Gamma is the rate of change of Delta. It’s how curved your P&L graph is. Gamma opposes Theta. If you want more Deltas (like owning shares) and you expect a big move, Gammas are a way to get them cheaply, because they turn in to Deltas. (Of course, Deltas are negative for long puts.)
Is there a book you can recommend for a more complete education about options? Maybe I can quickly flip through it to help me figure out what to do.
Options are complex, but maybe not that complex. Option pricing models do use differential equations, but everybody uses computers for that. Trading options is not beyond the reach on anyone who passed a calculus class, but I’m still not sure if you can pick it up that quickly.
I did not learn all of this from a textbook. I know there are books that cover this. Hull’s Options, Futures and Other Derivatives is the introductory textbook I hear recommended, but I have not read it myself (you might want to skip the futures chapters.) There may be shorter introductions. I think Tastyworks was supposed to have a good intro somewhere.
Gamma is the rate of change of Delta. It’s how curved your P&L graph is. Gamma opposes Theta. If you want more Deltas (like owning shares) and you expect a big move, Gammas are a way to get them cheaply, because they turn in to Deltas. (Of course, Deltas are negative for long puts.)
Options are complex, but maybe not that complex. Option pricing models do use differential equations, but everybody uses computers for that. Trading options is not beyond the reach on anyone who passed a calculus class, but I’m still not sure if you can pick it up that quickly.
I did not learn all of this from a textbook. I know there are books that cover this. Hull’s Options, Futures and Other Derivatives is the introductory textbook I hear recommended, but I have not read it myself (you might want to skip the futures chapters.) There may be shorter introductions. I think Tastyworks was supposed to have a good intro somewhere.