Option Strategies with Positive Gamma

This is a list of option strategies which have positive gamma:

See also option strategies with negative gamma and gamma neutral option strategies.

Which Strategies Have Positive Gamma

Generally, option strategies have positive gamma if they are net long options overall (long more contracts than short) or if they are net long at-the-money strikes (because gamma is highest at the money for both calls and puts).

Positive Gamma Explained

Gamma is one of option Greeks, which measures how delta (another Greek) changes with underlying price.

Generally, positive gamma means that delta increases (becomes a higher positive number or a smaller negative number) as underlying price goes up. This has a very favorable practical implication: Profit growth accelerates when underlying price moves in your preferred direction, while the increase in losses slows down as the market moves further against you.

Positive Gamma and Negative Theta

This desirable characteristic is not free. Option strategies which have positive gamma typically also have negative theta (they lose money with passing time, other factors being constant). In other words, you usually have to pay for holding the positive gamma position in the form of time decay. They also often have positive vega, but not always.

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