Negative Gamma is always associated with a concave profile. Positive Gamma is always associated with a convex profile.
The following are some ways to help you remember these terms.
- Negative is, well, a negative word. Negative words make people sad. The profile of a Negative Gamma trade has a sad face.
- Positive is a happy word. Positive Gamma trades make a smiley face.
- Concave means the profile is like the roof of a cave — it curves overhead.
- Convex is the opposite of Concave.
Watch this video to see some examples of convex and concave options profiles and the related Gamma measurement.