Dealer Gamma
The aggregate net gamma position held by options market-makers (dealers) across all underlyings or for a specific underlying. When dealer net gamma is NEGATIVE (typical when retail and institutional buyers of puts dominate flow), dealer delta-hedging requires SELLING when the underlying falls and BUYING when it rises -- amplifying moves. When positive, hedging dampens moves. The mechanism is real microstructure (dealers genuinely hedge their books), but the precise dealer-vs-non-dealer split is unobservable and must be estimated. A staple of contemporary market commentary, often over-applied.
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Related terms
American Option · Asian Option · Barrier Option · Basket Option · Butterfly Spread · Calendar Spread
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