Word of the Day: "Gamma Squeeze"

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Samiat

Member
Nov 12, 2024
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Word of the Day: "Gamma Squeeze"

A gamma squeeze happens when options traders rush to hedge their positions, causing extreme price moves in a stock. It often starts when many traders buy call options, forcing market makers to buy the underlying stock to stay balanced. This buying pressure drives the stock price higher, leading to a feedback loop of even more buying.

Example: Remember GameStop (GME) in 2021? A gamma squeeze was a key part of its wild price surge.

Why it matters: If you spot a gamma squeeze early, you can ride the momentum—or avoid getting caught on the wrong side of a massive swing.