Gamma is an options risk metric that describes the rate of change in an options delta per one-point move in the underlying assets price. Delta is how much an options premium will change given a one-point move in the underlying assets price. Therefore, gamma is a measure of how the rate of change of an options price will change with fluctuations in the underlying price. Gamma is a second-order risk factor, sometimes known as the delta of the delta. It is one of the "options Greeks" along with delta, rho, theta, and vega, which are used to assess the different types of risk in options portfolios.

Gamma is highest for at-the-money calls and puts, and it gets successively lower as the calls and puts move further out of the money. When the option being measured is deep in or out of the money, gamma is small. When the option is near or at the money, gamma is at its largest. Gamma is also largest for options with near-term expirations relative to longer-dated options.

A higher gamma indicates that an options delta will be more responsive to changes in the price of the underlying stock, while a lower gamma suggests that the option’s delta is less sensitive to changes in the price of the underlying stock. For long (owned) options, gamma is added to the option’s delta when the stock price increases, and subtracted from the option’s delta when the stock price decreases. Gamma is a critical concept in options trading as it signifies the rate at which an options delta will change with a $1 movement in the underlying stocks price.

In summary, gamma is a measure of how the rate of change of an options price will change with fluctuations in the underlying price. It is highest for at-the-money options and gets successively lower as the calls and puts move further out of the money. A higher gamma indicates that an options delta will be more responsive to changes in the price of the underlying stock, while a lower gamma suggests that the option’s delta is less sensitive to changes in the price of the underlying stock.