TL/DR is at the bottom To keep it simple, gamma measures how much the delta changes as the price of the underlying moves. What is delta? The sensitivity of an option relative to the movement of the underlying’s price. One way to think of gamma is how reactive a position is to price changes. So let’s talk long gamma This means a trader/dealer has POSITIVE gamma exposure(GEX) (an example would be owning an option) How does long gamma behave? As underlying price increases, so does the delta. The inverse is also true. How can this position be hedged? From a market makers position (who wants to remain neutral) they would sell the underlying asset as price increases (to offset gains) and buy as the price goes down (to offset losses). This buying and selling helps smooth out big price moves and stabilizes the market. Ok sooo short gamma? The trader has NEGATIVE GEX (selling options as an example). How does this behave compared to positive gex? When the underlying price goes down, the delta increases, and the inverse is also true. How do we hedge this? Well again from a MM perspective, buy the underlying as price goes up and sell as it goes down (to offset losses). Maybe you’ve heard “buying into strength and selling into weakness” or something along those lines. This impacts the market much more since this type of buying and selling amplifies price moves. Knowing this, we can see that long gamma environments stabilize prices and REDUCE volatility. Long gex also acts as a magnet around certain price levels. Short gamma environments increase volatility and makes price moves more extreme TL/DR: Long gamma= smooth stable market Short gamma= wild volatile market Orangutan Army discord will not be open for long. Come join the discord where all of the resources are FREE. Shout out to our mods @neverpullover @allie @extradoublecheese @l3gend @algorithmchef @allbetsy @the_shulk @kageOA @themintknight @rekius @BlackMarketOA @internetdialup @slime