“Delta hedging” and “gamma hedging” get used loosely, but the distinction is the key to why dealer flow moves SPY. What dealers rebalance is delta. What makes them rebalance constantly is gamma.

What they actually trade

Dealers want to be directionally neutral — they make money on the spread, not on price direction. So they hold the underlying (or futures) to offset the net delta of their options book. That's delta hedging: buy or sell shares to keep the book's net delta near zero. It's the actual trading that hits the tape.

Where gamma comes in

Gamma is the rate the book's delta changes as price moves. High gamma means a small SPY move creates a big delta imbalance — forcing a big re-hedge. So gamma doesn't get “hedged” directly; it governs how much delta hedging is required. “Gamma hedging” really means “delta-hedging a position whose delta is moving fast.” The more gamma, the more delta trading, the more dealer footprints on price.

Dealers rebalance delta. Gamma decides how often and how much, which is exactly why concentrated gamma near expiry moves the tape.

Why this is the whole game

Everything on the dealer map follows from this. In positive gamma, the required delta hedges lean against price (sell up, buy down) — stabilizing, mean-reverting. In negative gamma they lean with price — amplifying. The walls are where gamma (and thus required hedging) concentrates. Once you see that dealers are just delta-hedging a gamma-driven book, the whole map stops being mysterious and starts being mechanical.