Desk Slang · Core
Gamma Squeeze
A gamma squeeze is a price spiral where dealer hedging of short call (or put) gamma forces them to buy rallies and sell dips, amplifying the move that created the gamma.
Definition
Market-makers short calls are short gamma: they buy the underlying as it rises and sell as it falls. A fast call-buying wave can flip the Street short gamma at a strike cluster; hedging then chases the tape. Pin risk is the expiry cousin.
Why it matters
It is how options flow becomes cash flow. Ignoring dealer gamma in a crowded name is ignoring a large mechanical bid/offer.
Case
GME/AMC 2021; some index melt-ups into OPEX when dealers are short gamma around spot.
How to read it
Need strike concentration, dealer sign, and realized speed. A quiet grind with long dealer gamma damps moves — the opposite squeeze.
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