# Gamma

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## Gamma

The ratio of a change in the option delta to a small change in the price of the asset on which the option is written.

## Gamma

A measure of how fast the delta changes. That is, gamma is a mathematical measurement of how fast the price of an option contract changes for each unit of change in the price of the underlying asset. The larger the gamma, the more volatile the option contract is. If an option is at the money or near the money, gamma is large, but if it is deep in or deep out of the money, gamma can become quite small. This is because when an option is near the money, a small change in the underlying asset's value can greatly change the level of demand for the contract. This is not the case for deep in and deep out of the money options.

## gamma

The sensitivity of an option's delta to changes in the price of the underlying asset. The gamma of an option is greatest when an option is near the money (strike price close to market price of underlying asset) and near zero when an option is deep out of the money.
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