Market lesson · Market lessons
Opex pinning
On expiration, dealer hedging peaks.
As options approach expiration, gamma spikes for near-term strikes. Dealers managing that gamma often hedge in ways that push price toward the strike with the most open interest. This gravitational effect is called pinning.
Price gravitates toward the 100 STRIKE.
The 100 STRIKE label marks the dominant expiration level. Price drifts toward it and oscillates around it into the close, rather than trending away.
Price does not wander freely on expiration Friday.
The dominant strike acts as an anchor. Price tends to drift toward max pain or the largest open-interest strike as the session progresses. Intraday ranges often narrow compared to non-expiration days. Breakout trades often struggle for this reason.
It is options expiration Friday. The strike with the most open interest is $460. Price is at $458. What does opex pinning suggest?
Show the answer
B. Price may drift toward $460 and hold near it into close. Pinning suggests gravitational pull toward the dominant strike, not a directional breakout. Price meanders toward it rather than breaking away.