Gamma transforms: How to hedge squeeth using Uni V3

What is Gamma?

Payoff, delta, and gamma for a 7dte long call option. Gamma for call options is always position and is equal to a Gaussian function.

Gamma for defi primitives

Payoff, Delta, and Gamma for a squeeth.
Payoff, Delta, and Gamma for a Uniswap v2 LP position.
Payoff, Delta, and Gamma for a Uniswap v3 LP position with a relatively wide range factor r = 1.5 (top) and one with a relatively narrow range factor r = 1.05 (bottom).

THE GAMMA TRANSFORM

Combining 1, 2, 4 or 8 independent 1-tick positions to create a constant gamma payoff curve.
Payoff and delta of a hedged Uni v3 LP position (orange), a hedge squeeth (blue), and both of the combined (green).
Deploying liquidity under 4 distinct ranges in one transaction using defiedge.io

Hedging any power perpetual and closing words

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