Apple and the Dynamics of ‘Pinning’

Apple is one of those stocks that attract fervent opinions and concern for manipulation. Option market makers catch some of the blame, but better understanding the dynamics can allay some of those fears.

AAPL plunged more than $22 yesterday to its lowest close since May, continuing its slide since hitting all-times highs above $700 in September. The stock entered bear-market territory when it broken below $564 in the morning, marking a 20 percent decline from that peak.

Many owners of the stock are looking for a reason or, perhaps, a scapegoat (stocks do go down after all, even those we love and own). One suspected culprit is something known as “option pinning,” which we will explain in a moment.

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— Option Monster

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