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Dealer Flow
The 0DTE Gamma Feedback Loop, Explained
Same-day options put enormous gamma into a few strikes — and concentrated gamma doesn't just sit there. It feeds back on price, and that loop shapes the whole intraday tape.
NoVo Options Trading · 2026
Because SPY expires every day, a fresh book of same-day options loads huge gamma into strikes near spot. Concentrated gamma means dealers must hedge aggressively as price moves — and that hedging feeds back on the very price that triggered it. A loop.
The loop in positive gamma
When dealers are net long gamma, the loop is stabilizing: a push up is met with dealer selling, a dip with dealer buying, and the more price moves the harder they lean against it. That self-reinforcing damping is what produces the tight, pinned, mean-reverting 0DTE tape — small ranges that keep snapping back.
The loop in negative gamma
Flip the sign and the loop reverses into an accelerant: dealers buy strength and sell weakness, so a move begets more hedging in the same direction, which begets more move — the negative-gamma spiral. The same concentrated 0DTE gamma that pins price in one regime rips it in the other.
Concentrated 0DTE gamma is an amplifier with a sign. Positive: it damps and pins. Negative: it accelerates and trends. The regime sets the sign.
Why it dominates intraday
Longer-dated gamma is spread thin across many strikes and expirations; 0DTE gamma is concentrated and enormous, so it overwhelms the intraday hedging picture, especially into the afternoon as expiry nears. That's why reading the same-day dealer map — and knowing which side of the flip you're on — is the single most useful lens on how today's SPY tape will behave.
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NoVo is a software tool for market analysis and for executing trades you initiate, not financial advice. This article is general education, not investment advice. Options trading involves substantial risk of loss, up to and including your entire capital. NoVo makes no guarantee of profit, win rate, or performance, and past results do not predict future outcomes. You are responsible for your own broker account, configuration, and trading decisions.