You may have heard about this greek called Gamma. If you haven’t, I’m not going to talk about it much except to tell you that it's important.
I told you I would do something special for my 1yr GME anniversary, so I took to coding up a Gamma exposure tool (GEX) that I will be giving out for free once I get it tested next week.
The tool is simple enough but will provide GME traders with some important levels. The levels are based on Gamma exposure from options and identifying where gamma flips from negative to positive.
It's nothing new, but access to an entire Options Chain and being able to calculate the gamma exposure is something most alpha providers hide behind a paywall as some secret sauce to get you to pay for a subscription.
That's not me. I think all information regarding a stock should be accessible to everyone, particularly the less wealthy traders like us gamers.
Why is GEX important?
Gamma exposure is important because it acts as a driving force for underlying assets. That is to say, when a market maker's exposure to an asset is overly positive, the dealers will sell into a rally and buy into dips, inversely, when the mm is negative gamma, they will buy into a rally and sell into a dip.
It’s safe to assume once the mm exposure to that asset is negative like it is with GME below 140 gamma flip, you’re likely to get more volatility.
Usually this gamma zero acts as a type of support for an asset, but if you have been living under a rock, you may not have heard the shifting sentiment in the marketplace moving to a more risk-off appetite.
It's why you see shares of VIAC rising and our beloved GME breaking the gamma zero support and turning much more negative.
The bad news is, there is a rather large negative exposure to GME at 100, something to the tune of -1.6million that seems to be the likely drawdown.
I still need to verify my gamma exposure numbers and make sure I’m not missing anything. Something tells me the ETFs that include GME may offer some more gamma exposure I’m not seeing.
Either way, next week I will open-source the code and publish the tool/data to be verified. I will then attempt to make sense out of ETFs affecting this recent drawdown.
As always, not financial advice.
I’m a meat popsicle and…
I told you I would do something special for my 1yr GME anniversary, so I took to coding up a Gamma exposure tool (GEX) that I will be giving out for free once I get it tested next week.
The tool is simple enough but will provide GME traders with some important levels. The levels are based on Gamma exposure from options and identifying where gamma flips from negative to positive.
It's nothing new, but access to an entire Options Chain and being able to calculate the gamma exposure is something most alpha providers hide behind a paywall as some secret sauce to get you to pay for a subscription.
That's not me. I think all information regarding a stock should be accessible to everyone, particularly the less wealthy traders like us gamers.
Why is GEX important?
Gamma exposure is important because it acts as a driving force for underlying assets. That is to say, when a market maker's exposure to an asset is overly positive, the dealers will sell into a rally and buy into dips, inversely, when the mm is negative gamma, they will buy into a rally and sell into a dip.
It’s safe to assume once the mm exposure to that asset is negative like it is with GME below 140 gamma flip, you’re likely to get more volatility.
Usually this gamma zero acts as a type of support for an asset, but if you have been living under a rock, you may not have heard the shifting sentiment in the marketplace moving to a more risk-off appetite.
It's why you see shares of VIAC rising and our beloved GME breaking the gamma zero support and turning much more negative.
The bad news is, there is a rather large negative exposure to GME at 100, something to the tune of -1.6million that seems to be the likely drawdown.
I still need to verify my gamma exposure numbers and make sure I’m not missing anything. Something tells me the ETFs that include GME may offer some more gamma exposure I’m not seeing.
Either way, next week I will open-source the code and publish the tool/data to be verified. I will then attempt to make sense out of ETFs affecting this recent drawdown.
As always, not financial advice.
I’m a meat popsicle and…
