Gamma Squeeze

A gamma squeeze is a rally driven by options dealers hedging the calls they sold. When traders buy large volumes of call options, market makers who sold those calls buy shares to stay delta-neutral; as the stock rises, gamma pushes each call's delta higher, forcing dealers to buy even more stock, which lifts price again.

The loop is mechanical, not sentimental — the dealer buying happens because hedging models require it. It is most violent in short-dated, out-of-the-money calls on lower-float names, where a modest options bet controls a large slice of the tradable shares. A gamma squeeze often runs alongside a short squeeze, but the fuel differs: one is dealer hedging, the other is short covering.