What the Gamma Threshold (GT) Level Says About the SPX

The Gamma Threshold, or GT, is the level at which option dealers are neutral in terms of put gamma and call gamma.

Currently, the GT level is 2830 on the S&P 500 (SPX), and we are trading above it, so it means we are in a long gamma regime.  This means that option dealers are hedging against the market (if the market goes up they sell, if the market goes down they buy). This hedging activity slows down any attempts to move the market and produces very low realized volatility. 

For those of you that are expecting a big move down, a great starting point is if the market manages to tag the GT level (70 points down from here) and breaks it as well.

Once SPX switches to short gamma, then the market will start to move at gigantic steps, but only after we are below the GT level.