Neil Pearson:"If the options market maker had written the calls his hedge rebalancing trades would be in the opposite direction, and would tend to move AAPL away from the strike of $340. Whether hedge rebalancing trades tend to cause pinning or “anti-pinning” (or “clustering” or “declustering”) depends crucially on whether market makers in aggregate have a net purchased or net written options position. If the aggregate market maker position is purchased, hedge rebalancing trades will tend to push stock prices toward option strike prices, while if the aggregate market maker position is written hedge rebalancing trades will tend to push stock prices away from option strike prices.
Because the effect of hedge rebalancing trades is to push stock prices toward the strike when option market makers in aggregate have a purchased option position and away from the strike when option market makers in aggregate have a written option position, pinning caused by hedge rebalancing does not benefit option market makers but rather hurts them."
Sentiment: Strong Buy
Depends if the call sellers are MM or not. MM call sellers hedge, so it is bullish for the stock. I
Neil Pearson: "Consider our options market maker who owns 40 calls (on 40 ×100 = 4,000 shares) with a strike of $340, and suppose that AAPL is trading just a bit above $340. The delta of the option position is 2,000, and the market marker will hedge by short-selling 2,000 shares. If AAPL stays above $340 all week until expiration, the call will be exercised, resulting in the purchase of 4,000 shares. Because a stock position of 4,000 shares has a delta of 4,000, the delta of the options position (which, on exercise, becomes a stock position) will increase throughout the week, ending up at 4,000. The delta increases from 2,000 to 4,000 because the calls eventually get exercised, and the call owner receives 4,000 shares. As the option position delta increases from 2,000 to 4,000, the market maker must sell AAPL to increase the short stock position from short 2,000 shares to short 4,000 shares. This has the effect of pushing AAPL down toward $340.
This assumed that AAPL was above $340. If for some reason AAPL drops below $340 and stays below $340, the calls will expire worthless. This means that the options delta will drop to zero at expiration. As expiration approaches, the market maker must maintain a stock position opposite to the option delta. Because the option delta is dropping from 2,000 to zero, the stock position must change from 2,000 short to zero, i.e. the options market maker must buy AAPL to cover the short. This has the effect of pushing AAPL up toward $340.
The effect is that when AAPL is above $340 the hedge rebalancing trades involve selling AAPL, and when AAPL is below $340 the hedge rebalancing trades involve buying AAPL. These trades tend to “pin” AAPL at $340."
Sentiment: Strong Buy
Well, I am short small number of tomorrow's $450 calls as well (sold them as the hedge against larger long positions), but the path of least resistance will be up till AAPL hits the $500 mark, I believe.