Net GEX vs total (absolute) gamma: what is the difference?

How each is built

Both start from the same ingredients: each option's gamma, its open interest, the contract multiplier, and usually the square of the underlying price, so the result is expressed as dollars of stock to trade for a one-percent move. The difference is what happens to the sign.

Under the common convention that dealers are effectively long gamma on calls and short gamma on puts, net GEX counts call gamma as positive and put gamma as negative and adds them. A strike with large call open interest and equally large put open interest can show a net figure close to zero. Absolute gamma ignores the sign and adds both, so the same strike shows a large number.

A third version, the sum of absolute values of each strike's net figure, sits between the two. It measures how much net hedging pressure exists across the board without letting a positive strike above price cancel a negative strike below it.

When net GEX misleads

Imagine an index with heavy positive gamma at a strike two percent above price and heavy negative gamma at a strike two percent below. Net GEX for the whole board could be near zero, which reads like an empty map. In reality the market has two strong zones of opposite behaviour and a gap between them, which is very different from a board with nothing on it.

Net GEX is also sensitive to the sign convention in a way absolute gamma is not. If the assumption that dealers are long call gamma is wrong at a few large strikes, for example because customers bought those calls outright, the net figure can swing from positive to negative without any change in the underlying open interest.

That is why a single aggregate net GEX number is a blunt instrument. It summarizes the board in one direction and throws away where the gamma sits.

When absolute gamma misleads

Absolute gamma has the opposite problem. It tells you how much hedging could happen but not which way it would push. A board with very large absolute gamma could be heavily positive, meaning moves get absorbed, or heavily negative, meaning they get amplified. Those are opposite trading days.

It is also easily dominated by expirations that are about to disappear. On a day with heavy same-day open interest, absolute gamma can look enormous at the open and shrink sharply by the afternoon as those contracts approach settlement. The number is real, but its shelf life is a few hours.

It can also hide concentration. Two boards with the same absolute total can be built very differently: one with gamma spread thinly across dozens of strikes, another with most of it piled on a single strike near price. The second will behave very differently around that strike, and the aggregate cannot tell them apart.

A side-by-side example

Consider two hypothetical boards with the same absolute gamma. On the first, nearly all of it is positive and sits within a percent of price: net GEX is large and positive, and you would expect a contained, absorbing session. On the second, half is positive above price and half negative below: net GEX is close to zero, and you would expect a session that is calm while price stays above the negative zone and much looser if it falls into it.

Reading only the absolute figure, the boards look identical. Reading only the net figure, the second looks empty. Only the strike-by-strike view shows that the second board has a regime boundary sitting below price, which is the single most important thing about it.

Which one to look at

For the character of the session, the sign of net gamma at the current price is the more useful read: positive means hedging leans against moves, negative means it leans with them. Read the sign before the size.

For where the action is, look at the map strike by strike rather than either aggregate. The question is where large gamma sits relative to price and which sign it has, and that information lives in the shape of the board. A map shows the Apex, the call wall and the put wall in their places; an aggregate number cannot.

Absolute gamma is most useful as a context check: if it is unusually small, the board is thin and dealer hedging is unlikely to shape the day much in either direction, whatever the net figure says.