Market Makers hedge option positions by buying/selling stock and "pinning" (Google it) is a well known effect at option expiry IF there are large option positions. There is no doubt that ETO expiry impacts on the share prices, I suspect this may happen if there is large option interest (open ETO positions) and investors unwind those positions ... Which triggers market makers needing to unwind their long/short positions in the stock that they have in place to hedge the option positions.
I intend to do research on this one day as I feel there is a trading strategy in all of this.
You can always check the options chain on the ASX website to see if there is a large amount of open positions and where those positions sit to obtain some intuition as to what may happen at ETO expiry.
Weekly options tend to have thin open positions however.
Iron ore price, page-29867
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Last
$17.34 |
Change
0.520(3.09%) |
Mkt cap ! $53.38B | |||
| Open | High | Low | Value | Volume |
| $17.31 | $17.51 | $17.00 | $309.6M | 17.18M |
Buyers (Bids)
| No. | Vol. | Price($) |
|---|---|---|
| 1 | 300 | $17.33 |
Sellers (Offers)
| Price($) | Vol. | No. |
|---|---|---|
| $17.35 | 28897 | 5 |
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| FMG (ASX) Chart |