Reading the Dealer Gamma Map

Every morning, near the bottom of the Pre-Market Briefing, you will find a small table called the Dealer Gamma Map. It looks simple — three price levels — but it is one of the most useful tools in the letter for understanding how the market is likely to move on a given day, not just which direction. This guide explains what those levels mean, why they matter, and how to use them.

The one-sentence version

Big banks and market makers (“dealers”) are on the other side of most options trades, and they constantly buy and sell futures to stay balanced. The Dealer Gamma Map shows the price levels where that mechanical buying and selling is strongest — and whether, today, those flows are likely to calm the market down or speed it up.

What is “dealer gamma”?

When you buy an option, a dealer usually takes the other side. To avoid betting on direction, the dealer offsets (“hedges”) that risk by trading the underlying — for the S&P 500, that means E-mini futures. The catch is that the hedge is not a one-time trade. As price moves, the amount the dealer needs to hold changes, so they must keep adjusting throughout the day.

Gamma is the word for how fast that hedge has to change. Gamma exposure (GEX) is simply the total of all those hedging needs across the whole market. It matters because this hedging is mechanical, not optional — the dealer trades because the math forces them to, regardless of the news. That is why the market sometimes drifts higher on no news, stalls at round numbers, or falls apart with no obvious catalyst.

Two very different markets: positive vs. negative gamma

The single most important thing the map tells you is which regime the market is in. There are two, and they trade in opposite ways.

Positive gamma — the shock absorber

When dealers are net long gamma, their hedging leans against the move: they sell into rallies and buy into dips. The result is a calm, orderly, range-bound market where dips get bought and big moves are hard to sustain. Quiet grind-higher days are the classic signature.

Negative gamma — the amplifier

When dealers are net short gamma, the hedging goes with the move: they sell into weakness and buy into strength. This widens the daily range and can turn a small slide into a fast, cascading selloff — and a small bounce into a sharp rip. When you hear that a down day “came out of nowhere,” negative gamma is often why.

Rule of thumb: positive gamma suppresses volatility; negative gamma creates it.

The gamma flip: the line that separates the two

The gamma flip is the price where dealers switch from net-positive to net-negative gamma — the border between the calm regime and the jumpy one. This is the most important number on the map.

• Above the flip: positive gamma. Expect a calmer, dip-buying, range-bound tape.
• Below the flip: negative gamma. Expect wider ranges and moves that feed on themselves.

Important: the flip is not support or resistance. Price can pass right through it. What changes is the market’s behavior — how fast it moves and whether dips get bought. When price is sitting right at the flip, small moves matter more than usual, because crossing the line can flip the direction of all that dealer hedging.

Gamma walls: mechanical support and resistance

The other two levels on the map are gamma walls — strikes where a huge amount of options positioning is concentrated. As price approaches, dealer hedging around those strikes can act like a magnet or a barrier.

• Call wall (ceiling): a level with heavy call positioning above the market. Hedging flows there tend to cap rallies, so it often behaves like resistance.
• Put wall (floor): a level with heavy put positioning below the market. Hedging flows there tend to cushion declines, so it often behaves like support.

Walls are not unbreakable. A strong enough catalyst — a surprise Fed decision, a big earnings miss, a geopolitical shock — can push price through a wall. When that happens, the hedging that was defending the level can flip and accelerate the move. Some of the largest single-day moves happen right after a key wall breaks.

A related pattern: the gamma squeeze

The same machinery explains the gamma squeeze — a self-reinforcing rally driven by the options market rather than fundamentals. Traders pile into call options; the dealers who sold those calls must buy futures to hedge; that buying lifts price; the higher price forces still more hedging; and so on. The tell is that price and implied volatility rise together (normally they move in opposite directions). Squeezes end when call options get too expensive to keep buying — then the hedging runs in reverse and the move can unwind just as fast as it built. If a rally seems to ignore the news and “doesn’t respect” technical levels, the options market is usually the place to look.

How to read the map in your briefing

Here is the Dealer Gamma Map from a recent Pre-Market Briefing (Tuesday, July 21, 2026). Use it as a worked example:

Levels are for the S&P 500 index (SPX); the ES column translates them to the E-mini futures you actually trade.

Reading it top to bottom:

• The rows are always ordered high to low: call wall (ceiling) on top, gamma flip in the middle, put wall (floor) at the bottom.
• Two columns, one idea. The map is calculated on the cash index (SPX), but futures trade at a small premium. We add that premium (here about +41 points) to each SPX level to give you the equivalent ES futures level. So the 7,527 SPX flip is roughly 7,568 in ES.
• Find the regime first. On this day the index had closed at 7,443 — below the 7,527 flip — so the market was in negative gamma: dealers short gamma, moves amplified. That single fact tells you to expect a jumpier, trend-prone tape rather than a calm one.
• Then use the walls as guideposts. A push back up through the flip would flip the regime to calm; a break below the nearby levels would hand momentum to sellers. The briefing’s notes call out the closest “battleground” levels for the day.

A simple morning routine

You do not need to do any math — the briefing does it for you. Each morning, just ask four questions:

1. What is the regime? Is the index above or below the gamma flip? Above = calmer; below = jumpier.
2. How far is the flip? If price is sitting right on it, expect the character of the day to be able to change quickly.
3. Where are the walls? Note the call wall above (possible resistance) and put wall below (possible support).
4. What is on the calendar? Options expirations (especially monthly and quarterly) make gamma effects stronger.

Important caveats

Gamma positioning does not tell you which way the market will go — it tells you how it is likely to behave once it starts moving. Treat it as one input alongside your other analysis, never a signal on its own.

Also know that GEX is modeled, not observed. Dealer positioning is estimated from public options data, and different providers can produce different levels. The map is a well-informed approximation of where hedging pressure sits — a helpful lens, not a precise forecast.

Where to find it

The Dealer Gamma Map appears every trading day in the Cannon Pre-Market Briefing, in Section 04, “Pivot Points & Gamma Map,” just below the Cannon Daily Levels images. The net-gamma regime also shows up as a gauge in the Scoreboard near the top of the letter.

LEGAL DISCLOSURE & RISK WARNING

Cannon Trading Company

This publication is provided by Cannon Trading Company for informational and educational purposes only. Content may include market commentary, technical observations, analyst opinions, and aggregated material derived from publicly available sources. While such information is believed to be reliable, Cannon Trading Company does not author, independently verify, endorse, or guarantee the accuracy, completeness, or timeliness of any third‑party information referenced or summarized herein.

The information, opinions, market data, and commentary contained in this publication are subject to change at any time without notice and do not constitute investment advice, a solicitation, or a recommendation to buy or sell any security, futures contract, option on futures, foreign currency transaction, or any other financial instrument.

Past performance is not indicative of future results.

Trading Futures, Options on Futures, retail off‑exchange foreign currency transactions, and other derivatives involves substantial risk of loss and is not suitable for all investors. You may lose all or more than your initial investment. Carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources, and other relevant circumstances.

Cannon Trading Company does not guarantee any profits and makes no representation that the strategies, ideas, analyses, or information presented will result in profitable trades or avoid losses. Any market views, analyst calls, forecasts, or third‑party commentary referenced reflect the opinions of their respective authors and may or may not align with the views of Cannon Trading Company.

Cannon Trading Company is registered solely as a commodities broker. Nothing contained herein constitutes the provision of investment advisory services.

© 2026 Cannon Trading Company, Inc. All rights reserved.
cannontrading.com • 1‑800‑454‑9572 • (310) 859‑9572