First, the conclusion: When options OI (open interest) is concentrated at a single strike price, the price does tend to get "pulled" toward it, but this magnetic effect is not a physical law—it's a statistical inertia driven by market makers' delta hedging. It works only if there is significant positive gamma exposure near that strike and no stronger external forces (like breaking news or massive spot buying/selling) overwhelming the hedging flow.
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In practice, this pull is called the "pinning effect." When a large amount of OI piles up at a specific strike, market makers (as counterparties) hold huge positions. As expiration approaches, they must constantly adjust their spot hedges. The closer the price gets to that strike, the more frequent their hedging activity, repeatedly tugging the price toward that level for testing.
Step 1: Find the Strike with the Highest OI
Identify which strike price has the largest open interest for the day or week. Open the options chain on Deribit, CoinGlass, or your platform, filter by the expiration you're trading (e.g., this Friday), and sort by open interest. If you see a strike with an OI number significantly higher than its neighbors (say, over 10% of total OI), that strike is a potential "magnet."
Step 2: Determine Whether the Magnet is a "Wall" or a "Trap"
Figure out if this concentrated OI exposes market makers to positive gamma or negative gamma. Check the gamma sign at that strike using GEX (gamma exposure) data. If gamma is positive, the magnetic effect holds—the price will encounter corresponding support or resistance when approaching, getting repeatedly pulled back. If gamma is negative, the magnetism turns into an "accelerator," pushing the price away faster once it gets close.
Risk Reminder: The pinning effect from OI concentration has been widely documented in the U.S. stock market—high-OI strikes create mechanical support or resistance, and market makers' hedging tends to "pin" the price near crowded strikes. But this does not guarantee the price will stop there. A Deribit executive once noted that when put OI at the $60,000 strike exceeded $1.2 billion, if Bitcoin fell below that level, market makers would be forced to sell spot to hedge, triggering the next leg down. In other words, concentrated OI acts as a magnet when price "arrives," but as a slingshot once price "breaks through."
Common Reasons for Failure
Many traders see a strike with exceptionally high OI and immediately place a reverse order there, waiting for the price to get pulled in and then profit. But if that strike is in a negative gamma environment, or if major news (like a Fed rate decision) drops two hours before expiration, external forces will completely override the OI structure, and the pinning effect vanishes within minutes. OI concentration is a short-term structural indicator, not a directional guarantee—expiration acts more like a magnifying glass, amplifying not the news itself but the structure of positioning and liquidity.
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Next Steps
If your strategy involves range trading around a high-OI strike, the only way to verify is to simultaneously check the OI distribution chart and GEX data to confirm that gamma at that strike is positive. If gamma is negative, abandon the range-bound strategy and switch to a breakout-following approach. It's recommended to refresh OI data two hours and one hour before expiration—large positions may be closed last minute, and the magnet can suddenly disappear. Thirty minutes after settlement, check how far the closing price deviated from that strike; if it's more than 1%, it means external liquidity completely overwhelmed the OI structure during that period.
