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January 16, 2013 - 23 went

Expiration Week Wednesday - Networking Happy Hour

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Added by Willie D.
on Jan 18, 2013.
1 of 1 pages


  • Willie D.

    Hi all, great time on Wednesday! In line with the theme of Expiration, this image shows AAPL's close on this LEAP expiration Friday. Could somebody please explain to this retail guy what forces are able to exert this kind of influence, and how? Maximum pain? Also, any books or articles that explain the mechanism of how this would get pinned with such ferocity? Thanks! Willie

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  • Scott D.

    Willie, I'm not an expert. Usually, the stock pins to the strike with the most call/put open interest. I've always thought of the cause of the pinning due to the hedging activity of the market makers short calls/puts i.e., they have to buy stock long to cover their short calls and short stock to hedge their short (i.e., sold) puts. Conversely, large long call/put positions will be short/long stock to hedge their positions. All sides pushing to hedge causes the pinning. At times I will hedge my positions in the same way. I hope this helps. I'd like to see comments from others on this. Scott

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