Second article | Gamma: You think the risk hasn't changed, but it's actually accelerating Many people lose money on options not necessarily because they have a completely wrong direction, but because they underestimate the speed at which direction risk changes. This speed is Gamma. If Delta tells you how bullish or bearish the target is now, then Gamma tells you how fast Delta will become after the target continues to fluctuate. Give a simple example. The current Delta and Gamma of a Call are 0.50 and 0.08, respectively. After the target rises by $1, Delta may change from 0.50 to 0.58; If it continues to rise, Delta may further increase. This means that the more favorable the market is, the greater the directional exposure of the position may be. On the other hand, if you stand on the other side of Gamma, risks will also rush towards you faster and faster. Buying a regular call or put usually belongs to multi gamma. The advantage is that when encountering a major market trend, Delta will change in a favorable direction. After buying Call, the target rose sharply, and Delta gradually approached 1; After buying Put, the target fell sharply, and Delta gradually approached -1. You pay a royalty in exchange for this convexity. Selling options usually belong to empty Gamma. When the market is stable, sellers can slowly earn time value, which looks very comfortable. But once the target rapidly rises or falls, Delta will expand in an unfavorable direction. In order to maintain neutrality, sellers may have to buy more as they rise and sell more as they fall, leading to a rapid increase in hedging costs. Gamma is usually more pronounced near the mean value, and the closer it is to expiration, the more drastic the changes may be. So a flat option that appears to have a low price before expiration may not necessarily be cheap in terms of risk. It may change from a small opening in direction to a highly sensitive position within a few minutes. Some people also use multiple Gamma positions for dynamic hedging, hoping to earn actual volatility by selling high and buying low. But this does not mean a steady profit. You have paid Theta, but also bear the risk of transaction fees, slippage, and high volatility. Only when the actual fluctuations are large enough to cover time loss and transaction costs, can this logic be valid. So I won't just look at the Delta of one option now, but will continue to look at its Gamma. Especially when approaching maturity, near parity, or when the market is about to release important data, Gamma is often more worthy of vigilance than the apparent premium. The real danger of a position is often not how much it loses now, but whether the risk will suddenly accelerate after the market takes another step forward.