Options Expiration: What Happens and Why It Matters
OpEx reshapes market structure every week. Learn what happens at expiration, why pin risk exists, and how to trade around the expiration cycle.
What Happens at Options Expiration
At expiration, options either settle in-the-money (and are exercised or assigned) or expire worthless. All the open interest in that expiration — every contract — is removed from the options chain.
This matters for market structure because those contracts were creating hedging pressure. When they disappear, the structural levels they supported (walls, gamma, expected moves) can shift dramatically overnight.
This is why you'll often see large moves the Monday after a big expiration — the "gamma unwind" as the structural support and resistance vanishes.
AM vs PM Settlement
Not all expirations are equal. Standard monthly options (third Friday of the month) settle using AM settlement — the opening price Friday morning. Weekly and daily options use PM settlement — the closing price.
AM settlement is important because it creates unusual dynamics on expiration morning. Market makers need to unwind their hedges based on the opening print, which can cause volatility in the first 30 minutes of trading.
In GammaLens, the expiration filter lets you isolate AM vs PM expirations separately, so you can see how much gamma is tied to each settlement type.
Pin Risk: Why Price Sticks to Strikes
Near expiration, prices tend to gravitate toward strikes with the highest open interest. This is called "pinning" and it's caused by delta hedging.
As expiration approaches, at-the-money options have extremely high gamma. Market makers hedging these options buy aggressively as price dips below the strike and sell aggressively as it rises above. This creates a magnetic effect that pulls price toward the strike.
The most powerful pins happen at round-number strikes with massive OI — think SPY $580, $590, $600. On expiration day, these levels can act as incredibly strong attractors.
Trading the Expiration Cycle
The options expiration cycle creates a predictable rhythm in market structure:
Mid-week before expiration, gamma is building and structural levels are strong. Price tends to stay contained between call and put walls.
On expiration day, pinning effects dominate intraday action. Price gravitates toward high-OI strikes.
After expiration, the structural slate is partially wiped clean. New levels form based on the remaining open interest. This is when breakouts and trend changes are most likely.
GammaLens shows you exactly how much OI is rolling off at each expiration, so you can anticipate when structural shifts are coming.
Ready to see this in action?
Filter by expiration in the Options Matrix — free, no credit card required.