Artificially keeping the price of a stock low or actively lowering it by applying selling pressure.
This is a violation of the National Association of Securities Dealers (NASD) rules. By another definition, capping may also refer to the strategy of selling large amounts of a commodity or security near the options expiration date to prevent a rise in market price. The investor who might do this (called a call option writer) would be attempting to have the option worth nothing upon expiration to protect the premium he/she initially received and therefore avoid having to transfer the underlying security or commodity to the option holder.
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