What is 'Gamma'
Gamma is the rate of change for delta with respect to the underlying asset's price. Gamma is an important measure of the convexity of a derivative's value, in relation to the underlying. In a deltahedge strategy, gamma is sought to be reduced in order to maintain a hedge over a wider price range. A consequence of reducing gamma, however, is that alpha too will be reduced.
BREAKING DOWN 'Gamma'
Mathematically, gamma is the first derivative of delta and is used when trying to gauge the price movement of an option, relative to the amount it is in or out of the money. When the option being measured is deep in or out of the money, gamma is small. When the option is near or at the money, gamma is at its largest. Gamma calculations are most accurate for small changes in the price of the underlying asset.

Gamma Hedging
An options hedging strategy designed to reduce or eliminate the ... 
Speed
The rate at which the gamma of an option or warrant will change ... 
Color
The rate at which the gamma of an option or warrant will change ... 
DeltaGamma Hedging
An options hedging strategy that combines a delta hedge and a ... 
Zomma
An options greek used to measure the change in gamma in relation ... 
Ultima
The rate at which the vomma of an option will react to volatility ...

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How can you use delta to determine how to hedge options?
Learn what delta is, how to use delta to hedge options and how to maintain a deltaneutral position by deltahedging options ... Read Answer >> 
Why does delta only range from 1 to 1?
Learn what the option Greek delta is, what affects the value of delta for an option and why the delta of an option can only ... Read Answer >> 
What are common delta hedging strategies?
Learn about common delta hedging strategies, including how to make a position in options delta neutral by offsetting risk ... Read Answer >> 
You currently are holding a portfolio of bonds. Interest rates are expected to increase ...
The correct answer is c. Bonds with high convexity are less affected by changes in interest rates than bonds with lower convexity. ... Read Answer >> 
What does it mean to say that a straddle is "delta neutral?"
Learn what the option Greek delta is and what makes a deltaneutral position, and see an example illustrating a deltaneutral ... Read Answer >> 
What are the differences between delta hedging and beta hedging?
Learn about hedging strategies, how to delta and beta hedge a security and the difference between delta hedging and beta ... Read Answer >>