Pin Pressure Strategies

Using Option Open Interest to Develop Short Term Price Targets

By: AJ Monte

Overview: This paper explains how option trading influences the prices of underlying stocks, especially near the expiration dates.

Read the full paper here!


Background on the Black-Scholes Model, and Delta Neutral Trading

This section introduces the concepts and formulas used to calculate the fair value and hedge ratio of an option contract, and how option traders adjust their hedges to maintain a delta neutral position.


How Traders Would Hedge a Short Straddle Position

This section illustrates the strategy and risk of selling both a call and a put option at the same strike price, and how option writers benefit from time decay and price manipulation.

Trading Ideas that Combine the Open Interest of Options and Bollinger Bands

This section proposes a technique to profit from the options markets by using Bollinger Bands and the open interest of the option contracts to set short term price targets. It also introduces the Pin Pressure Indicator, a tool that shows the strike prices with the highest open interest.