The Gamma Flip Level (also called the gamma neutral level or gamma zero line) is the price at which aggregate dealer gamma exposure crosses from positive to negative—or vice versa. This level marks a critical transition in market microstructure.

Why the Flip Matters

Above the gamma flip, dealers are generally long gamma. Below it, they're short gamma. This single level determines whether dealer hedging will:

Price Relative to Flip	Dealer Gamma	Hedging Behavior	Market Character
Above	Positive	Sell rallies, buy dips	Mean-reverting, dampened
Below	Negative	Buy rallies, sell dips	Trending, amplified

The flip level acts as a regime boundary—cross it, and market dynamics fundamentally change.

Calculating the Gamma Flip

The gamma flip is found by summing gamma exposure across all strikes and identifying where total GEX equals zero:

$\text{Gamma Flip} = S^* \text{ where } \sum_K GEX_K(S^*) = 0$

Because gamma exposure at each strike changes with spot price, this calculation must be performed dynamically. The flip level shifts as:

• Spot price moves
• Open interest changes
• Time passes (gamma profiles evolve)
• Implied volatility shifts

The Flip as Support/Resistance

Empirically, the gamma flip often acts as a meaningful technical level:

From Above (Positive Gamma Zone)

As price approaches the flip from above, positive gamma hedging creates buying support. Dealers buy dips, cushioning declines. If price breaks through, this support disappears—and can become acceleration.

From Below (Negative Gamma Zone)

As price approaches from below, negative gamma hedging has been selling rallies and buying dips. Breaking above the flip transitions to a regime where rallies get sold into, creating potential resistance.

Multiple Flip Levels

In practice, the gamma exposure curve may cross zero at multiple price points, creating several potential flip levels. This typically occurs when:

• Large put OI exists well below spot (creates negative gamma zone)
• Large call OI exists well above spot (creates another negative gamma zone)
• The "sweet spot" between them has positive gamma

Understanding the entire gamma profile matters more than fixating on a single flip level.

Flip Level Dynamics Through Time

The gamma flip is not static:

Into Expiration

As options approach expiry, gamma concentrates at near-the-money strikes. The flip level becomes more sensitive to small OI changes and can move rapidly.

After Large Expirations

When significant OI rolls off at OPEX, the gamma profile reshapes entirely. The flip level may jump or new flip levels may emerge.

During Volatility Events

IV changes affect gamma profiles (higher IV → flatter gamma curves). The flip level can shift during vol spikes even without price movement.

Trading Around the Flip

Traders use the gamma flip as context, not a signal:

When Above the Flip

• Mean-reversion strategies may work better
• Volatility tends to be suppressed
• Dips often find support

When Below the Flip

• Momentum/trend strategies may work better
• Volatility tends to expand
• Moves can extend further than expected

Approaching the Flip

• Watch for regime change
• Position sizing may need adjustment
• Volatility expectations should shift

Limitations

The gamma flip has important caveats:

• Model-dependent: Different assumptions produce different flip levels
• Not precise: It's a zone more than an exact price
• One factor among many: Vanna, charm, and fundamental flows also matter
• Dealer assumption: Relies on the assumption that dealers are net short options

The flip level is useful context for understanding market regime—not a magic line that guarantees behavior.

Related Concepts

• Gamma Exposure (GEX) - The aggregate measure that determines the flip
• Negative Gamma Environment - What happens below the flip
• Positive Gamma Environment - What happens above the flip