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Gamma squeeze

A rapid price rise driven by dealers buying shares to hedge a surge of call options.

Market Structure & FlowAdvanced

Definition

When many out-of-the-money calls are bought, the dealers who sold them hedge by buying stock. As the price rises, their hedging needs grow, forcing more buying, which can feed the move.

Watch out for

Squeezes can reverse as fast as they build, once the options expire or buyers stop.

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