Gamma Squeeze

A gamma squeeze is a rapid price spike that happens when options traders are forced to buy (or sell) a stock all at once to manage their risk. Here's why: when you sell call options (bets that a stock won't rise), you're on the hook if the price shoots up. To protect themselves, traders automatically buy shares as the price climbs—which pushes it higher, triggering more forced buying. It's a self-reinforcing loop. You'll hear about gamma squeezes during volatile rallies, especially in heavily-traded stocks with lots of options activity. They matter because they can create sudden, dramatic price moves that aren't based on company fundamentals. For example, if TechCorp stock suddenly jumps 15% in an hour partly due to gamma squeezing, that's less about the business and more about options mechanics.