Definition · updated 2026-10-21
Gamma squeeze
A gamma squeeze is a sharp, self-reinforcing rally caused by dealer hedging: heavy call buying forces dealers who sold those calls to buy shares as the price rises, which lifts the price further and forces more buying. It ends when call buying stops or the calls are sold.
See it live: the live unusual activity tape.
The mechanics
A dealer who sells a call is short delta and hedges by buying shares. As the stock rises the call's delta grows (that growth is gamma), so the dealer has to buy more. Enough call open interest near the price and that hedging becomes the dominant buyer.
The same mechanism runs in reverse on heavy put buying into a decline, which is why negative-gamma selloffs feel like they accelerate.
How to spot one forming
Look for unusual call volume concentrated in near-dated, slightly out-of-the-money strikes, negative net GEX below spot flipping positive above it, and a call wall stacked just above the current price. The options tape shows the buying; the GEX profile shows the fuel.
Frequently asked questions
- How long does a gamma squeeze last?
- Usually hours to a few sessions, until the calls driving it expire, get sold, or the hedging demand is absorbed. The unwind can be as fast as the squeeze.
- Is a gamma squeeze the same as a short squeeze?
- No. A short squeeze is short sellers covering; a gamma squeeze is dealers hedging call options. They often occur together, which is what made the 2021 meme-stock moves so violent.