I use the front month to get the current picture. I look further out for hints of what the future may bring. Keep in mind when a put is sold naked at a certain strike it means the seller either thanks the stock/index is going to move higher and the put will become worhless or the seller wants the underlying to be put to him at that price - the premium he received for the option. Both are bullish. The exact opposite holds true for those selling calls naked.
Max pain will move, that is why I watch open interest every day and look for significant changes at strike levels. Max pain is not foolproof, it can get skewed by news, earnings etc. But in my years of studying it, I will not bet against the story that option interest shows. Option sellers sell hope. And 90% of the time that hope ends up worthless. Who's side do you want to be on ?
Are you looking at open interest totals for puts, or specfically 130.00 puts on SPY? If so, I see what you mean
06 Apr 1175. (SPT PO-E) Put Vol 209079 06 Apr 1375. (SXY DO-E) Call Vol 160228 06 Apr 1400. (SXZ DT-E) Call Vol 143707 Volente, You must be watching this!!!! What do you think? Duard
Well, what's glaringly obvious is the 100 pt spread with 1275 in the middle where alot of options sit as well. If the median is 1275 we have a skewed distribution to the downside. BIG MONEY IS SHORT!!!
I am looking at open interest at each strike in the 127-131 range. . Notice how the put interest dwarfs the call interest currently. http://finance.yahoo.com/q/op?s=SPY
Right I see what you mean....I tried to follow this in the past without much success..But, will look more closely in the future. It makes sense.. Thanks for the info.