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Why Is the Increase in Gamma Most Pronounced for ATM Options?

The increase is most pronounced for ATM options because they are the most sensitive to the underlying price movement determining their ITM or OTM status. A small price change near expiration will definitively push the option to a Delta of 1 or 0.

OTM or ITM options already have Deltas close to the boundaries, so their Gamma change is minimal.

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