ITC
Itc Ltd
ITC
327
Max Pain
Strike 243.5 has a total call value of 0 versus a total put value of 538,818,400,000 Combined total value = 538,818,400,000
Strike 245 has a total call value of 9,600,000 versus a total put value of 527,949,520,000 Combined total value = 527,959,120,000
Strike 247.5 has a total call value of 25,600,000 versus a total put value of 509,834,720,000 Combined total value = 509,860,320,000
Strike 248.5 has a total call value of 32,000,000 versus a total put value of 502,588,800,000 Combined total value = 502,620,800,000
Strike 250 has a total call value of 41,600,000 versus a total put value of 491,724,000,000 Combined total value = 491,765,600,000
Strike 252.5 has a total call value of 57,600,000 versus a total put value of 473,616,400,000 Combined total value = 473,674,000,000
Strike 253.5 has a total call value of 64,000,000 versus a total put value of 466,373,360,000 Combined total value = 466,437,360,000
Strike 255 has a total call value of 76,000,000 versus a total put value of 455,777,840,000 Combined total value = 455,853,840,000
Strike 257.5 has a total call value of 96,000,000 versus a total put value of 438,119,040,000 Combined total value = 438,215,040,000
Strike 258.5 has a total call value of 104,000,000 versus a total put value of 431,055,520,000 Combined total value = 431,159,520,000
Strike 260 has a total call value of 116,000,000 versus a total put value of 420,586,240,000 Combined total value = 420,702,240,000
Strike 262.5 has a total call value of 137,600,000 versus a total put value of 403,146,640,000 Combined total value = 403,284,240,000
Strike 263.5 has a total call value of 146,240,000 versus a total put value of 396,170,800,000 Combined total value = 396,317,040,000
Strike 265 has a total call value of 159,680,000 versus a total put value of 385,790,560,000 Combined total value = 385,950,240,000
Strike 267.5 has a total call value of 182,080,000 versus a total put value of 368,490,160,000 Combined total value = 368,672,240,000
Strike 268.5 has a total call value of 191,040,000 versus a total put value of 361,570,000,000 Combined total value = 361,761,040,000
Strike 270 has a total call value of 204,480,000 versus a total put value of 351,245,680,000 Combined total value = 351,450,160,000
Strike 272.5 has a total call value of 226,880,000 versus a total put value of 334,053,280,000 Combined total value = 334,280,160,000
Strike 273.5 has a total call value of 235,840,000 versus a total put value of 327,176,320,000 Combined total value = 327,412,160,000
Strike 275 has a total call value of 280,000,000 versus a total put value of 316,992,160,000 Combined total value = 317,272,160,000
Strike 276 has a total call value of 309,440,000 versus a total put value of 310,204,960,000 Combined total value = 310,514,400,000
Strike 277.5 has a total call value of 353,600,000 versus a total put value of 300,035,200,000 Combined total value = 300,388,800,000
Strike 278.5 has a total call value of 383,040,000 versus a total put value of 293,255,360,000 Combined total value = 293,638,400,000
Strike 280 has a total call value of 428,640,000 versus a total put value of 283,140,320,000 Combined total value = 283,568,960,000
Strike 281 has a total call value of 459,040,000 versus a total put value of 276,445,120,000 Combined total value = 276,904,160,000
Strike 282.5 has a total call value of 504,640,000 versus a total put value of 266,433,760,000 Combined total value = 266,938,400,000
Strike 283.5 has a total call value of 535,040,000 versus a total put value of 259,759,520,000 Combined total value = 260,294,560,000
Strike 285 has a total call value of 607,280,000 versus a total put value of 249,835,520,000 Combined total value = 250,442,800,000
Strike 286 has a total call value of 655,440,000 versus a total put value of 243,221,760,000 Combined total value = 243,877,200,000
Strike 287.5 has a total call value of 730,560,000 versus a total put value of 233,356,080,000 Combined total value = 234,086,640,000
Strike 288.5 has a total call value of 780,640,000 versus a total put value of 226,784,080,000 Combined total value = 227,564,720,000
