Long Gamma

Long gamma is a position held by those who purchase options, granting them the right to benefit from increased price volatility. As the underlying price moves, the delta of a long gamma position automatically shifts in a direction that increases the profitability of the trade.

This provides a natural cushion against adverse moves and allows for the potential of outsized gains during market spikes. In crypto, long gamma is often used as a hedge against catastrophic market drops or as a way to profit from expected periods of extreme volatility.

Because the position owner does not have to actively rebalance to stay hedged, it is generally considered a lower-stress position than short gamma. However, the cost of this benefit is the premium paid for the option, which is subject to time decay.

Long gamma is a core component of many speculative and protective strategies in the digital asset space. It allows traders to capture upside while limiting downside risk.