What Is the Goal of a "Gamma-Neutral" Position? ▴ Learn

What Is the Goal of a “Gamma-Neutral” Position?

The goal of a Gamma-neutral position is to stabilize the Delta of a portfolio. By having a total Gamma of zero, the portfolio's Delta will not change rapidly in response to small movements in the underlying asset's price.

This reduces the need for frequent re-hedging, lowering transaction costs and making the Delta-neutral position more robust over a wider range of price movements.

How Does ‘Gamma’ Affect the Frequency and Size of Delta Hedging Trades?

How Does the Concept of ‘Gamma’ Relate to the Re-Hedging Frequency of a Delta-Neutral Position?

Does a Higher Gamma Value Necessitate More Frequent Delta Hedging?

Explain the Concept of “Delta-Neutral” Position and How Gamma Affects Its Stability