Strike 290 has a total call value of 868,240,000 versus a total put value of 217,121,200,000 Combined total value = 217,989,440,000
Strike 291 has a total call value of 926,800,000 versus a total put value of 210,710,960,000 Combined total value = 211,637,760,000
Strike 292.5 has a total call value of 1,026,160,000 versus a total put value of 201,242,720,000 Combined total value = 202,268,880,000
Strike 293.5 has a total call value of 1,092,400,000 versus a total put value of 194,931,360,000 Combined total value = 196,023,760,000
Strike 295 has a total call value of 1,352,080,000 versus a total put value of 185,862,000,000 Combined total value = 187,214,080,000
Strike 296 has a total call value of 1,525,200,000 versus a total put value of 179,831,760,000 Combined total value = 181,356,960,000
Strike 297.5 has a total call value of 1,850,160,000 versus a total put value of 171,110,880,000 Combined total value = 172,961,040,000
Strike 298.5 has a total call value of 2,066,800,000 versus a total put value of 165,315,200,000 Combined total value = 167,382,000,000
Strike 300 has a total call value of 2,458,000,000 versus a total put value of 156,752,960,000 Combined total value = 159,210,960,000
Strike 301 has a total call value of 2,767,920,000 versus a total put value of 151,156,640,000 Combined total value = 153,924,560,000
Strike 302.5 has a total call value of 3,269,040,000 versus a total put value of 142,829,840,000 Combined total value = 146,098,880,000
Strike 303.5 has a total call value of 3,603,600,000 versus a total put value of 137,306,160,000 Combined total value = 140,909,760,000
Strike 305 has a total call value of 4,300,320,000 versus a total put value of 129,362,400,000 Combined total value = 133,662,720,000
Strike 306 has a total call value of 4,772,800,000 versus a total put value of 124,117,440,000 Combined total value = 128,890,240,000
Strike 307.5 has a total call value of 5,545,120,000 versus a total put value of 116,440,800,000 Combined total value = 121,985,920,000
Strike 308.5 has a total call value of 6,068,800,000 versus a total put value of 111,359,680,000 Combined total value = 117,428,480,000
Strike 310 has a total call value of 7,422,880,000 versus a total put value of 103,973,920,000 Combined total value = 111,396,800,000
Strike 311 has a total call value of 8,410,240,000 versus a total put value of 99,226,080,000 Combined total value = 107,636,320,000
Strike 312.5 has a total call value of 9,952,480,000 versus a total put value of 92,205,120,000 Combined total value = 102,157,600,000
Strike 313.5 has a total call value of 11,027,360,000 versus a total put value of 87,563,520,000 Combined total value = 98,590,880,000
Strike 315 has a total call value of 13,417,040,000 versus a total put value of 80,955,360,000 Combined total value = 94,372,400,000
Strike 316 has a total call value of 15,129,840,000 versus a total put value of 76,919,040,000 Combined total value = 92,048,880,000
Strike 317.5 has a total call value of 17,975,760,000 versus a total put value of 71,140,560,000 Combined total value = 89,116,320,000
Strike 318.5 has a total call value of 19,976,400,000 versus a total put value of 67,375,280,000 Combined total value = 87,351,680,000
Strike 320 has a total call value of 24,096,960,000 versus a total put value of 62,229,920,000 Combined total value = 86,326,880,000
Strike 321 has a total call value of 27,411,520,000 versus a total put value of 59,273,600,000 Combined total value = 86,685,120,000
Strike 322.5 has a total call value of 32,640,640,000 versus a total put value of 55,089,440,000 Combined total value = 87,730,080,000
Strike 323.5 has a total call value of 36,245,760,000 versus a total put value of 52,452,640,000 Combined total value = 88,698,400,000
Strike 325 has a total call value of 42,966,480,000 versus a total put value of 48,791,200,000 Combined total value = 91,757,680,000
Strike 326 has a total call value of 47,726,640,000 versus a total put value of 46,693,440,000 Combined total value = 94,420,080,000
