Why do stocks seem to ‘pin’ to certain strikes on options expiration day?

Dealers who make markets in options take the opposite side of what customers trade, then hedge the resulting directional risk by buying or selling the underlying. Gamma measures how fast an option’s delta changes as the stock moves, so it governs how much dealers must re-hedge and, combined with the sign of their position, in which direction.

When dealers are net long gamma, their hedging is stabilizing. As the stock rises their delta grows and they sell; as it falls their delta shrinks and they buy. That buy-low, sell-high pattern absorbs flow and compresses ranges. If dealers are long the options clustered at a high-open-interest strike, gamma there spikes into expiration, so their hedging tightens around that price and the stock tends to gravitate toward it, the pin, especially once price already sits near the strike late on expiration day.

When dealers are net short gamma, the mechanics reverse. They buy as price rises and sell as it falls, adding fuel instead of damping it. The same crowded strike then repels rather than attracts, and you get trends, air pockets, and sharper swings.

So a big open-interest strike is not automatically a magnet; the pull depends on who is long or short that gamma. That positioning is inferred from assumptions about who holds what, not observed directly, so estimates can be wrong. Pinning is a tendency in heavily-optioned names at large expirations, not a rule. Charm and vanna flows add further complexity.