Pinning the Strike

Pinning the Strike

The tendency of a stock's price to close near the strike price of heavily traded options (in the same stock) as the expiration date nears.

Notes:

This doesn't always happen, but it often does when there is significant open interest. For example, if a stock is trading near $50 and there is heavy trading in both puts and calls at this strike price, there is a tendency for the stock price to be "pinned" at $50 as traders unwind their positions at expiration.

See also: Exercise Price, Expiration Date, Option, Strike Price