Options traders watch S&P 500 gamma levels as index faces pressure

According to CNBC, crude oil is rallying, bonds are selling off, and the stock market is under pressure after investors dumped Big Tech shares following earnings, while the 10-year Treasury yield touched 4.7%, its highest level since January 2025. The S&P 500 is still less than 3% below its record, but options traders are tracking whether trading around key index levels could signal more volatility or a deeper pullback.

Evidence from SpotGamma, Barchart and Cboe LiveVol suggested market makers were likely long gamma for at least a month into this week, with the largest positions concentrated around 7,500 in the S&P 500. That has helped keep the index mostly within a 200-point range since mid-May, though Barchart's volatility model put the flip point at 7,500 and said the State Street SPDR S&P 500 ETF Trust (SPY) would face higher sell-off risk if it fell below 740. Barchart options product manager Brendan Herbert said the market is in a negative gamma regime and that market makers may have to sell to hedge if the market drops. SpotGamma founder Brent Kochuba said positive gamma has eased but remains fairly light through 7,300, and he said he would add short-dated, cheap, out-of-the-money put flies with a bearish bias.