A Gamma Squeeze is a specific event that happens when the price of a stock climbs suddenly due to actions in the options market. As a background, a call option’s value increases when the underlying stock it’s associated with increases in value. If there is a large amount of buying of short-dated call options, the market maker that sold those options can be forced into a short position. This in turns forces them to buy more shares of the underlying stock in order to hedge against the short position they now find themselves in.
The gamma squeeze happens when the underlying stock’s price begins to go up very quickly within a short period of time. As more money flows into call options from investors, that forces more buying activity which can lead to higher stock prices.
This current implementation looks at the change in open interest in short-dated puts and calls (monthlies) to identify stocks that are susceptible to a squeeze. All options metrics in the table below relate to options that expire within the next month (monthlies).
This is an experimental feature. We welcome your feedback and any ideas for improvement.