Hermēs DocumentationAnatomy of a Gamma Squeeze
Break the "dealers forced to chase" feedback loop into pre-conditions and how it ends — no predicting which name pops, just the mechanistic checklist for a squeeze, and which HermesGEX cards flag it early.
One-line positioning
A gamma squeeze = when calls are stacked above, the short-gamma feedback loop runs upward: dealers are forced to chase, buying more as it rises and rising more as they buy.
This chapter doesn't predict "which name pops." It gives you one mechanistic checklist: which conditions must co-occur for a squeeze to be possible. Conditions met = soil, not a guarantee.
Section 1: The feedback loop
Retail frantically buys upside OTM calls
→ dealers sell those calls, holding short gamma
→ price rises
→ the dealers' delta gets shorter (short-gamma property)
→ they're forced to buy the underlying/futures to hedge
→ buying lifts price ↺ back to the previous step, self-reinforcingVersus the GEX knowledge base: this is exactly short gamma (negative GEX) amplifying volatility, run to its upside extreme. Normally short gamma "helps both the fall and the rise" — a squeeze is its rise-helping version, set alight on a call wall.
Section 2: Before — the four conditions of squeeze soil
Before a squeeze, check whether these four co-occur:
| # | Condition | Where in HermesGEX |
|---|---|---|
| 1 | Skew abnormally flips Call rich | Insight Rail · C/P Skew card shows "Call rich" (green) |
| 2 | Dense call OI wall above spot | Main chart / GEX heatmap: a tall Call Wall above |
| 3 | Dealers short gamma (negative GEX) there | Main-chart regime tile red + net GEX negative in that zone |
| 4 | Price approaching that wall | Price converging on the Call Wall + NET (AggDEX) turning positive with volume |
All four together = soil in place. Missing any one, don't call it a squeeze: Call rich without a wall has no fuel; a wall with dealers long gamma instead suppresses price and won't squeeze at all.
Section 3: After — how it runs and how it ends
While running, it looks like this:
- After breaking the Call Wall, price doesn't look back and accelerates up;
- NET (AggDEX) keeps printing positive with volume — mechanical buying chasing;
- GEX Trail (the 30-min trajectory of net GEX) swings violently toward the negative side — short gamma deepening.
How it ends (two classics):
| Ending | Mechanism | Felt as |
|---|---|---|
| Supply exhausts | Upside calls bought out, the chase loses fuel | Spikes then stalls, goes flat |
| IV crush + charm unwind | IV collapses after the spike, charm unwinds the long hedges | A fast, abrupt drop |
The harder it squeezed up, the more violently it unwinds. Chasing the last leg = boarding when the fuel is nearly burnt, most exposed to the IV-crush giveback.
Section 4: 👀 Where to see it in HermesGEX (the early-warning combo)
| What you want | Where | Signal |
|---|---|---|
| Skew anomaly (soil 1) | Insight Rail · C/P Skew card | Flips "Call rich" (green) — a red flag |
| Upside call wall (soil 2) | Main chart · GEX heatmap / Call Wall | A tall wall above spot |
| Dealers short gamma (soil 3) | Main-chart regime tile + net GEX | Red tile + negative GEX in that band |
| Mechanical chasing flow (soil 4 / in progress) | HuntingFlow · NET (AggDEX, magenta line) chip | Sustained positive prints with volume |
| Short gamma deepening | GEX Trail (30-min net-GEX trajectory) | Swinging violently toward negative |
| Who's bidding the calls | Whale Signals · UOA | Unusual call sweeps / block trades above |
Section 5: The unfalsifiable usage + traps
What we say (conditional, unfalsifiable): "If Call rich + an upside call wall + short gamma there + price breaks that wall, then the mechanism that forces dealers to chase will ignite." — an accounting outcome under delta-neutrality.
What we don't say (a falsifiable directional bet): "This name will squeeze and rip tomorrow."
1. Soil ≠ a guaranteed pop. Even with all four, price may simply not break the wall and the squeeze never ignites. The conditions are necessary, not sufficient.
2. Don't sell naked on a Call-rich name. Skew already tells you the upside is being bid; selling naked calls / shorting outright sits you on top of the squeeze fuel.
3. Don't chase the last leg. The ending is fast and abrupt; the final leg is the most expensive.
Next steps
A squeeze is short gamma run to an extreme. The final chapter looks at short gamma's sharpest vehicle — 0DTE: same-day expiry, where gamma and charm get the maximum leverage into the close.
Chapter mantra: a squeeze = the upside short-gamma feedback loop; beforehand check the four (Call rich + upside wall + negative GEX + approach); in progress watch NET volume + GEX Trail swing; the ending is fast and abrupt — don't chase the last leg, don't sell naked.
Frequently asked questions
How does a gamma squeeze happen?
Retail frantically buys upside OTM calls; dealers sell those calls and end up short gamma. Once price rises, the dealers' delta gets shorter and shorter, forcing them to buy the underlying to hedge; that buying lifts price further, making delta shorter still and forcing more buying — a self-reinforcing chase to the upside. That's a gamma squeeze.
How can I tell a squeeze might be coming?
Check whether four conditions line up at once - 1) C/P skew abnormally flips to Call rich; 2) there's a dense call open-interest wall above spot; 3) dealers are short gamma (negative GEX) in that zone; 4) price is approaching that wall. All four together is "squeeze soil," not a "guaranteed pop" prophecy.
How does a squeeze end?
Usually two ways - the upside call supply gets bought out and the chase runs out of fuel; or IV collapses after the spike (IV crush) while charm unwinds the long hedges, sending price down fast. The harder it squeezed up, the more violently it unwinds, so chasing the last leg is extremely risky.
Vanna & Charm
When IV moves and time passes, a dealer's delta drifts on its own, forcing price-independent hedging flow — the mechanism behind the afternoon lift and the closing magnet, and how to read it on the Greek Flow page.
0DTE & Intraday Pinning
Same-day expiry puts gamma and charm at maximum leverage — the intraday rhythm, the long vs short gamma regimes, the closing magnet, and how to read it on Greek Flow and the EOD Magnet Clock.