Making The Best Use Of Negative Gamma Flip Point

gamma flip point

Passionate equity investors will know the hype around the catchphrase Gamma of the stock market. This Greek-oriented metric is proving to be a boon for everybody interested in private equity funding. Being a price monitor has helped the related stakeholders to decide how to react owing to the price shifts. A lot of chatter keeps happening around the positive state of gamma but there is very little speech about the negative side. This post strives to throw some light on the negative state of the gamma flip point.

Benefitting from negative gamma

The general connotation is that the market is favorable as long as the gamma charts show a positive shift. Its negative side is assumed to turn the bad market conditions into something worse only. But is it the only correct vision? Will a negative gamma behavior always prove to be unfavorable? Well, maybe yes but maybe not. Let’s remain hopeful and look at the other side.

  • Be Opportunist- People usually dread the situation of a negative gamma. Resultantly, there is less activity in this phase and investors avoid encouraging dealings. This is when a cunning investor can turn the tables. An option seller can utilize this opportunity to earn more money rather than sitting idle like others.
  • Stay Alert- It is all about the right timing in stock trading. Someone who learns to make quick move-ins and outs can be the master of this game. Curb the risk of losing too much money with the help of a risk graph. It can indicate the risky and comfy zones to enable the user to know when the right time to take out the money is.

However, experts suggest that one should prefer spread selling instead of naked transactions. Staying alert is the only key to come out successfully even from the negative gamma.