Max pain cash value for stocks with options

Discussion in 'Options' started by smile, Nov 17, 2015.

  1. smile


    Fascinating website:

    "This finance website calculates the weekly and monthly max pain cash value for stocks. Max Pain theory states that the stock price on option expiration will be at the strike where the most options (by cash value) expire worthless. This is due to hedging activity by the option writers. Thus, you can predict where the stock price will be in the future and trade accordingly."

    How Max Pain Works:
    Last edited: Nov 17, 2015
  2. destriero


    lawrence-lugar likes this.
  3. OptionGuru


    If you had run some numbers through the maximum pain calculator you would have known it is useless - as is the theory of maximum pain in general.

    Below is the maximum pain for November 20, 2015, along with the current quotes of some high profile stocks. There is enough info below to make a lot of money if the maximum pain calculator works - which of course it doesn't.

    • AAPL $115.00 $113.69
    • GOOGL $702.50 $745.98
    • FB $95.00 $105.13
    • PCLN $1295.00 $1258.79
    • NFLX $106.00 $117.10
    • TSLA $220.00 $214.00

  4. smile


    For me there is value in this max pain cash value for stocks.

    It is instructive to understand under what situations it works best and worst.

    Clearly it is only one part of a multi-faceted picture of a stock's price action.