Gamma Scalping Pressure

Gamma scalping pressure is the phenomenon where market makers must continuously trade the underlying asset to remain delta-neutral as the price moves. Because an option's delta changes as the underlying price moves, the market maker must buy or sell the underlying asset to offset the changing exposure.

This creates a reflexive feedback loop: when the market maker is long gamma, they must sell as the price rises and buy as it falls, which stabilizes the market. Conversely, when the market maker is short gamma, they must buy as the price rises and sell as it falls, which can significantly amplify price swings.

This pressure is a major driver of realized volatility in both traditional and crypto derivatives markets. Understanding this dynamic is key to predicting short-term price behavior.