GEX Rating System
The GEX rating (1-5) describes the volatility regime for the session - how smooth or violent the tape may trade. It is not a directional signal.
Direction comes from price vs the Anchor. The rating tells you how to size and which strategy types fit the environment.
Rating Overview#
| Rating | Regime | Day type | What it usually means |
|---|---|---|---|
| 5/5 | Strongly positive gamma | Very stable | Slow, pin-friendly tape. Premium selling and fades toward the anchor often fit when structure agrees. |
| 4/5 | Positive gamma | Stable | Measured trends and structured breakouts when Anchor and Flip align. |
| 3/5 | Mixed | Neutral / range | No clean volatility regime. Smaller size, defined risk, avoid hero trades. |
| 2/5 | Negative gamma | Volatile | Breakouts can run; reversals can snap. Size down. |
| 1/5 | Strongly negative gamma | Very volatile | Fast, amplified moves. Do not expect a slow pin. Never force short premium here. |
Key Distinction#
| Question | Answer from |
|---|---|
| Which way is the magnet pulling? | Price vs Anchor |
| Will the move be smooth or violent? | GEX Rating |
| Is the book stabilizing or expanding vol? | Price vs Flip |
Example: Rating 4/5 with price below the Anchor is a strong bullish pinning candidate (magnet up + stable tape). Rating 4/5 with price above the Anchor is a bearish magnet down in a stable environment - not a automatic "buy calls" read.
How Ratings Are Calculated#
The rating reflects the balance of positive vs negative dealer gamma across the strike grid (and related positioning inputs). In plain terms:
| Positive gamma share (approx.) | Rating |
|---|---|
| 80%+ | 5/5 |
| 60%+ | 4/5 |
| 40-60% | 3/5 |
| 20%+ | 2/5 |
| Under 20% | 1/5 |
Ratings update intraday as open interest, expiries, and spot move. Re-check after the open settles and again before the close on 0DTE days.
Strategy Environment by Rating#
Direction still comes from price vs Anchor. The rating tells you how to express the trade.
4-5 / Stable (positive gamma)#
Environment: Pinning, mean reversion, structured breakouts.
Fits when:
- Price vs Anchor gives a clear magnet
- Price is above the Flip (stable side)
- Charm agrees with GEX (see workflow)
Examples: Iron condors at defense lines, credit spreads, buying dips toward the anchor in a pin setup.
3 / Mixed#
Environment: Range, chop, no clean regime.
Fits when: You have a level-based plan but expect two-way action.
Examples: Smaller size, defined risk, wait for a cleaner tape or confluence before adding.
1-2 / Volatile (negative gamma)#
Environment: Momentum, expansion, sharp reversals.
Fits when: Price vs Anchor and Flip confirm a breakdown or breakout - not a slow pin thesis.
Examples: Long options in the anchor's direction with defined risk, wider stops, reduced size. Avoid naked short premium.
Rating + Anchor + Flip = Complete Picture#
Use all three before sizing:
- Anchor - directional magnet (below = up, above = down, at = neutral)
- Flip - above = stabilizing regime, below = vol expansion
- Rating - 4-5 = slow/smooth, 3 = mixed, 1-2 = fast/violent
Common Scenarios#
Scenario 1: Rating 4/5, price below anchor, above flip
- Read: Bullish pinning playbook - magnet up in a stable environment
Scenario 2: Rating 3/5, price at anchor
- Read: Range / premium-selling zone possible - size down, no hero trade
Scenario 3: Rating 2/5, price above anchor, below flip
- Read: Bearish magnet + vol expansion - fast downside risk, size down
Scenario 4: Rating 1/5, GEX and Charm disagree
- Read: Chop warning - see Charm Lens until one force wins
Key Rules#
- Rating is not direction - Do not map 4-5 to "buy calls" or 1-2 to "buy puts."
- Stable does not mean bullish - 4-5 means the tape may trade smoothly, not that price must go up.
- Volatile means size down - 1-2 is not "go big directional" - it is "moves can accelerate."
- Update through the session - Especially on 0DTE and OpEx days.
- Confirm on Pulse - Same rating and levels should match on the chart before entry.