DEFINITION of 'Gamma Neutral'
A method of managing risk in options trading by establishing an asset portfolio whose delta rate of change is zero. A gammaneutral portfolio hedges against secondorder time price sensitivity. Gamma is one of the "options Greeks" along with delta, rho, theta and vega. These are used to assess different types of risk in options portfolios. The risk level of an options portfolio could also be managed through delta neutral, theta neutral and vega neutral strategies, which are used to hedge against the risks of price sensitivity, time sensitivity and implied volatility.
INVESTOPEDIA EXPLAINS 'Gamma Neutral'
A gamma neutral portfolio can be created by taking positions with offsetting deltas. This helps to reduce variations due to changing market prices and conditions. A gamma neutral portfolio is still subject to risk, however. For example, if the assumptions used to establish the portfolio turn out to be incorrect, a position that is supposed to be neutral may turn out to be risky. Furthermore, the position has to be rebalanced as prices change and time passes.

Color
The rate at which the gamma of an option or warrant will change ... 
Gamma
The rate of change for delta with respect to the underlying asset's ... 
Hedge
Making an investment to reduce the risk of adverse price movements ... 
Portfolio
A grouping of financial assets such as stocks, bonds and cash ... 
Delta
The ratio comparing the change in the price of the underlying ... 
Current Liquidity
The total amount of cash and unaffiliated holdings compared to ...

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