Negative Gamma (Short Gamma)
Dealers are net short gamma — they amplify moves by selling into dips and buying rallies.
In a negative gamma environment, market makers are net short gamma. Their hedging activity amplifies price movements:
- Price drops → dealers sell (pushing price lower)
- Price rises → dealers buy (pushing price higher)
Result: High volatility, trending moves, momentum. Ideal for buying breakouts and volatility.
See also: Positive Gamma (Long Gamma), Volatility Point (V)