Long Gamma
A position with positive gamma exposure -- typically achieved by being net long options (long calls plus long puts, or any combination that nets to positive optionality). Long-gamma positions benefit when the underlying moves sharply in either direction: delta-hedging captures convex gains as the position is rebalanced through the move. The cost of being long gamma is the theta bleed -- options decay in value each day, so the position bleeds during calm regimes and pays off during volatile ones. Hedgers are typically long gamma; income-collectors are typically short gamma.
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Related terms
American Option · Asian Option · Barrier Option · Basket Option · Butterfly Spread · Calendar Spread
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