Dealer Flow Risk

Q: What is dealer flow risk?

Scores probability that dealer hedging will move against your position. High = stressed dealers amplifying moves.

Q: How does it relate to GEX?

Negative GEX is a key input. Short gamma forces dealers to trade WITH the move, creating feedback loops.

Q: Why does Dealer Flow Risk matter for trading?

Dealer flow risk is the risk-side check on any premium-selling setup. A high harvest score tells you the trade should pay; dealer flow risk tells you whether the mechanics of dealer hedging will let that happen. Professional short-vol books never ignore it.

Q: When is Dealer Flow Risk good versus bad for a trader?

Low flow risk is good for full-size short vol — mechanics support the trade. High flow risk is bad — dealer hedging runs over your P&L; reduce or skip. Mid is typical; size normally. Always pair with harvest and regime.

Canonical definition, formula, interpretation, and API reference.

Definition

0-100 score measuring risk that dealer hedging will move against your short-vol position.

Formula

Composite of gamma stress, hedging imbalance, flow velocity

Higher = more risk from dealer flows.

Inputs

gamma regimehedging estimatesGEX velocity

Output

dealer_flow_risk (0-100)

Interpretation

<30: low risk — dealers comfortable
30-60: moderate stress
>60: high — dealers stressed, may amplify moves

API Reference

Endpoint

GET /v1/vrp/{symbol}

Tier

Alpha+

Response field

dealer_flow_risk

Why Dealer Flow Risk Matters for Trading

TL;DR

Dealer flow risk is a 0–100 score of whether dealer hedging will work with or against a short-vol trade. High = hedging amplifies your pain. Low = it dampens it.

What it measures: Composite score measuring the expected directionality and magnitude of dealer hedging flow against a typical premium-selling book.
What it signals: The non-discretionary flow you're trading against.
Why we measure it: A great harvest score is worthless if dealer flow runs over you. Flow risk is the risk-side companion to the reward-side harvest.
Who uses it: Systematic vol sellers, options-flow quants. ALPHA TIER.

How to read Dealer Flow Risk

Low (< 30)

Dealer flow aligned or benign
Trades can hold size
Harvest strategies supported
Best risk environment

Good for: full-size premium sells

High (> 70)

Dealer flow actively hurts short vol
Expect unpleasant re-hedging
Reduce size aggressively
Avoid during vol regime shifts

Bad for: short vol — warning

Mid (30–70)

Typical flow environment
Normal sizing
Watch for regime shifts
Default reading

Typical

Rules of thumb

Reward and risk together. Harvest × (1 - flow risk) is the cleanest 'net harvest' heuristic.
Spikes around OPEX. Large dealer inventories unwind — flow risk elevates Thu/Fri of expiry week.
Pair with regime. High flow risk + negative gamma = worst short-vol setup.
Event-sensitive. CPI, FOMC, earnings routinely push flow risk high intraday.
Alpha-tier signal. Not available in free/basic tiers.