Into expiration, SPY often gravitates to round-number levels — whole dollars and especially $5 increments. There's a psychological pull to round numbers, but the real force is structural: those strikes carry the most open interest, so they carry the most gamma, so dealer hedging pins price there.
Why round strikes load up
Round-number strikes are where traders concentrate. They're the default strikes people choose, the ones with the deepest liquidity, and the ones institutions build positions around. That concentration of open interest builds a heavy gamma pile at exactly those prices — a self-fulfilling reason the round numbers matter.
Why the gamma pins price
Around a heavily-owned round strike, dealers hedging concentrated gamma sell just above and buy just below — the mechanical pin. Into expiration, as gamma peaks, that magnet is at its strongest, so price gets drawn to the nearest big round strike and sticks. The round number isn't magic; it's where the hedging concentrates.
SPY doesn't respect round numbers out of habit — it respects the gamma that piles up at them. The psychology builds the OI; the gamma does the pinning.
How to trade it
Into expiration, treat big round strikes as magnet targets and fade zones: expect price to gravitate and stick, fade small pushes away from the level, and distrust breakouts that lack force. But respect the two exits — a pin can break in the final hour on a strong flow, and once the strike's gamma rolls off at expiry, the magnet is gone. Trade the pin while it's real; don't marry it.