What Is the Difference between “Long Gamma” and “Short Gamma” Positions?
A long Gamma position means the portfolio's Gamma is positive, typically achieved by buying options. The Delta becomes more positive when the underlying price rises and more negative when it falls, benefiting from high volatility.
A short Gamma position means the portfolio's Gamma is negative, typically achieved by selling options. The trader profits from low volatility and time decay (Theta).
Glossar
Long Gamma Position
Mechanism ⎊ A long gamma position in cryptocurrency options denotes a strategy profiting from substantial price movements, either upward or downward, while being sensitive to changes in implied volatility.
Gamma
Parameter ⎊ Representing the second derivative of an option's price with respect to the underlying asset price, this Greek measures the rate of change of Delta, indicating how quickly the hedge ratio needs to be adjusted.
Short Gamma Position
Exposure ⎊ A short gamma position in cryptocurrency options denotes a portfolio construction where an options dealer or trader has a negative gamma risk profile, typically achieved by selling options or creating a short straddle or strangle.