We examine investors' behavioral biases and preferences in the options marketnear 52‐week high and low (52W‐H/L) using Indian options market data. Wedocument that as the stock price approaches 52W high (low), the skewness ofrisk‐neutral  density  (RND),  and  out‐of‐the‐money  (OTM)  call  volumedecreases (increases), while OTM put volume increases (decreases). Aftercrossing the 52W high (low), the skewness of RND and OTM call volumeincreases (decreases), while OTM put volume decreases (increases). Theeffects are economically large and significant. Our findings provide evidenceconsistent with the anchoring theory of belief distortion near 52W‐H/L. Thereis no evidence of preference distortion, contrary to what prospect theorypredicts.