The GEX Trading Playbook

Reading the heatmap is half the battle. The other half is knowing which setup applies to the regime you're seeing. The playbook below organizes six recurring setups across the two primary regimes — Compression (positive gamma) and Expansion (negative gamma) — with concrete trigger logic, entry structures, target anchoring, and invalidation rules. None of these are mine alone; they're the patterns I've watched institutional desks trade off this data for years. OptionsDeck systematizes them.

Regime A — Compression (spot above flip, positive aggregate gamma)

In Compression, dealers dampen moves. Walls hold. Realized volatility contracts. The Magnet Strike pulls price into close. Premium-selling structures and counter-trend fades dominate.

Setup 1 — Mean Reversion to Magnet

• Trigger: spot is 0.3–1.0% away from the Magnet Strike with at least three hours to close, no major news catalyst pending, IV rank below 35.
• Structure: if spot is below Magnet → bull call debit spread with long leg at-the-money and short leg at the Magnet. If spot above → mirror with put debit.
• Target: Magnet Strike, slightly improved on the short leg if filled early.
• Stop: close beyond the next Pin Ceiling/Floor against the position, or break of the flip level.
• Invalidation: a Pin Ceiling/Floor breaks against you with conviction (sweep volume confirming).

Setup 2 — Wall Fade (counter-pressure)

• Trigger: price tagging a Pin Ceiling or Pin Floor for the second time in the session, both with rejection candles. Compression regime confirmed.
• Structure: short premium against the wall — vertical credit spread, short leg one tick beyond the wall, long leg one strike further. Defined risk.
• Target: 50% of max profit before close, or full expiration if 0DTE.
• Stop: daily close past the wall on volume.
• Invalidation: a sweep print buying through the wall at multiple of OI — that's institutional intent to break through.

Setup 3 — Range Compression Premium Sell

• Trigger: Magnet Strike sits between a Pin Ceiling and Pin Floor that are roughly equidistant from current spot. IV rank above 40 (premium is rich enough to sell). Compression regime, multi-day positive gamma persistence.
• Structure: iron condor with short strikes at the Pin Ceiling and Pin Floor, long wings two strikes beyond each.
• Target: 50% of max profit, or hold to expiration if both shorts remain comfortably OTM.
• Stop: if either short strike is breached intraday with continuation (price stays beyond for > 30 minutes), close the affected leg.
• Invalidation: flip level breaks. The regime is changing; the entire structure becomes a directional bet rather than a range bet. Close both sides.

Regime B — Expansion (spot below flip, negative aggregate gamma)

In Expansion, dealers amplify moves. Walls become porous. Realized volatility expands. Trends extend further than they "should." Premium-buying structures and momentum trades dominate.

Setup 4 — Trend Continuation Long

• Trigger: price below flip and below the most recent Pin Ceiling, with that ceiling having failed twice today. Recent flow shows buyer-initiated put sales (negative skew demand drying up).
• Structure: long puts at a strike near current spot, expiration 5–15 DTE so theta is manageable but optionality has room. Or put debit spread to define cost.
• Target: next Pin Floor below current price, or a volume-by-price low. Don't expect mean reversion in this regime.
• Stop: daily close above the most recent failed Pin Ceiling.
• Invalidation: flip level recaptured from below with two consecutive 5-minute closes above. Regime is switching back to Compression.

Setup 5 — Flip Cross Acceleration

• Trigger: price has been hovering within 0.2% of the flip level for at least 45 minutes, with directional unusual flow building in one direction (buyer-initiated calls if grinding up, buyer-initiated puts if grinding down).
• Structure: long single-leg call or put in the direction of the flow, 1–3 DTE for highest gamma exposure. This is the only setup in the playbook that pays for naked optionality — because if the flip breaks, the move accelerates fast.
• Target: next major Pin (Ceiling if going up, Floor if going down) past the flip.
• Stop: two consecutive 5-minute closes back across the flip in the wrong direction.
• Invalidation: the flow that triggered the entry reverses (other-side sweeps appear).

Setup 6 — Velocity Pocket Run

• Trigger: price breaks a Pin Ceiling or Pin Floor on volume, with a Velocity Pocket extending toward the next major wall.
• Structure: small-size long call or put riding the breakout direction, or call/put debit spread with long leg at the broken wall and short leg at the next major wall on the other side of the pocket.
• Target: the next major Pin past the Velocity Pocket. The shape of the pocket tells you how fast and how far.
• Stop: price reclaims the broken wall, or volume on the breakout fades.
• Invalidation: the broken wall is reclaimed with a sweep print against you. The breakout was a fakeout.

Which setup fires when — the decision tree

1. Read the heatmap. Identify regime (Compression vs Expansion), Magnet, flip, walls, pockets.
2. In Compression with IV rank under 35 → look for Mean Reversion to Magnet (Setup 1).
3. In Compression at a wall with rejection candles → Wall Fade (Setup 2).
4. In sustained Compression with balanced walls and elevated IV → Range Compression Premium Sell (Setup 3).
5. In Expansion below flip with failed pin retests → Trend Continuation (Setup 4).
6. Hovering at flip with directional flow building → Flip Cross Acceleration (Setup 5).
7. Breakout into a Velocity Pocket → Velocity Pocket Run (Setup 6).

What the OptionsDeck AI Strategist does with this

When you ask the AI Strategist for a trade idea on any ticker, it pulls the current GEX read in the background, classifies the regime, locates the Magnet Strike and walls, and selects the setup that fits the regime and your enabled strategies. The thesis it returns will explicitly reference the Magnet Strike, the flip level, and the nearest wall — and the target will be anchored to those structural levels rather than arbitrary round numbers. You can read more about how the strategist's prompt incorporates these reads on the AI Strategist explainer.

Common mistakes to avoid

• Trading Compression setups in Expansion (or vice versa). The single most common error. Walls don't hold below the flip. Reversion doesn't work when dealers are short gamma. Check regime first, always.
• Treating the Magnet Strike as a hard floor or ceiling. It's a probabilistic destination, not a wall. Don't bet against a move through the Magnet if conviction flow is pushing through it.
• Selling premium into a regime change. The transition from Compression to Expansion is the worst possible moment to be short volatility. If the flip is being tested, get out of short-premium structures before it breaks.
• Ignoring IV rank. Setup selection depends on it. Premium-selling setups require elevated IV; premium-buying setups require depressed IV. Mixing them up is how you bleed credit-spread accounts.