Trading Monthly Options Expiration Week
Monthly expiration week has a distinct rhythm, and knowing that rhythm prevents a trader mistaking pinning for genuine trend exhaustion.
What happens during monthly options expiration week?
Accumulated open interest concentrates on a single Friday date, which maximises pinning pressure at the heaviest strikes and strengthens charm driven drift through the whole week. Price often compresses toward the largest strike as the expiration date approaches across those final sessions.
Why does the market often move after expiration?
Expiration removes a large block of open interest and the dealer hedging obligations attached to that open interest. The pinning force that was suppressing movement disappears at once, which is why the sessions immediately following a monthly expiration frequently trend cleanly.
How should a trader adapt during expiration week?
The Obsidian desk reduces breakout sizing throughout expiration week, because heavy pinning causes breakouts to fail far more often than usual, and then increases willingness to trade continuation during the sessions immediately after the expiration has cleared the book of that open interest.