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Opex (expiration effects)

The expiration date itself and the price behaviour around it, driven by hedges unwinding rather than by news.

As contracts expire, the hedges dealers hold against them are no longer needed. A large block of open-interest at one strike can hold price near that level through the morning — see pinning — and then release it once the contracts are gone.

Traders use opex mainly as a context flag, not a signal: ranges compress into it and expand after it, and positioning-based estimates such as gamma-exposure reset the following Monday.

Example: XYZ sits at $50.20 with 40,000 contracts of open interest at the $50 strike and under 5,000 at every other. Price grinds in a $49.85–$50.25 band all Friday, then gaps to $51.40 on Monday with no company news. Nothing changed except that the hedging demand expired.

Related: pinning, triple-witching

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