Lesson 5 of 6 · GEX & Dealer Positioning
Why price pins
Pinning happens near expiration.
As a major expiration approaches, large open interest at specific strikes creates intense dealer hedging pressure. Both sides of a strike require constant rebalancing as price drifts, which pulls price back toward the heaviest concentration. This is pinning.
Price oscillating around a heavy strike.
The 100 STRIKE label marks the pin point. Price pushes above it, dealers sell to rebalance. Price drops below it, dealers buy. The oscillation compresses as the expiration approaches.
When pinning ends.
The same strike that acted as a magnet can move sharply once it expires. The hedging pressure disappears at expiration, removing the force that held price in range. Large positions often unwind fast once they have no more delta to manage.
Why does price often pin near a large strike on expiration day?
Show the answer
A. Dealer hedging near large open interest pulls price toward the strike. Heavy open interest at a strike forces dealers to make large delta adjustments as price passes through. Their rebalancing acts as a gravitational pull.