With option expiration this Friday, Bill Luby at Vix and More has an article about how round numbers act as magnets and how to trade that tendency (link). A pin is when a stock closes at an option strike price on expiration Friday. Example: IBM closes right at 100 causing all the calls and puts at that strike to expire worthless.
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Rather than look as round numbers as potential areas of enhanced support or resistance, I like to think of them has having a strong attractive power, almost as if they are large magnets. In some indices and stocks, prices tend to linger near round numbers for longer periods than a random distribution would suggest.
One way to take advantage of the attractive tendencies of round numbers is to sell options at or near that strike. Straddles, strangles, butterflies and iron condors would certainly be appropriate choices, but I have personal preference for strangles, with their wide maximum profit zone and simple construction/position management.
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Quiet market today, the dog days of summer are upon us, with many traders taking vacation. Volatility, and option premiums are down.
Long TM, IWM, XLE
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