Range Bound and Pinning Environments
A range bound chart is a pinning environment, where strike bands sit above and below price and deny any clean direction.
What is a range bound positioning chart?
A range bound chart shows strike bands positioned both above and below current price, surrounding price on either side rather than pulling price in any one clean direction. The surrounding structure produces a pinning environment where price oscillates between the bands instead of trending away from them.
How does the Obsidian desk handle a range bound chart?
The Obsidian desk either sells credit spreads against the established range boundaries or stands aside from the chart entirely. Buying directional premium into a pinning environment fights the structure directly, because that structure is actively suppressing the movement directional premium depends on.
When does a range bound environment break?
A pinning environment breaks when the open interest creating the bands expires or gets rolled away, or when a catalyst overwhelms the hedging flow. The sessions immediately after a major expiration are where the Obsidian desk watches for a pin to release.