what is gamma risk 
for options positions that are short gamma there is a risk that price movements in the underlying will cause compounding losses for instance if such a position begins delta neutral and the stock rises it will produce increasingly short deltas for the position so that as the underlying rises the options will lose more and more money the risk however is that if the deltas are bought at these ever higher prices the underlying asset can reverse direction and fall creating long deltas on the way down compounding those earlier losses the bottom linegamma measures the rate of change in the delta for each one point increase in the underlying asset it is a valuable tool in helping traders forecast changes in the delta of an option or an overall position gamma will be larger for at the money options and goes progressively lower for both in and out of the money options unlike delta gamma is always positive for being long both calls and puts investopedia does not provide tax investment or financial services and advice the information is presented without consideration of the investment objectives risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors investing involves risk including the possible loss of principal 