
| Δ | Intuition |
|---|---|
| Call Δ = 0.50 | Moves half the underlying |
| Call Δ = 0.95 | Almost 1:1 with the underlying |
| Put Δ = −0.50 | Moves opposite, half pace |
Gamma = Acceleration
The underlying moves $1, Delta itself changes by Γ.
Gamma is largest at ATM (at-the-money), near zero deep ITM/OTM. So:
The closer price gets to a massive Gamma concentration, the more frantically dealers hedge — and the bigger the feedback into the underlying.
Where in Hermes
- Main
Gamma Chart's horizontal Gamma Profile bars — each strike's gamma magnitude visible at a glance - Closer to spot (x-axis) = closer to where dealers care
- Golden HVL line on the chart = the overall gamma center of mass
Section 2: Dealers don't predict, they hedge
The most important sentence in this entire framework:
Retail and institutions can take directional bets. Dealers can't. Their business model is the bid-ask spread, so they must stay delta-neutral.
Retail vs Dealer
| Role | Must hedge? |
|---|---|
| Retail | ❌ Optional |
| Institution (funds) | Optional |
| Dealer | Mandatory (every second) |
Every fill, every tick, every delta change — dealers respond in the opposite direction in the underlying or futures.
Retail selling Calls is one of the true drivers of upside
In SPX, retail and institutions systematically sell covered calls (JEPI, XYLD, QYLD, etc.):
Retail / inst → Sell Call (Short Gamma)
Dealers → Buy Call (Long Gamma) ← Why dealers default to Long Gamma in up-trendsRetail buying Puts is one of the true drivers of downside
In panic, everyone buys Puts:
Retail / inst → Buy Put (Long Gamma)
Dealers → Sell Put (Short Gamma) ← Why dealers default to Short Gamma in sell-offsSummary in one line:
Dealer Gamma positioning = mirror image of retail/institutional option flow.
Know this and you can roughly infer where dealers are Long Gamma vs Short Gamma right now.
Section 3: Two opposite universes
The most valuable concept in GEX. Same chart, totally different physics.
🟢 Long Gamma universe
Price up → option delta grows → dealers SELL stock to hedge
Price down → option delta drops → dealers BUY stock to hedge= Volatility suppression = chop market
Feels like:
- Tight range grinds
- Slow drift up or down
- Fakeouts immediately reverse
- Key levels act like magnets
🔴 Short Gamma universe
Price up → delta grows → dealers BUY stock (chasing upside)
Price down → delta drops → dealers SELL stock (selling into the drop)= Volatility amplification = blackout market
Feels like:
- Trend days
- Big intraday swings
- Cascading sells / squeeze rips
- Levels get punched through
This is why markets sometimes feel like being pushed down stairs — it's not fundamentals breaking, it's Short Gamma self-reinforcing.
Emotional explanation: fear. Mechanical explanation: Short Gamma feedback loop.
Where in Hermes to identify your universe
| Signal | Location | How |
|---|---|---|
| Overall regime | Main panel tint / Tactical HUD "Regime" card | Green = Long Gamma; Red = Short Gamma |
| NET sign | Header NET chip | NET > 0 = Long; NET < 0 = Short |
| Price vs HVL | Chart golden HVL line | Above HVL = Long universe; Below = Short universe |
| Regime switch imminent | Chart cT/pT blue markers + Insight Rail alert | Price entering transition zone = ready to flip |
Section 4: When are dealers Long vs Short Gamma?
One rule, easy to remember:
Dealer Gamma positioning = mirror of retail/institutional option flow.
📈 Uptrend environment (retail sells Calls)
Retail/inst → Short Call (Short Gamma)
Dealers → Long Call (Long Gamma)
Up-move → dealer sell hedging → vol compressed→ This is why bull markets feel like "slow grind up, shallow pullbacks, key levels glued."
📉 Downtrend environment (retail buys Puts)
Retail/inst → Long Put (Long Gamma)
Dealers → Short Put (Short Gamma)
Down-move → dealer sell hedging → vol amplified→ This is why drops always come fast and hard.
🔄 Special: Gamma Squeeze
Rare but real. GME / TSLA / NVDA 2020-2021:
Retail → Heavy CALL BUYING (anomaly)
Dealers → Short Call (Short Gamma)
Price up → forced dealer buying to hedge → push higher → more squeeze → moonThis is non-normal. 95% of the time the 📈/📉 patterns apply.
Where in Hermes to spot Gamma Squeeze conditions
- Insight Rail "C/P Skew" card — extreme positive skew when retail goes call-heavy
- Insight Rail "Vanna Heat" card — highlights when Short Gamma feedback is intensifying
- Chart bottom-right "GEX Trail" — max_priors 30 min trajectory swinging wildly = flow on rampage
Section 5: What GEX actually measures (the most-confused point)
90% of beginners die here:
GEX is NOT the gamma of any single option.
| Concept | What it is |
|---|---|
| Gamma | A property of one option |
| GEX | A property of the entire option market structure, aggregating gamma across all strikes + expiries |
GEX gives you not single-contract Greeks, but the full picture of dealer hedging sensitivity:
- Which strikes hedging pressure is highest at
- Which strikes are negligible
- What "universe type" you're in today
Three things to remember:
- You will never see real dealer positioning (CBOE has 15-min lag, OTC hedges are opaque)
- Even if you could, Vanna / Charm reshape exposure every minute
- GEX isn't "guessing inventory" — it's "showing how market structure forces dealer reactions"
Translation into Hermes data fields
| GEX concept | Hermes data | Displayed at |
|---|---|---|
| Total GEX | chain.sum_gex_vol | Header NET chip |
| Per-strike GEX | chain.strikes[].gex_vol | Chart horizontal profile |
| Primary Call Wall | chain.major_pos_vol | Chart C1 marker (★★★) |
| Primary Put Wall | chain.major_neg_vol | Chart P1 marker (★★★) |
| Total Call/Put OI | chain.major_pos_oi / neg_oi | Levels Reading Board COI/POI rows |
| Cumulative zero-cross | chain.zero_gamma | Chart golden HVL line |
Next
You now have the foundation. Next we clear five "GEX intuition traps" that kill 80% of beginners — Call Wall ≠ resistance, positive GEX ≠ bullish, etc.
Chapter mantra: Delta is speed / Gamma is acceleration / Dealers must hedge / Long Gamma suppresses volatility / Short Gamma amplifies it. Hermes' regime tint tells you which universe you're in.