What Does a High Gamma Reading Imply for an Option Trader’s Position?

A high Gamma implies that the option's Delta will change rapidly in response to small movements in the underlying asset's price. Gamma is highest for options that are at-the-money and close to expiration.

A trader with a long Gamma position (e.g. long calls or puts) benefits from high Gamma because it means their Delta-hedged position will require less frequent rebalancing and will profit from high volatility. A short Gamma position is highly vulnerable to sudden price swings.