Margin Cascades Can Outlast the Gamma Flip Even When Dealers Stabilize

A financial modeling analysis shows that even when a volatility-driven gamma flip stabilizes dealer books during a market crash, leveraged accounts can continue to be force-liquidated on their own timetable. Simulations using four leveraged account buckets — with leverage ratios between 2x and 10x — found that forced selling added 28% to total losses beyond what the dealer spiral alone would cause. The gamma flip and margin cascade operate as two separate engines, meaning markets can technically stabilize while funds are still being unwound. Monte Carlo modeling across 2,000 paths showed median drawdowns worsening from 15.5% to 19.2% when cascades were included, with tail losses deepening by roughly 10 percentage points. The analysis draws a parallel to March 2020, when dealer-side stabilization and continued fund blow-ups occurred simultaneously because each followed its own independent mechanism.