Post by mrtaxx on Aug 5, 2016 16:17:45 GMT -5
Familiar with "max pain" in the options market? This was on a post by fortunesformular
maximum-pain.com/options/max-pain/
Fill in the symbol and use the drop down to pick the expiration. Max pain is "the" point where the most money will be lost. Its not 100%, no one indicator ever is, but it's just another item to consider when you are wondering why a stock does what it does. I check the weekly max pain every day. They can be caught off guard sometimes, but then again, sometimes it can be uncanny. I fully expected today's close from the opening bell.
What is Option Pain®?
In the option market, wealth transfer between option buyers and sellers is a zero-sum game. On option expiration days, the underlying stock price often moves toward a point that brings maximum loss to option buyers. This specific price, calculated based on all outstanding options in the market, is called Option Pain®. Option Pain® is a proxy for the stock price manipulation target by the option selling group.
DEFINITION of 'Max Pain
The point at which options expire worthless. The term, max pain, stems from the Maximum Pain theory, which states that most traders who buy and hold options contracts until expiration will lose money. According to the theory, this is due to the tendency for the price of a underlying stock to gravitate towards its "maximum pain strike price" - the price where the greatest number of options (in dollar value) will expire worthless.
www.investopedia.com/terms/m/maxpain.asp
maximum-pain.com/options/max-pain/
Fill in the symbol and use the drop down to pick the expiration. Max pain is "the" point where the most money will be lost. Its not 100%, no one indicator ever is, but it's just another item to consider when you are wondering why a stock does what it does. I check the weekly max pain every day. They can be caught off guard sometimes, but then again, sometimes it can be uncanny. I fully expected today's close from the opening bell.
What is Option Pain®?
In the option market, wealth transfer between option buyers and sellers is a zero-sum game. On option expiration days, the underlying stock price often moves toward a point that brings maximum loss to option buyers. This specific price, calculated based on all outstanding options in the market, is called Option Pain®. Option Pain® is a proxy for the stock price manipulation target by the option selling group.
DEFINITION of 'Max Pain
The point at which options expire worthless. The term, max pain, stems from the Maximum Pain theory, which states that most traders who buy and hold options contracts until expiration will lose money. According to the theory, this is due to the tendency for the price of a underlying stock to gravitate towards its "maximum pain strike price" - the price where the greatest number of options (in dollar value) will expire worthless.
www.investopedia.com/terms/m/maxpain.asp