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Re:SoftBank unmasked as ‘Nasdaq whale’ that stoked tech rally by AndrewBissell on Friday September 04, 2020 @12:24PM (#24376370)
Also, gamma has a kind of self-reinforcing feedback loop. When the options are initially way OTM the market makers only need to hedge with a small amount of the underlying. But as the price runs closer to the option strikes the delta impact of a given move becomes larger and larger, so MMs have to hedge with more and more of the underlying, which can itself push the price farther in the same direction.
Re:SoftBank unmasked as ‘Nasdaq whale’ that stoked tech rally by quickthrowman on Friday September 04, 2020 @12:37PM (#24376503)
And then the options expire, MMs unwind their hedges and gamma comes back down. There’s no infinite gamma trick
Re:SoftBank unmasked as ‘Nasdaq whale’ that stoked tech rally by AndrewBissell on Friday September 04, 2020 @12:43PM (#24376574)
Yes, obviously the reflexivity does not proceed ad infinitum, but these dynamics are often responsible for extremely violent moves in the short term. The effects can be even more pronounced right before expiration.

http://m.koreatimes.co.kr/pages/article.amp.asp?newsIdx=7768...

Re:SoftBank unmasked as ‘Nasdaq whale’ that stoked tech rally by quickthrowman on Friday September 04, 2020 @12:50PM (#24376628)
Indeed, gamma squeezes can produce lots of volatility near OpEx. And call rolling can just push the gamma further out for another squeeze come the next OpEx.