What is the relationship between gamma and call options in the cryptocurrency market?

1 answers

• Alex ShantoJan 22, 2022 · 4 years ago
  In the cryptocurrency market, gamma is a key factor that influences the pricing and risk of call options. Gamma measures the rate of change in an option's delta, which represents the sensitivity of the option's price to changes in the underlying asset's price. When gamma is high, call options become more sensitive to price movements, resulting in larger potential gains or losses. This means that call options with high gamma will experience more significant price swings in response to changes in the underlying asset's price. Traders who are looking for higher potential returns in the cryptocurrency market may find call options with higher gamma appealing. However, it's important to note that higher gamma also implies higher risk, as the option's value can fluctuate rapidly with small price movements. Therefore, traders should carefully consider the relationship between gamma and call options and assess their risk tolerance before engaging in cryptocurrency options trading.
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