Re: Options Expiration, closing right on the number--market manipulati
If there are substantial number of options on a stock the nearest strike becomes a natural equilibrum.
When an investor buys a call (put) the market maker will short (buy) the underlying stock to hedge his book. As the stock price moves he will either buy or sell more, look up delta hedging.
If the stock is already close to a strike with a lot of options on each side (calls and puts) there will be a lot of trading as investors and market makers unwind the position.
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