What is the zero-gamma (gamma flip) level?

The two regimes it separates

Above zero-gamma, dealer hedging sells strength and buys weakness, so realised volatility compresses and price tends to coil between the walls. Below zero-gamma, the same hedging buys strength and sells weakness, so moves feed on themselves — ranges widen, trends extend and gaps are more likely to run.

This is why the flip matters more than any single wall: it tells you which BEHAVIOUR to expect from the whole book, and therefore whether to fade extremes or respect momentum.

Crossing the flip

Price crossing zero-gamma is a regime change, not just another level. A market that slips from positive into negative gamma often sees a sudden expansion in range as the stabilising bid disappears, which is why sharp sell-offs frequently begin just after the flip breaks. Reclaiming the flip from below tends to restore the calmer, range-bound behaviour.

The flip itself also drifts intraday as positioning and expiry change, so it is read as a live level, not a fixed line.

How traders use it

Many traders use zero-gamma as a regime switch: above it they favour mean-reversion and fading the walls; below it they favour trend continuation and give moves more room. Distance from the flip also gauges conviction — the further price sits inside positive gamma, the stronger the pinning tendency.

FAQ

What is the gamma flip?

It is the price where net dealer gamma changes sign — the boundary between a positive-gamma (mean-reverting) and a negative-gamma (trend-amplifying) market. Zero-gamma is another name for it.

What does it mean when price is below zero-gamma?

Dealers are net short gamma, so their hedging amplifies moves: expect wider ranges, stronger trends and a higher chance of a volatility expansion.

Does the zero-gamma level move?

Yes. It drifts intraday as positioning and expiries change, so it is read as a live regime line, not a fixed price.