What gamma levels really tell you: how far, not which way

Options dealers hedge their books in the futures and index markets. When they are long gamma they sell rallies and buy dips. When they are short gamma they must hedge with the move. So positive gamma should calm the market and make moves snap back, and negative gamma should widen the range and make moves run.

Does that show up on NQ and ES? And is it usable?

• NQ with Nasdaq-100 net gamma and ES with S&P 500 net gamma, 291 sessions, September 2025 to 5 November 2026. Each index alone and both together.
• A checkpoint every half hour from 10:00 to 15:00 ET (6,388 in all). At each, only the gamma reading already known at that minute is used.
• Gamma builds through the day, so “high” and “low” are judged against the same half hour on recent sessions, as the data card in the app does.
• We measured the next 60 minutes: its range, whether price kept going in the direction of the last 30 minutes, and a fade and a follow trade after a big 30-minute move, after costs.
• Wild days come with negative gamma, so the range test also allows for the last 30 minutes' range and the day's usual range.
• Luck check: each day's gamma readings swapped with another day's, 200 times.

Direction shows nothing. After a 30-minute move, the next hour keeps going or snaps back the same way in either regime (luck check 7 of 200). Fading a big move made about the same in both: +$30 per Mini in negative gamma and +$35 in positive, after costs.

The flip line, the price where dealers' net gamma changes sign, says the same as the sign: price below it gave a 9.2% wider hour on NQ and ES, also 200 of 200.

Momentum shorts: when both NQ and ES were in negative gamma, a fall ran a full usual range 25% of the time, against 14% when both were positive (199 of 200). But the bounce against the short was just as big, so the trade itself was not reliably better. With both indexes positive, momentum shorts lost on every exit we tried, in both halves.

Dealer hedging can only move a market when the options are big next to it. S&P 500 and Nasdaq-100 options are among the largest in the world, and their hedges trade straight into ES and NQ. The gold, oil and Bitcoin ETFs' options are small next to their futures.

That is why gamma works as a volatility gauge on NQ and ES only. Oil's reading went the opposite way to the dealer story and held, but we have no market reason for it, so we treat it as a marker of something else about the day, not a force.

Use gamma for the size of the expected move: stop and target distances, and whether a target is realistic within the hour. A high-for-the-time reading says the next hour is likely calmer than it looks.

Don't use gamma to choose trend or fade. In our data it does not tell you that. On gold, oil and Bitcoin, treat it as no information.

About 14 months of minute bars and minute positioning data. Ten checkpoints a day overlap, which is why the luck check swaps whole days. This is the past, not a promise it repeats.

Simulated results on past market data from 2025 and 2026. Research only, not trading signals or advice. Past results do not promise future ones; see the hypothetical performance disclosure at the bottom of the page.