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Investment
Gamma
A Greek that measures how fast an option’s delta changes when the stock price moves.
Gamma is highest for at-the-money options close to expiry. Long gamma positions benefit from big moves; short gamma positions (like selling options) can lose money very quickly if the market accelerates. Professional traders watch gamma closely when managing option portfolios.
It's the accelerator pedal on delta — how quickly your option's sensitivity speeds up or slows down.
Real world: Near expiration, at-the-money options have very high gamma. A small stock move can cause delta to change dramatically, making the option price swing wildly. This is why short-term options can be extremely volatile.
💡 Gamma tells you how explosive an option position can become as the stock moves.