Strike 327.5 has a total call value of 55,075,200,000 versus a total put value of 43,828,080,000 Combined total value = 98,903,280,000
Strike 328.5 has a total call value of 60,221,600,000 versus a total put value of 42,072,720,000 Combined total value = 102,294,320,000
Strike 330 has a total call value of 68,559,200,000 versus a total put value of 39,651,840,000 Combined total value = 108,211,040,000
Strike 331 has a total call value of 75,918,720,000 versus a total put value of 38,324,960,000 Combined total value = 114,243,680,000
Strike 332.5 has a total call value of 87,246,000,000 versus a total put value of 36,448,400,000 Combined total value = 123,694,400,000
Strike 333.5 has a total call value of 95,060,560,000 versus a total put value of 35,262,320,000 Combined total value = 130,322,880,000
Strike 335 has a total call value of 107,447,920,000 versus a total put value of 33,709,760,000 Combined total value = 141,157,680,000
Strike 336 has a total call value of 116,135,280,000 versus a total put value of 32,715,520,000 Combined total value = 148,850,800,000
Strike 337.5 has a total call value of 129,322,560,000 versus a total put value of 31,242,640,000 Combined total value = 160,565,200,000
Strike 338.5 has a total call value of 138,162,400,000 versus a total put value of 30,266,320,000 Combined total value = 168,428,720,000
Strike 340 has a total call value of 151,653,760,000 versus a total put value of 28,853,680,000 Combined total value = 180,507,440,000
Strike 341 has a total call value of 161,199,200,000 versus a total put value of 27,925,680,000 Combined total value = 189,124,880,000
Strike 342.5 has a total call value of 175,709,360,000 versus a total put value of 26,540,160,000 Combined total value = 202,249,520,000
Strike 343.5 has a total call value of 185,503,280,000 versus a total put value of 25,616,480,000 Combined total value = 211,119,760,000
Strike 345 has a total call value of 201,286,640,000 versus a total put value of 24,625,520,000 Combined total value = 225,912,160,000
Strike 346 has a total call value of 211,978,000,000 versus a total put value of 23,965,200,000 Combined total value = 235,943,200,000
Strike 347.5 has a total call value of 228,092,080,000 versus a total put value of 22,996,320,000 Combined total value = 251,088,400,000
Strike 348.5 has a total call value of 238,856,720,000 versus a total put value of 22,350,400,000 Combined total value = 261,207,120,000
Strike 350 has a total call value of 255,136,400,000 versus a total put value of 21,409,120,000 Combined total value = 276,545,520,000
Strike 351 has a total call value of 266,248,400,000 versus a total put value of 20,792,320,000 Combined total value = 287,040,720,000
Strike 352.5 has a total call value of 282,968,240,000 versus a total put value of 19,867,360,000 Combined total value = 302,835,600,000
Strike 353.5 has a total call value of 294,122,320,000 versus a total put value of 19,250,880,000 Combined total value = 313,373,200,000
Strike 355 has a total call value of 312,327,520,000 versus a total put value of 18,455,040,000 Combined total value = 330,782,560,000
Strike 356 has a total call value of 324,503,840,000 versus a total put value of 17,924,480,000 Combined total value = 342,428,320,000
Strike 357.5 has a total call value of 342,816,320,000 versus a total put value of 17,128,640,000 Combined total value = 359,944,960,000
Strike 358.5 has a total call value of 355,054,080,000 versus a total put value of 16,598,080,000 Combined total value = 371,652,160,000
Strike 360 has a total call value of 373,605,600,000 versus a total put value of 15,818,800,000 Combined total value = 389,424,400,000
Strike 361 has a total call value of 386,109,760,000 versus a total put value of 15,302,640,000 Combined total value = 401,412,400,000
Strike 362.5 has a total call value of 404,903,920,000 versus a total put value of 14,528,400,000 Combined total value = 419,432,320,000
Strike 363.5 has a total call value of 417,437,040,000 versus a total put value of 14,012,400,000 Combined total value = 431,449,440,000
