Long Gamma And Short Gamma Explained

Summary

While gamma is one of the lesser known greeks and arguably least important of the “big 4”, it’s important to have at least a basic understanding of the difference between long gamma and short gamma.

The easiest way to remember gamma is this:

Gains on long gamma trades will grow exponentially as the stock continues to trend. Long gamma traders want trending stocks.

Losses on short gamma trades will grow exponentially as the stock continues to trend. Short gamma traders want stocks to stay in a tight range.

I hope you enjoyed this tutorial.

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Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are ...

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