Options Pin

[veesah]

What does it mean when a stock's price is "pinned by extreme options pressure"

How can I tell what the extreme options pressure points are? i.e. are strike prices with the most open interest going to be potential pin prices?

 

[ajacobson]

Pinning is when the unwinding of the hedges drives the stock towards the strike price. There is no real way to gauge pin risk. Some folks think a high open interest in the atm straddle can result in pin risk, but that may not always be the case as the open interest may simply be rolled forward rather than unhedged.