Strike 365 has a total call value of 436,592,880,000 versus a total put value of 13,393,440,000 Combined total value = 449,986,320,000
Strike 366 has a total call value of 449,381,040,000 versus a total put value of 12,980,800,000 Combined total value = 462,361,840,000
Strike 367.5 has a total call value of 468,603,600,000 versus a total put value of 12,361,840,000 Combined total value = 480,965,440,000
Strike 368.5 has a total call value of 481,418,640,000 versus a total put value of 11,949,200,000 Combined total value = 493,367,840,000
Strike 370 has a total call value of 500,844,480,000 versus a total put value of 11,360,960,000 Combined total value = 512,205,440,000
Strike 371 has a total call value of 513,900,800,000 versus a total put value of 10,968,960,000 Combined total value = 524,869,760,000
Strike 372.5 has a total call value of 533,509,280,000 versus a total put value of 10,380,960,000 Combined total value = 543,890,240,000
Strike 373.5 has a total call value of 546,581,600,000 versus a total put value of 9,988,960,000 Combined total value = 556,570,560,000
Strike 375 has a total call value of 566,677,280,000 versus a total put value of 9,489,280,000 Combined total value = 576,166,560,000
Strike 376 has a total call value of 580,076,960,000 versus a total put value of 9,156,160,000 Combined total value = 589,233,120,000
Strike 377.5 has a total call value of 600,214,640,000 versus a total put value of 8,656,720,000 Combined total value = 608,871,360,000
Strike 378.5 has a total call value of 613,639,760,000 versus a total put value of 8,323,760,000 Combined total value = 621,963,520,000
Strike 380 has a total call value of 633,816,320,000 versus a total put value of 7,834,400,000 Combined total value = 641,650,720,000
Strike 381 has a total call value of 647,285,920,000 versus a total put value of 7,511,200,000 Combined total value = 654,797,120,000
Strike 382.5 has a total call value of 667,503,040,000 versus a total put value of 7,026,400,000 Combined total value = 674,529,440,000
Strike 383.5 has a total call value of 680,981,120,000 versus a total put value of 6,703,200,000 Combined total value = 687,684,320,000
Strike 385 has a total call value of 701,322,560,000 versus a total put value of 6,292,080,000 Combined total value = 707,614,640,000
Strike 386 has a total call value of 714,883,520,000 versus a total put value of 6,018,000,000 Combined total value = 720,901,520,000
Strike 387.5 has a total call value of 735,232,160,000 versus a total put value of 5,607,600,000 Combined total value = 740,839,760,000
Strike 388.5 has a total call value of 748,797,920,000 versus a total put value of 5,334,000,000 Combined total value = 754,131,920,000
Strike 390 has a total call value of 769,154,480,000 versus a total put value of 4,927,200,000 Combined total value = 774,081,680,000
Strike 391 has a total call value of 782,725,520,000 versus a total put value of 4,656,000,000 Combined total value = 787,381,520,000
Strike 392.5 has a total call value of 803,087,840,000 versus a total put value of 4,249,440,000 Combined total value = 807,337,280,000
Strike 393.5 has a total call value of 816,662,720,000 versus a total put value of 3,978,400,000 Combined total value = 820,641,120,000
Strike 395 has a total call value of 837,908,720,000 versus a total put value of 3,784,960,000 Combined total value = 841,693,680,000
Strike 396 has a total call value of 852,072,720,000 versus a total put value of 3,656,000,000 Combined total value = 855,728,720,000
Strike 397.5 has a total call value of 873,318,720,000 versus a total put value of 3,464,240,000 Combined total value = 876,782,960,000
Strike 398.5 has a total call value of 887,482,720,000 versus a total put value of 3,336,400,000 Combined total value = 890,819,120,000
Strike 400 has a total call value of 908,771,200,000 versus a total put value of 3,148,480,000 Combined total value = 911,919,680,000
Strike 401 has a total call value of 922,963,520,000 versus a total put value of 3,023,200,000 Combined total value = 925,986,720,000
