Glossary term
Long Gamma
A position whose hedge moves against the market — selling into strength and buying into weakness — which dampens volatility and stabilises price.
A position is long gamma when its required hedge moves opposite to the market, so the hedger sells as price rises and buys as it falls. Option buyers are long gamma: as the underlying moves, the option's delta shifts in the holder's favour, and rebalancing back to neutral means trading against the move. Because this hedge flow leans against the prevailing direction, markets tend to feel calmer when dealers are long gamma. It is the stabilising mirror image of short gamma.