A pin is a thesis or a condition where prices tend to stick in a narrow range. A pinning condition is usually linked to high gamma levels in the market. We can set up trade ideas based on how a pin is when a security is drawn to a specific price as it nears expiration. Technically, when approaching an expiry and when close to an option’s strike, the increase in market gamma creates dealer hedging (the rebalancing of market maker books to neutralize their risk) activity which causes the stock to gravitate back to the pinned strike.

From the market maker's perspective, if net long gamma (the acceleration of directional exposure), then they would be selling the underlying security above the pinned level, and buying below it. The same dynamic would be at play for an individual trader with a net long gamma position or portfolio. 

If unsure about how market makers would hedge given modeled positioning and with the current levels, you can derive it by simply thinking about how you would be balancing your own portfolio or positions in that scenario. What this means is that when long gamma (from being long options), you would trade the underlying against the direction of sharp price movement in order to lock in a profit offensively. And when short gamma (from being short options), you would trade the underlying in the same direction of sharp price movements in order to defend against mounting directional risks.

You can visualize pinned regions each day for gamma models, displayed under the vanna models section; vanna measures the impact of implied volatility on delta (directional risk). The pinning effect from gamma is especially strong during positive gamma market regimes. Pictured here is where (on the underlying) a sticky gamma pin would take place. If the underlying drops (moves to the left) then market makers would need to buy in order to get back to delta neutral (low or zero directional risk). And if the underlying increases (moves to the right) then market makers would need to sell the underlying to get back to delta zero.

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