Explain Why Gamma Increases as an Option Approaches Expiration ⎊ Path

Explain Why Gamma Increases as an Option Approaches Expiration.

Gamma increases near expiration because the option's sensitivity to price changes becomes highly magnified. As the option gets closer to expiration, a small move in the underlying asset's price can determine whether the option expires worthless or deep in-the-money.

This 'all-or-nothing' effect causes the Delta to change very rapidly, which is the definition of high Gamma.

How Does a derivative’S’open Interest’ Affect the Potential for Manipulation near Settlement?

Why Do Options with Very Short Time to Expiration Generally Have Higher Gamma near ATM?

What Is the Relationship between Delta and Theta for OTM Options near Expiration?

What Is the Significance of Gamma in Understanding the Change in an Option’s Delta?

What Is ‘Slippage’ and How Is It Magnified by the Wider Spreads Found in Illiquid Altcoin Markets?

Does a Deep ITM Option Also Have Gamma near Zero?

What Is the Main Drawback of a Delta-Neutral Hedging Strategy?

Define “Gamma” in Options Trading and Its Relationship to the Underlying Asset’s Price Change

Glossar

Near Expiration

Horizon ⎊ The proximity of an options contract's expiration date significantly impacts its pricing and trading dynamics, particularly within cryptocurrency derivatives.