Definition
Pin risk occurs when a stock closes very close to an option's strike price at expiration. The option seller doesn't know if they'll be assigned because tiny after-hours moves or partial exercises can trigger assignment. This uncertainty can result in unexpected stock positions Monday morning.
Example
You sold a $100 call, stock closes at $100.05 Friday. You might or might not be assigned depending on whether holders exercise.
FAQ
What is Pin Risk?
The risk of uncertain assignment when stock closes near the strike at expiration.
Why is Pin Risk important?
Pin Risk helps investors evaluate options and make more informed decisions.