This is why it is called a "Gamma Squeeze". A gamma squeeze can force additional buying activity on a stock because of open option positions on the underlying stock. This is because market makers when short calls and the market rising causes the calls to rise, must buy the underlying as a hedge against the options sold. A gamma squeeze can force additional buying activity on a stock because of open option positions on the underlying stock. Options volume for the February expiration … Calls , a form of option, increase in value when the price of the underlying stock increases. This is called the gamma squeeze effect. I want to show you a report of the most active option names from Trade Alert: Notice that 3 of the top 5 names are the stocks that are hitting the headlines. The day’s most interesting financial news The market makers are buying the market as it is going up and accelerating the move. A “gamma squeeze” can occur when a trader or group of traders purchase call options in bulk, causing market makers who sold them these options to buy the stock as a hedge. A gamma squeeze is one of the causes of the recent Gamestop chart price action in 2021. 2. So, if a market maker sells far OTM (out of the money) options, they will be forced to buy more and more shares as the Gamma of the option increases. Somebody is selling you the options … The Option Market’s Role: ... How It Ends: This type of gamma squeeze has worked wonders for the stock prices of GameStop and other heavily-shorted stocks in the short term. The stock is trading at $30, and you decide to buy $50 calls that expire in a month. This is because there is FURIOUS option buying in names like GME. A GAMMA squeeze. Subscribe to our newsletters. Gamma Squeeze The gamma squeeze involves the somewhat complicated world of options. A “gamma squeeze” can occur when a trader or group of traders purchase call options in bulk, causing market makers who sold them these options to buy the stock as a hedge. Gamma squeeze explained. One way to see the gamma effect is to look at historical volatility. The option buying is not all over the months, though … it is EXTREMELY concentrated in short-dated options. SoftBank "Reconsidering" Infamous 'Gamma Squeeze' Option Strategy Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Let's say that you are bullish on Gamestop. Click here to become a part of our growing community and … -- This is the "short squeeze". A cursory look at AMC options shows that a gamma squeeze almost certainly is driving Wednesday’s move. As the Gamma of the stock option increases, this means that the option is getting closer to being at-the-money. A gamma squeeze is one of the causes of … A gamma squeeze takes things one step further, forcing additional stock-buying activity due to open options positions on the underlying stock. A “gamma squeeze” is a trading terminology that refers to massive call buying leading to higher stock prices, which leads to more call buying, a higher stock price and so on.