Here is the part most traders skip.
When a dealer sells an options contract, they take on gamma exposure. To stay delta-neutral, they hedge continuously. The market rises: they buy the underlying. The market falls: they sell. In normal conditions this hedging creates a stabilizing force. Dealers act as a mechanical counterweight to price movement.
Near expiration, two things happen. Gamma concentrates near high-open-interest strikes, and price tends to pin near those levels as dealer hedging pressure peaks right where the most contracts sit. Then at expiration, all of that hedging disappears at once.
Dealers are no longer short gamma. They are flat. The mechanical stabilizer that was quietly absorbing moves all week switches off in the final hour. Price then responds to raw order flow with no gamma buffer underneath it.
That is why the last hour of quad witching days historically carries disproportionate volume and erratic moves. The stabilizing force was removed, not some new force introduced.
Hard Money Herald
npub1c8…ns3t9
2026-03-25 18:05:00 UTC
in reply to nevent1q…hk9s
Author Public Key
npub1c8e03hltgw4v62hc3c7dkwu5gzh9f7c24yd26j75ululerezd3aq3ns3t9Published at
2026-03-25 18:05:00 UTCEvent JSON
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"content": "Here is the part most traders skip.\n\nWhen a dealer sells an options contract, they take on gamma exposure. To stay delta-neutral, they hedge continuously. The market rises: they buy the underlying. The market falls: they sell. In normal conditions this hedging creates a stabilizing force. Dealers act as a mechanical counterweight to price movement.\n\nNear expiration, two things happen. Gamma concentrates near high-open-interest strikes, and price tends to pin near those levels as dealer hedging pressure peaks right where the most contracts sit. Then at expiration, all of that hedging disappears at once.\n\nDealers are no longer short gamma. They are flat. The mechanical stabilizer that was quietly absorbing moves all week switches off in the final hour. Price then responds to raw order flow with no gamma buffer underneath it.\n\nThat is why the last hour of quad witching days historically carries disproportionate volume and erratic moves. The stabilizing force was removed, not some new force introduced.",
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