How does gamma impact options pricing in the cryptocurrency industry?

1 answers

• Eunhae HwangDec 16, 2022 · 3 years ago
  Gamma is an important concept in options pricing, including in the cryptocurrency industry. It represents the rate of change in the delta of an option with respect to changes in the price of the underlying asset. In simple terms, gamma measures how quickly the delta of an option changes as the price of the underlying asset moves. A higher gamma indicates that the option's delta is more sensitive to price changes, while a lower gamma suggests less sensitivity. Traders can utilize gamma to their advantage by understanding its impact on options pricing. For example, when gamma is high, options can experience larger price swings, making them potentially more profitable for traders. However, it's important to note that gamma is just one factor among many that influence options pricing, and traders should consider other factors such as volatility and time decay when making trading decisions.
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