Delta tells you how fast an option moves today. Gamma tells you how fast that speed changes as the stock moves. In one sentence: gamma is the acceleration of your delta. When gamma is high, the position you hold today is not the position you will hold tomorrow if the stock moves.

Gamma in One Line

If your option has delta 0.30 and gamma 0.05, a $1 move up means tomorrow your delta is roughly 0.35. Another $1 up and delta is ~0.40. Your share-equivalent exposure is quietly climbing while you sleep.

Low γ
Deep ITM or far OTM
Gamma is small. Delta barely changes with moves. Position size stays roughly constant — what you see is what you own.
High γ
At-the-money · near expiry
Gamma peaks where delta is near 0.50 and time is running out. A $2 stock move can flip delta from 0.40 to 0.70 — you are suddenly much longer than you signed up for.
Short γ
Short options = negative gamma
Sellers of options are short gamma. Every move against you makes your losses accelerate, not just continue. This is the hidden tail risk of "selling premium."

Why Gamma Matters More Than Delta Near Expiry

In the last 2 weeks of an option's life, gamma spikes sharply on at-the-money contracts. A cash-secured put sitting quietly at 0.30 delta can balloon to 0.80 delta overnight if the stock drops toward the strike. You thought you had 30 equivalent shares; assignment risk is now 80.

This is why professional options traders close positions with 1-2 weeks left rather than holding to expiry — not because theta is bad (theta is good for sellers at that point), but because gamma risk becomes unmanageable.

Every time you check net delta on your options book, also ask: what does gamma say my delta will be if the stock moves 5%? If the answer is "dramatically different," your real position size is much more uncertain than the delta number suggests.

Where to See Gamma in the App

The Risk Signals dashboard shows gamma alongside delta and theta for every option contract. The portfolio strip also surfaces gamma × $move² exposure — an estimate of how much your delta shifts for a 1% move in the underlying, aggregated across the whole book.

Gamma = the acceleration of your delta
High near the strike · highest near expiry · negative if you sold
If gamma is big, the position you own tomorrow is not today's position

Open Risk Signals dashboard →