Gamma Scalping 101

There are tons of versions of gamma scalping, below is an overview of the base strategy. Gamma scalping seeks to mitigate theta decay on a long options strategy (typically delta neutral). There are tons of variations and people "gamma scalp" short options positions - these are all derivatives from the base concept. Below is a generally theoretical discussion to introduce the topic, I'm not endorsing it as a strategy (on the contrary, I feel it's generally inefficient for retail traders. Institutions regularly use these strategies).

For example: you have a long straddle with a 0 delta. As the underling moves up, your position will start to take on an increasingly bullish disposition (LC delta increases, LP delta decreases, yielding a higher overall delta). You'd then sell stock against the straddle to reduce your overall delta. As the underlying moves lower, you'd take the short stock off for a profit. As the underlying continues lower still, you'd add long stock to re-balance. The idea is through a series of shorter term trades, you collect enough of a profit to offset the theta you took on when establishing the position.

There are a TON of holes in the approach, if there is a large up move after the short stock is added, your long deltas will max out at some point, etc.

New video on gamma scalping for those interested in learning more about it. https://youtu.be/hnlGPMkkEyA