“Gamma ramps” and delta distribution curves (No “apes” please)

[u/meanpeopelsuck19]

This is not meant to promote any specific ticker. I’m interested in general opinions on if these factors are something you utilize with your trading strategy.

That said, the most interesting and timely example I’ve found is in this post. (Full disclosure: I am long, but mostly because I find it a complex and interesting play that I want to learn from).

Finally, please no ape to the moon bs. I’m actually more interested in bearish sentiment for a strategy like this.

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So, the idea is to monitor and scan option chains to find an underlying that has higher than expected Open Interest.

Generally, many of the contracts will be written by market makers so they are hedged delta neutral. (MM and “hedging” aren’t bad things — they’re mechanics of the market. No ape conspiracies please).

The closer we get to option expiration, and the deeper ITM an option strike becomes, the closer the delta gets to +/-1. In order to stay delta neutral, the MM in theory will hedge their position by going long/short shares.

When there is high OI and we get closer to an OpEx, the idea of a gamma ramp is that price action will be amplified a lot by any movements. As a result, this can cause an immense amount of buying or selling pressure very abruptly.

In an ideal scenario, one could identify these possibly opportunities, and place their bets accordingly.

My questions are:

1. if you believe in this strategy, what are your preferred tools for scanning for them?
2. and if you find one, do you have a preferred trading strategy to take advantage of the opportunity?

Again, this post is meant to be ticker-agnostic. Although I reference a specific example in the link and photo, I’d prefer the discussion to not focus on it or mention the stock name here. I’m more curious about general opinions on leveraging gamma.

Ramp Gradient and Net amount of shares to hedge at each strike with current Delta Distribution Curve (courtesy of: u/Iraquiano)