Gamma

Gamma measures how much an option's delta changes for a $1 move in the price of the underlying stock. If delta tells a trader how much an option's price should move for the next dollar move in the stock, gamma tells them how much that sensitivity itself will shift once the stock moves, making gamma a measure of the rate of change of delta rather than of the option's price directly.

Gamma is highest for options that are struck close to the current stock price and are nearing expiration, and lowest for options that are deep in the money, deep out of the money, or far from expiration. High gamma means an option's delta can swing quickly as the stock moves even a small amount, which is part of why options near the money and close to expiration can see dramatic swings in value on relatively modest moves in the underlying stock.

For a trader hedging a position based on delta, high gamma means that hedge needs to be adjusted frequently, since the delta it is meant to offset keeps changing as the stock price moves. This is why gamma is closely watched by options market makers, who need to rebalance their hedges constantly when gamma is high, and why periods of heavy options positioning near a particular strike price can sometimes amplify moves in the underlying stock, as market makers buy or sell shares to stay hedged against fast changing delta.