There was some interest in the concept of Options Pinning strategies on various posts – so I tried an experiment with this concept last Friday, with some spectacular results. Pinning is a concept in the Option markets where Stocks, ETFs or Index Options are “pinned” down to a certain strike price, which in general also coincides with a round number. Optiontiger is the creator of proprietary Options trading strategies that give traders a 75% edge on every trade. Please visit these links for more information. 1) SwingtradeMAX for swing trades - 20% to 80% in a few days to few weeks - http://www.optiontiger.com/swingtrademax/ 2) DayTradeMAX - this is daytrading on steroids - http://www.optiontiger.com/daytrademax/ 3) CondorMAX to manage Iron condors - http://www.optiontiger.com/optionedge-trading-system/ 4) IncomeMAX spreads and straddles systems - Dredit and debit spreads and Straddles and Strangles - http://www.optiontiger.com/incomemax-strategies/ 5) EarningsMAX - Powerful playbook of Earnings trades. Take advantage of Volatility bump and the "Crush" http://www.optiontiger.com/earningsmax/ YOUTUBE CHANNEL ------------------------ To access over 400 Options education, trading, and stock market videos, please visit our YouTube Channel – https://www.youtube.com/user/OptionTiger

2. Options Pinning strategies
There was some interest in the concept of Options Pinning strategies on various posts –
so I tried an experiment with this concept last Friday, with some spectacular results.
Pinning is a concept in the Option markets where Stocks, ETFs or Index Options are
“pinned” down to a certain strike price, which in general also coincides with a round
number – For example AAPL got pinned at 520 on Friday, GOOG got pinned at 540. The
Pinning phenomenon works because big hedge funds and Prop traders have exposure at
certain strike prices in the Options markets, and it is in their advantage to see expiry
happen very close to these strikes. The way they achieve this is by placing large Buy / Sell
orders in the Equity markets and the Futures markets. The orders are large, so these have
the ability to “guide” the stock to a certain price by the end of the day. Pinning does not
work every time, especially in volatile markets where lots of fundamental events or news
is happening, but in the absence of such market moving events, it tends to occur more
frequently.
First of all – let’s be clear. Pinning is a highly speculative strategy, with potential for very
large profits, and losses as well. Secondly, you pretty much have to be on your computer
every minute. A 15-minute coffee break could turn you into toast. This is because we’re
dealing with Options expiration on the final day, so Delta and Gamma are going to move
violently for ATM pinning strategies. Thirdly, it’s important to take a calculated measure
of the market behavior that morning since the open. If things are stable for the first two
hours, say until 12 noon ET, its time to think of some good stocks or indices for pinning
strategies. Also, if you deploy Short Option strategies, you will need sufficient margin.
Okay, having said all this, lets take a look at what Pinning strategies can produce on a
good day. Friday’s market action was highly range-bound. The SPX opened lackluster, and
traded between 1465 and 1470 all day. Not surprisingly, all the major stocks behaved the
same way. Around 12 noon, I decided to try a couple of pinning strategies.
After studying individual stocks and indices, I decide to try pinning strategies on GOOG,
PCLN and SPX.
- PCLN was hovering around 655 with a + or – 2 range. I put on a Short straddle at 655 for
a premium of $3.55
- GOOG traded between 735 and 740, but closer to 740. I put on a Short straddle at the
740 Strike for a premium of $4.2
- On SPX, I put a Short strangle at 1465 / 1470 strikes.

3. The graph below is a snapshot at 2 pm ET.
1) GOOG started to move towards 735, and I was getting a bit nervous. I took a $465 Loss
on the 740 Put and opened a 735 Short put. Then it started to move towards 740 again. 2
hours had passed since I opened the position, and time decay was working very well
already. At 2 pm, I closed my GOOG shorts for a profit of $1285 on the position. (You
won’t believe where GOOG ended the day at 4 pm). The max profit on this trade was
$4200 if GOOG expired exactly at 740.
2) PCLN was rangebound 655 + or – $2. I kept this position open for 3 hours. At one
point, it seemed like it would breach 653, at which point I had accumulated a good profit
from 3 hours of time decay, so I closed this position by around 3 pm for a profit of $1820.
The max profit on this trade was $3550 if PCLN expired exactly at 655.
3) The SPX moved a little more between 1465 and 1470. At one point, I converted the
short strangle to a short straddle at 1470 because it had moved firmly towards that
strike. But because of passage of 3 hours, I was still able to pick up a profit of $1100.
The graph below is a snapshot just after 4 pm.
GOOG closed the day at 739.99 (talk about pinning !!!)
PCLN closed at 655.25 (Pretty good pinning)
SPX closed at 1472 (Its hard to pin a large Index because its composed of 500 stocks).
Overall a great trading day with about $4000 generated from pinning strategies in a matter of 3 to 4
hours.

4. So the takeaways are -
1) Pinning strategies will work in the absence of market moving events or news
2) In my opinion, its best to watch the first two hours of trading to get a feel for the
day’s trading
3) You must be on your computer and be prepared to adjust
4) Don’t wait for maximum profit – if you can capture 30 to 50%, take it with a smile
Would welcome your thoughts on these strategies.
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