Strike 402.5 has a total call value of 944,252,000,000 versus a total put value of 2,836,960,000 Combined total value = 947,088,960,000
Strike 403.5 has a total call value of 958,444,320,000 versus a total put value of 2,712,800,000 Combined total value = 961,157,120,000
Strike 405 has a total call value of 979,831,920,000 versus a total put value of 2,567,840,000 Combined total value = 982,399,760,000
Strike 406 has a total call value of 994,090,320,000 versus a total put value of 2,471,200,000 Combined total value = 996,561,520,000
Strike 407.5 has a total call value of 1,015,477,920,000 versus a total put value of 2,329,600,000 Combined total value = 1,017,807,520,000
Strike 408.5 has a total call value of 1,029,736,320,000 versus a total put value of 2,235,200,000 Combined total value = 1,031,971,520,000
Strike 410 has a total call value of 1,051,128,240,000 versus a total put value of 2,096,960,000 Combined total value = 1,053,225,200,000
Strike 412.5 has a total call value of 1,086,781,440,000 versus a total put value of 1,866,560,000 Combined total value = 1,088,648,000,000
Strike 413.5 has a total call value of 1,101,042,720,000 versus a total put value of 1,774,400,000 Combined total value = 1,102,817,120,000
Strike 415 has a total call value of 1,122,514,560,000 versus a total put value of 1,671,920,000 Combined total value = 1,124,186,480,000
Strike 417.5 has a total call value of 1,158,300,960,000 versus a total put value of 1,501,120,000 Combined total value = 1,159,802,080,000
Strike 418.5 has a total call value of 1,172,615,520,000 versus a total put value of 1,432,800,000 Combined total value = 1,174,048,320,000
Strike 420 has a total call value of 1,194,098,640,000 versus a total put value of 1,332,720,000 Combined total value = 1,195,431,360,000
Strike 422.5 has a total call value of 1,229,903,840,000 versus a total put value of 1,165,920,000 Combined total value = 1,231,069,760,000
Strike 423.5 has a total call value of 1,244,225,920,000 versus a total put value of 1,099,200,000 Combined total value = 1,245,325,120,000
Strike 425 has a total call value of 1,265,728,960,000 versus a total put value of 1,009,920,000 Combined total value = 1,266,738,880,000
Strike 427.5 has a total call value of 1,301,567,360,000 versus a total put value of 861,120,000 Combined total value = 1,302,428,480,000
Strike 428.5 has a total call value of 1,315,902,720,000 versus a total put value of 801,600,000 Combined total value = 1,316,704,320,000
Strike 430 has a total call value of 1,337,407,440,000 versus a total put value of 716,400,000 Combined total value = 1,338,123,840,000
Strike 432.5 has a total call value of 1,373,248,640,000 versus a total put value of 574,400,000 Combined total value = 1,373,823,040,000
Strike 433.5 has a total call value of 1,387,585,120,000 versus a total put value of 517,600,000 Combined total value = 1,388,102,720,000
Strike 435 has a total call value of 1,409,105,680,000 versus a total put value of 444,880,000 Combined total value = 1,409,550,560,000
Strike 437.5 has a total call value of 1,444,973,280,000 versus a total put value of 323,680,000 Combined total value = 1,445,296,960,000
Strike 438.5 has a total call value of 1,459,320,320,000 versus a total put value of 275,200,000 Combined total value = 1,459,595,520,000
Strike 440 has a total call value of 1,480,840,880,000 versus a total put value of 202,960,000 Combined total value = 1,481,043,840,000
Strike 442.5 has a total call value of 1,516,708,480,000 versus a total put value of 82,560,000 Combined total value = 1,516,791,040,000
Strike 443.5 has a total call value of 1,531,055,520,000 versus a total put value of 34,400,000 Combined total value = 1,531,089,920,000
Strike 445 has a total call value of 1,552,624,320,000 versus a total put value of 29,840,000 Combined total value = 1,552,654,160,000
Strike 447.5 has a total call value of 1,588,572,320,000 versus a total put value of 22,240,000 Combined total value = 1,588,594,560,000
Strike 448.5 has a total call value of 1,602,951,520,000 versus a total put value of 19,200,000 Combined total value = 1,602,970,720,000
