CFDs are complex instruments. 75% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. CFDs are complex instruments. 75% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

Gamma definition

Gamma is a derivative of delta: the relationship between a derivative’s price and the price of its underlying asset. Specifically, gamma is the movement of delta in regard to the price of the underlying asset.

If an option has a large gamma, then its price movement in relation to the price movement of its underlying asset is volatile. That enhances both risk and reward, because any price move in the underlying asset will be amplified in the price move of its option.

Gamma is always at its largest when a trade is at the money, and smallest when it is deeply in the money or out of the money.

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