From one option to a portfolio
Gamma describes the change in delta per unit move in the underlying. A long standard option position has positive gamma; a short position has negative gamma. Portfolio contributions depend on quantity, contract multiplier and position sign.
In our simplified example, two assumed positions contribute +600 and −450 delta units per point. Their sum is +150. Changing the assumed positions or signs changes the result even if the option prices are unchanged.
Check units and signs first
Providers may display gamma per point, dollar gamma or a measure normalized to a percentage move. These numbers are not directly interchangeable. Positive option gamma also does not automatically imply positive assumed dealer exposure.
Use GEX in a retrospective review
Save the source time, included expirations and price reference with the chart. Later, ask what was actually visible before entry. An updated heatmap cannot prove that information was available earlier. Comparing it with executed order flow keeps the model separate from market observations.
Portfolio gamma = Σ (gamma × position size × multiplier × sign)
Frequently asked questions
Is positive GEX a long signal?
No. It describes modeled exposure. Direction, timing and actual hedging activity do not follow uniquely from that number.
Sources and methodology
Worked examples are original and synthetic. Verify contract specifications with the provider before use.