By Thorsten Wegener 26-02-2020

What Gamma Isn’t

(5 min read)
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Some months back I published an article explaining the so-called Gamma-Flip. It was just when it became fashionable to use terms firmly anchored in the world of derivatives to explain market behaviour, rather than traditional valuation indicators which now appeared to lack explanatory power. I provided a fresh view from ‘left field’, the weird and wonderful world of option trading. Little did I know that my Macro Hive article would be picked up by various publications from Chicago to Mumbai, capturing a zeitgeist in the market.

Gamma as Swiss Army Knife?

Since that 15 minutes of fame I have read a lot of articles invoking options gamma as a force to explain almost any move imaginable – from stalling major indices to parabolic moves in certain (unnamed) electric car manufacturers, as well as explaining the diametrically opposed moves invoking the same underlying forces. Even though I love my professional field, namely derivatives in all shapes, forms, or sizes, gamma is only one factor that can explain certain situations. It’s not the swiss army knife that many market pundits find it so fashionable to portray it as.


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