Source: Options Guy's Blog

In the last post I noted that delta is dynamic: it moves not only as the underlying stock moves, but as expiration approaches. Gamma is the Greek that determines the amount of that movement. Officially speaking, Gamma is defined as the amount a theoretical option's delta will change for a corresponding one-unit (point) change in the price of the underlying security. But here's a more intuitive definition I like: If you look at delta as the 'speed' of your option position, Gamma is the 'acceleration'.

When you are buying options, just like when you are buying a car, Gamma/acceleration is a good feature to have. If your option has a large Gamma, its delta will approach 1 quickly, in other words giving it 1-to-1 movement with the stock. 

Gamma is highest for the near-term ATM strike, and slopes off toward the ITM and OTM strikes. This is the main reason why the near-term ATM strike usually is the series that has the largest number of contacts that trade each day. Buyers of options like these options because they have high Gamma values. The graph below shows a near-term option (15 days to expiration) on a stock now trading around 85; Gamma is largest on the ATM strike. You can also see as the underlying stock moves up or down the Gamma becomes smaller, this is because Delta is either approaching one or approaching zero which means Gamma has to become smaller because Delta can not go beyond these levels.

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options.