Strike 450 has a total call value of 1,624,520,320,000 versus a total put value of 14,640,000 Combined total value = 1,624,534,960,000
Strike 452.5 has a total call value of 1,660,468,320,000 versus a total put value of 7,040,000 Combined total value = 1,660,475,360,000
Strike 453.5 has a total call value of 1,674,847,520,000 versus a total put value of 4,000,000 Combined total value = 1,674,851,520,000
Strike 455 has a total call value of 1,696,419,440,000 versus a total put value of 3,040,000 Combined total value = 1,696,422,480,000
Strike 457.5 has a total call value of 1,732,372,640,000 versus a total put value of 1,440,000 Combined total value = 1,732,374,080,000
Strike 458.5 has a total call value of 1,746,753,920,000 versus a total put value of 800,000 Combined total value = 1,746,754,720,000
Strike 460 has a total call value of 1,768,325,840,000 versus a total put value of 560,000 Combined total value = 1,768,326,400,000
Strike 462.5 has a total call value of 1,804,279,040,000 versus a total put value of 160,000 Combined total value = 1,804,279,200,000
Strike 463.5 has a total call value of 1,818,660,320,000 versus a total put value of 0 Combined total value = 1,818,660,320,000
Max-Pain Table for Stocks
Frequently Asked Questions
Max Pain, also known as the max pain price, is the strike price at which the maximum number of option contracts (both puts and calls) would expire worthless, causing the largest financial losses for option holders at expiration. This price point represents the level where option writers would experience the least payout obligation.
The max pain theory suggests that as expiration approaches, market makers and option writers may attempt to influence the stock price toward this level to minimize their payout obligations, making it a significant reference point for traders analyzing option expiration dynamics.
Max Pain is calculated by determining the total dollar value of in-the-money options at each strike price. Here's the step-by-step process:
- For each strike price: Calculate the difference between the current stock price and the strike price.
- Multiply by Open Interest: Multiply this difference by the open interest (number of contracts) at that strike for both call and put options.
- Sum the values: Add together the dollar value for put options and call options at each strike price.
- Repeat for all strikes: Perform this calculation for every available strike price in the option chain.
- Identify the maximum: The strike price with the highest combined dollar value is the Max Pain price.
This calculation helps identify the price level where option writers would face the maximum financial loss if the stock closes at that price on expiration day.
Traders can incorporate Max Pain analysis into their trading strategy in several ways:
- Expiration Day Trading: As option expiration approaches, traders can use Max Pain as a potential support or resistance level, as market makers may attempt to push the price toward this level.
- Option Selection: Understanding Max Pain helps traders choose strike prices that are less likely to be manipulated, potentially improving their option trade outcomes.
- Risk Management: If a stock is trading far from Max Pain before expiration, traders can anticipate potential price movement toward this level and adjust their positions accordingly.
- Market Sentiment Indicator: Comparing the current stock price to Max Pain can provide insights into market sentiment and potential price direction near expiration.
- Hedging Strategy: Option writers can use Max Pain to identify strike prices where they might face the least payout risk, helping them structure more efficient hedging strategies.
Max Pain provides insights into potential stock price behavior, especially near option expiration:
- Price Magnet Effect: If the stock price is significantly above or below Max Pain before expiration, there may be a tendency for the price to move toward Max Pain as expiration approaches, as option writers hedge their positions.
