Gamma squeeze
TradingDefinition
Self-reinforcing rally where dealers hedging short call positions are forced to buy the underlying as it rises, pushing the price higher and triggering more hedging. Famous example: GameStop January 2021.
Most acute in low-float, heavily-shorted names with concentrated retail call buying. The math: as a stock pushes through call strikes, gamma rises sharply, forcing accelerated dealer buying.
Most acute in low-float, heavily-shorted names with concentrated retail call buying. The math: as a stock pushes through call strikes, gamma rises sharply, forcing accelerated dealer buying.