Pinning the Strike

DEFINITION of '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.

BREAKING DOWN 'Pinning the Strike'

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.

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RELATED FAQS
  1. What happens when a security reaches its strike price?

    Learn more about the moneyness of stock options and what happens when the underlying security's price reaches the option ... Read Answer >>
  2. How does the term 'in the money' describe the moneyness of an option?

    Find out what in the money means about the moneyness of call or put options and what it indicates about the relationship ... Read Answer >>
  3. How do I set a strike price for an option?

    Learn about the strike price of an option and how to set a strike price for call and put options depending on risk tolerance ... Read Answer >>
  4. How are call options priced?

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  5. What is the difference between in the money and out of the money?

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  6. Can an option have a negative strike price?

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