Hedging
Hedging is taking an offsetting trade so a price move neither makes nor loses money. A market maker who sells an option buys or sells the stock to cancel the option's risk — and keeps adjusting that stock position as the price moves.
Which way that adjusting pushes depends on gamma. Positive gamma: Moves damped — market makers' hedging tends to buy dips and sell rises. Negative gamma: Moves amplified — market makers' hedging tends to sell into drops and buy into rises.
A worked example
A market maker sells one call option on 100 shares. If the stock rises, the call gains value and the market maker loses. The option's delta says how much: a delta of 0.50 means the call moves about $0.50 per $1 of stock. So the market maker buys 50 shares. Now a small move up or down roughly cancels out.
This is called delta hedging. For a sold put it works the other way: the market maker sells (shorts) shares instead of buying them.
Why the hedge keeps changing
Delta is not fixed. If the stock rises further, the call's delta may climb to 0.60, and the market maker buys 10 more shares; if it falls, they sell some back. How fast delta changes is the option's gamma. Summed over all open options, these adjustments either lean against the price or run with it — that is what gamma exposure estimates.