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How does call option gamma affect the pricing of digital assets in the cryptocurrency market?

avatarDavid SilvaDec 26, 2021 · 3 years ago1 answers

Can you explain how call option gamma influences the pricing of digital assets in the cryptocurrency market?

How does call option gamma affect the pricing of digital assets in the cryptocurrency market?

1 answers

  • avatarDec 26, 2021 · 3 years ago
    In the cryptocurrency market, call option gamma affects the pricing of digital assets by influencing the option's sensitivity to changes in the price of the underlying asset. When call option gamma is high, the option's delta can change significantly with small price movements in the underlying asset. This means that the option's value can change rapidly, leading to higher volatility in the pricing of digital assets. On the other hand, when call option gamma is low, the option's delta is less sensitive to price changes, resulting in lower volatility in the pricing of digital assets. Traders and investors need to consider call option gamma when trading or investing in digital assets to understand the potential risks and rewards associated with different options strategies.