Why Is Gamma Highest for At-the-Money Options?

Gamma is highest for At-the-Money (ATM) options because this is the point where the option's Delta is changing most rapidly. ATM options have the highest uncertainty about whether they will expire In-the-Money or Out-of-the-Money.

Therefore, a small move in the underlying asset's price significantly shifts the probability, causing a large change in Delta. For deep ITM or OTM options, the Delta is already close to its maximum (1 or -1) or minimum (0), so a price change has a much smaller effect on Delta, resulting in low Gamma.