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Gamma is a measure of the rate of change in an option's delta for a one-unit change in the price of the underlying asset. It's a second-order derivative and is used to assess the risk of an options position.
Gamma is important for options traders as it provides insight into the stability of an option's delta. A high gamma indicates that the delta is highly sensitive to changes in the underlying asset's price, which can lead to larger price swings in the option's value. Understanding gamma helps traders manage the risk of their options portfolio, especially in volatile markets.