Gamma in one minute
Delta is how much an option's price moves per $1 in the stock. Gamma is how fast delta changes. Market makers who sell options hedge their delta by buying or selling stock, and gamma tells you how much that hedging must change as price moves.
Why walls form
When lots of open interest sits at one strike, dealer hedging around that strike is large. If dealers are long gamma there, they sell into rallies and buy dips — dampening moves toward the strike. That is the "wall".
Call wall, put wall and gamma flip
- Call wall: strike with the most call gamma, often above price; tends to cap rallies.
- Put wall: strike with the most put gamma, often below price; tends to slow selloffs.
- Gamma flip: price where net dealer gamma changes sign. Below it, hedging can amplify moves.
Limits
- Gamma estimates assume who is long or short each option; real positioning can differ.
- Walls shift daily with open interest and expire with their contracts.
- News, earnings and macro data overpower gamma.