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.