- Support/Resistance Level: Max Pain can act as a psychological and technical support or resistance level, especially on expiration day, as it represents the price where maximum option value would be lost.
- Volatility Indicator: A large gap between current price and Max Pain may indicate higher potential volatility or price movement as expiration nears.
- Market Maker Activity: Significant open interest concentration around Max Pain suggests where market makers might have the most incentive to influence price movement through their hedging activities.
Note: Max Pain is a theoretical concept and should be used in conjunction with other technical and fundamental analysis tools, as it does not guarantee price movement.
Max Pain is a dynamic value that changes continuously based on several factors:
- Open Interest Changes: As traders open and close option positions, the open interest at different strike prices changes, which directly affects the Max Pain calculation.
- Stock Price Movement: As the underlying stock price moves, different strike prices become in-the-money or out-of-the-money, altering the dollar value calculations.
- Time Decay: As expiration approaches, the time value of options decreases, but the intrinsic value calculations for Max Pain continue to evolve with price movements.
- New Option Contracts: When new strike prices are added or when significant new positions are opened, Max Pain may shift to reflect the new distribution of open interest.
For accurate Max Pain analysis, traders should monitor it regularly, especially in the days leading up to expiration, as it can shift significantly as market conditions and option positions change.
Max Pain and Spot Price are two distinct concepts that serve different purposes in options trading:
- Spot Price (Current Market Price): This is the current trading price of the underlying stock or index in the market. It represents the real-time value at which the asset can be bought or sold immediately.
- Max Pain Price: This is a calculated theoretical price level based on option open interest data. It represents the strike price where option writers would face minimum payout obligations, not necessarily where the stock is currently trading.
The relationship between these two prices is crucial: when the spot price is far from Max Pain, traders may anticipate potential price movement toward Max Pain as expiration approaches. However, this is not guaranteed, and many other factors influence stock price movement.
No, Max Pain is not always accurate and should not be used as the sole indicator for predicting stock price movement. Here's why:
- Market Forces: Strong fundamental news, earnings reports, or significant market events can override the Max Pain effect and drive prices in unexpected directions.
- Institutional Activity: Large institutional trades, algorithmic trading, and other market participants may have different objectives than minimizing option payouts.
- Limited Influence: While market makers may attempt to influence price toward Max Pain, their ability to do so is limited, especially in highly liquid stocks with strong directional momentum.
- Multiple Expirations: Stocks often have options expiring on different dates (weekly, monthly), which means multiple Max Pain levels may exist simultaneously, reducing the predictive power of any single level.
- Statistical Tool: Max Pain is best viewed as a statistical tool that provides context about option market dynamics rather than a guaranteed price target.
Traders should use Max Pain as one of many tools in their analysis, combining it with technical analysis, fundamental analysis, and market sentiment indicators for more comprehensive decision-making.
Max Pain becomes increasingly relevant as option expiration approaches:
- Last Trading Week: Max Pain analysis is most useful during the final week before expiration, when option writers are actively hedging and the "pinning effect" (price movement toward Max Pain) is most likely to occur.
- Expiration Day: On the day of expiration, Max Pain can serve as a key reference level, as market makers may attempt to keep the stock price near this level to minimize their payout obligations.
- High Open Interest: Max Pain is more reliable when there is significant open interest concentrated around specific strike prices, as this indicates where option writers have the most exposure.
- Low Volatility Periods: During periods of low market volatility, Max Pain may have a stronger influence, as there are fewer competing forces driving price movement.
- Monthly Expirations: Monthly option expirations (typically the third Friday) often show stronger Max Pain effects compared to weekly expirations, due to higher open interest and more significant market maker involvement.
While Max Pain can be calculated at any time, its predictive value and practical application increase significantly as expiration approaches, making it particularly useful for short-term trading strategies focused on expiration week dynamics.
