TMC, OPAD, IRNT
**I. Intro**
Hello degenerates! Not financial advice, I am a retarded degenerate too.
*TMC, OPAD, and IRNT were supposed to go to the fucking moon, right? Why the hell didn’t they? Because you have an obsession with OTM call options.*
First off, answer this question for me: Which call option strikes have the highest gamma? Go ahead, I’m sure you YOLOing mother fuckers know that before you drop your 100k on **GAMMA** SQUEEZE, right?
Here’s some pictures I drew on to help you. These are the option chains for each of last week’s favorites. I’ll highlight the call strike that has the highest gamma.
**TLDR in section III.**
[ The Iron Giant – You degenerates saw $100 a share everywhere and really went for it. Look at all that open interest at $40. Those MFers were expensive. Look at that, by the end of Friday they only had a delta of 3.1, so about 3 shares hedged for each of those calls. Ouch. ](https://preview.redd.it/fj133ltavho71.jpg?width=1050&format=pjpg&auto=webp&s=c3ae7fd171c61e4100e0aeb113bf72c50daac486)
[ What strikes? First one in the money, first one out of the money. OPA! ](https://preview.redd.it/45jh9ltavho71.jpg?width=1157&format=pjpg&auto=webp&s=28c0ffc619e959f76906068314dc368ee61b46d8)
[ TMC – You were supposed to be the chosen one! 160% short interest, massive gamma, low share price.](https://preview.redd.it/ijhuhjtavho71.jpg?width=1190&format=pjpg&auto=webp&s=4ebdc63c195aa7749527ef0728e50a24858c654d)
But wait a second, doesn’t gamma move with the stock? Absolutely. And now we learn HOW to gamma.
**II. Buying ATM options is to Gamma Squeezes as Buying and Holding Shares is to Short Squeezes**
So now you know, the highest gamma is the first strike in the money, and first strike out of the money. What does this mean, and why is this the highest gamma position?
A gamma squeeze is essentially taking advantage of market maker delta hedging. The “idea” here is that there is a rush to own shares in large lots as the price moves. The whole purpose of buying a call option is to lock in a price to own 100 shares. It’s an insurance package. If you are buying at the money options, your breakeven price is pretty close to, but just a bit higher than the share price, depending on volatility (vega gang).
The *implied* sentiment behind buying at the money options is that you are expecting a continued rise in share price. If you were to go further in the money, you are expecting the share price to remain the same (break even = share price). If you go out of the money, you’re expecting a miracle and want to donate money to the market maker’s party fund.
So what this means for a gamma squeeze, is that in order for it continue, option buying must reflect an *implied sentiment of continued rise in share price*.
**III.** **If I want to squeeze the gamma, how do I get the juice? READ THIS IT’S YOUR TL;DR**
**SMALL LOTS at a time,** **BUY FIRST STRIKE IN THE MONEY – SELL OFF 90% WHEN 5+ strikes ITM and buy more ATM**
Buy the first strike in the money, every time. It doesn’t matter the share price. If you are expecting a gamma squeeze, always buy the first strike in the money, or if you’re really a damn cheapskate, get the first one out of the money.
When the share price rises and puts your call a strike or two in the money, buy another small lot at the money again. Continue to do this.
Now once the share price puts your calls 5+ strikes in the money, sell dem bitches and get more AT THE MONEY. The gamma on the calls deep in the money has played out.
In the money calls have a maximum delta of 100. If you can sell an in the money call, and buy two at the money calls with a delta of 60, now you are effecting a combined delta of 120 on the stock. Your power is growing and the market makers must now hedge even more delta.
Let’s look at IRNT for next week. Do you know what you nitwits have done? You’ve opened up massive open interest far out of the money and there’s almost ZERO in the money calls open. You want a gamma squeeze you’re gonna have to get sell off those OTM options and buy at the money. I promise you, the share price will not reach your $70 strike option without significant buy volume. The market makers are bringing the majority of the volume as they delta hedge, and they’re not going to hedge all those calls that are $40 out of the money. There’s zero reason to. In fact, as we approach expiration, their delta gets LOWER and shares are SOLD by market makers. Don’t shoot yourself in the foot!
[Okay, you've already shot yourselves in the foot, but maybe it can be fixed?](https://preview.redd.it/pvho43sqvho71.jpg?width=782&format=pjpg&auto=webp&s=90a98487e6213179783b1f1c1cd7e61c5c762792)
Alright, so repeat after me, for a GAMMA squeeze, you buy options with the HIGHEST GAMMA. Which ones are they? First strike in the money, first strike out of the money.
Good luck!
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