Understanding how gamma exposure shapes intraday movement can give traders a powerful structural edge, and few explain this better than my guest Paul (Doc McGraw). In this interview, he breaks down how GEX levels reveal where market makers are likely to hedge and how those actions can create predictable reaction points in the SPX.
Learn all about gamma exposure (GEX) in this video
Doc McGraw
Paul – known online as Doc McGraw – is a retired psychologist turned full-time options trader specializing in structural analysis, SPX trading, and 0DTE strategies. He has spent years studying gamma exposure and uses GEX levels as a core part of his trading framework. Paul lives in upstate New York with his family – and five goats.
Why gamma exposure matters
In the interview, Paul explains gamma exposure (GEX) in a practical and trader-focused way: what it measures, how it affects intraday SPX price action, and why GEX gives traders insights that traditional technical analysis cannot. His breakdown of market maker behavior shows how structural forces often shape the trading day long before price arrives at a key level.
What gamma exposure actually measures
Delta tells us how much an option’s price changes with a $1 move in the underlying. But Delta is not linear; it keeps changing. Gamma measures how fast delta changes, again with a $1 move in the underlying. Options with high gamma respond non-linearly, which can force market makers to hedge aggressively.
Gamma exposure (GEX) quantifies how much hedging market makers must perform as price moves. It is often shown in dollar amounts – millions or billions – representing how much underlying market makers need to buy or sell to remain delta neutral.
This creates predictable behavior at certain price levels.
- Watch some of our other video interviews:
- Daniel Nikolaides: Earnings trades
- Lee Lowell: Selling puts
- Paul Gundersen: The Wheel strategy
- Bill Belt: Rolling Put Diagonal
Market makers and the hedging “prescription”
Paul emphasizes that market makers are not forecasting direction. Their job is simple: stay delta neutral.
This generates predictable patterns:
- Short gamma: market makers hedge with the move → more volatility
- Long gamma: market makers hedge against the move → more mean reversion
Paul calls GEX a prescription, not a prediction. If the price reaches a level where exposure changes sharply, market makers must hedge there. This mechanical behavior often creates reliable reaction zones.
GEX levels as structural support and resistance
Paul argues that GEX levels often produce stronger reactions than traditional technical support and resistance because they reflect real dealer positioning.
1. Positive gamma clusters act like magnets
Price often drifts toward positive gamma levels, with frequent mean reversion.
2. Negative gamma zones can create fast, directional moves
These areas can accelerate trends as market makers hedge with the move.
3. Large GEX levels tend to hold, unless volatility shifts
Sudden spikes in volatility can distort deltas and temporarily weaken the effect of gamma levels.
How Paul uses gamma exposure for 0DTE trading
A major part of the discussion focuses on how Paul builds his iron condors, credit spreads, and butterflies around GEX levels.
His pre-market routine includes:
- Identifying major GEX clusters
- Mapping positive vs negative gamma zones
- Checking volatility and expected move
- Planning premium-selling trades around key structural levels
- Preparing both bullish and bearish butterfly setups
Paul usually scales into trades instead of entering full size immediately. He sells premium below strong positive gamma support and above strong negative gamma resistance.
Iron Condors
He sells put spreads beneath strong support levels and call spreads above areas where market makers may begin selling.
Butterflies
Directional butterflies target areas where price is likely to move toward and then pull back from, something gamma exposure highlights exceptionally well.
When gamma exposure doesn’t work well
Paul discusses several situations where GEX becomes less reliable:
- Sometimes the GEX profile is not showing any clear picture
- Major news events (CPI, FOMC, unexpected headlines)
- Large institutional orders that overpower dealer hedging
- Periods close to the expirations of monthly options
- Sudden and big changes in volatility
On those days, he reduces the size or shifts to conservative setups.
Key takeaways
Paul’s main points:
- Gamma exposure drives much of SPX intraday action
- GEX levels hold because market makers must hedge mechanically
- Gamma analysis is forward-looking
- GEX works best as a confluence with your existing strategy
- Understanding dealer positioning gives traders confidence in trade selection
Books recommended in this video
Here are three options trading books recommended by Paul:
- Lawrence G. McMillan: Options as a Strategic Investment
- Euan Sinclair: Positional Option Trading – An Advanced Guide
- Nassim Taleb: Dynamic Hedging – Managing Vanilla and Exotic Options
