Guess who’s got *hand* this expiration? It’s the options shorts. Even the movers of Wednesday, the ags and energy et. al. simply moved into middle ground sort of spots. And with no follow through, no real whipsaw action like we saw in, say, July, when financials went to wallpaper and then soared all within a few days.

So if you something near strike, got some serious likelihood it stays there.

And what better time to review the mechanics of pinning than expiration day.

The way it works is a cabal of powerful AMEX market makers meets on Thursday nights and goes over each stock and decides where it will close.With a particular emphasis on causing the most pain to the most customers. Then they come in Friday and set their markets accordingly.

OK, just kidding.

A pin is the tendency of a stock to gravitate and close at/near a strike price. A pin is most common when the open interest on the strike price is high relative to typical volume in the stock, and when volatility of the stock is relatively low. The dynamic is that option longs on the strike are forced to buy and sell stock around the strike in order to offset the decay they are about to lose on their positions. That causes pressure on the margins on the stock to gravitate around the strike. If the option shorts are in control, as they seem to be this cycle, then option longs are likely to cause a self-fulfilling prophecy against their best interests.