Gamma Peak

Gamma Peak refers to the specific price level at which the aggregate gamma of all outstanding options contracts in a market reaches its maximum value. In options trading, gamma measures the rate of change in an option delta for a one-unit change in the underlying asset price.

When market makers sell options to traders, they become short gamma, meaning they must hedge their positions by buying the underlying asset as price rises and selling as it falls. At the Gamma Peak, this hedging activity is most intense because the sensitivity of the delta to price changes is highest.

This phenomenon often acts as a magnetic point for price action or a resistance level, as market makers must constantly adjust their delta-neutral hedges. In the context of cryptocurrency derivatives, high concentration of open interest at specific strike prices can create pronounced Gamma Peaks that significantly influence short-term volatility and liquidity.

Understanding this level helps traders anticipate where market maker hedging flows might amplify or dampen price movements.