Gamma Scenarios — Dealer Flow & Price Dynamics
How gamma sign and price direction determine dealer hedging flow — with live animation
Scenario 1 · Long Gamma + Price Up — Dampening
Dealers sold calls → long gamma → sell as price rises → slows momentum
🛡 Dealer selling dampens rally — price slows near strike
Scenario 2 · Long Gamma + Price Down — Dampening
Dealers sold puts → long gamma → buy as price falls → slows sell-off
🛡 Dealer buying cushions decline — price finds floor
Scenario 3 · Short Gamma + Price Up — Amplifying
Dealers bought calls → short gamma → buy more as price rises → fuels rally
⚡ Dealer buying fuels rally — price rockets through strike
Scenario 4 · Short Gamma + Price Down — Amplifying
Dealers bought puts → short gamma → sell more as price falls → fuels crash
⚡ Dealer selling fuels decline — price crashes below strike
Price
Gamma
Dealer hedge (opposing)
Dealer hedge (fueling)
Strike level