Gamma Squeeze

A gamma squeeze happens when rapid stock price movement forces options traders to buy or sell shares in large quantities, pushing the price even higher (or lower). Here's why it matters: options traders use hedging strategies to protect themselves, and when a stock moves fast, their hedges become unbalanced—forcing them to trade shares urgently to rebalance. This creates a feedback loop where their buying pressure drives prices up further, which triggers more forced buying. You'll hear about gamma squeezes during volatile rallies, especially in heavily-traded stocks with lots of options activity. For example, if TechCorp stock suddenly jumps 10%, options traders might need to buy thousands of shares at once to stay hedged, pushing it up another 5%. It's a real market force, though often overstated in online discussions.