The Unlucky Investor's Guide to Options Trading guides readers through the world of options and teaches the crucial risk management techniques for sustainable investing.
The risk that a stock price settles exactly at the strike price when it expires.
For option sellers, pin risk means there exists uncertainty around how many contracts may get assigned. For owners of options, last second moves in the underlying can quickly change in-the-money (ITM) options to out-of-the-money (OTM) options, and vice versa. Pin risk can translate to an unwanted long or short delta exposure on the Monday after expiration.
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