Thursday, December 8, 2011

If there is high open interest in a call and the options expiration date rolls around, can you expect that the

stock price will drop if the open interest is well below the actual price of the stock on expiration date because the options buyers would want to exercise their options and purchase the stock shares for the lower price on that day?|||Life tends to be a lot more complicated than that. There is a so-called "Jupiter effect" where if the stock price is very close to a strike price with high open interest, the "gravitational" pull of the strike will move the price toward that strike. I've seen at least one paper that provides support for that theory. However, these are very small effects only that occur only over the very short-term.





Don't bet too much money on them. Good luck.

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