Gamma is a term used in trading to assess the rate of change of the delta of an asset relative to the change in the price of the asset, and is used to analyze the movement of derivatives relative to the underlying value.
A higher value of gamma usually makes a position harder to hedge, although a lower gamma usually means a lower alpha.
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Patrick Curtis is a member of WSO Editorial Board which helps ensure the accuracy of content across top articles on Wall Street Oasis. He has experience in investment banking at Rothschild and private equity at Tailwind Capital along with an MBA from the Wharton School of Business. He is also the founder and current CEO of Wall Street Oasis. This content was originally created by member WallStreetOasis.com and has evolved with the help of our mentors.
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