Why Is High Gamma Considered a Double-Edged Sword for an Option Trader?
High gamma is a double-edged sword because it leads to rapid changes in delta. For a long-gamma position, rapid delta changes are favorable as the position becomes long when the price rises and short when the price falls, accelerating profits.
However, for a short-gamma position, rapid delta changes accelerate losses, requiring costly and frequent re-hedging.
