Positive vs negative gamma regimes

A gamma regime describes which side of the gamma flip price is on. In a positive gamma regime dealers hedge against the move, so rallies get sold and dips get bought. In a negative gamma regime dealers hedge with the move, which amplifies trends and widens daily ranges.

Positive gamma — the pinned regime

• Dealers dampen moves — rallies get sold, dips get bought.
• Expect range-bound, mean-reverting action between the walls.
• Playbook — fade extremes toward the walls; range and premium-selling strategies (condors, butterflies) shine.

Negative gamma — the trending regime

• Dealers amplify moves — they buy strength and sell weakness.
• Expect trending, volatile action with gap risk and momentum that feeds on itself.
• Playbook — respect momentum, widen stops, and favor long-volatility or directional structures over premium selling.