What is Option Pain?
Before understanding “Options Max Pain Theory”, it is important to understand the meaning of “Options Pain”.
It is seen that 90%+ options expire out of the money. Since most options buyers lose money in options trading, the price of the underlying stock somehow must be adjusted / manipulated to close in a way that benefits option writers at the time of options expiry.
The loss incurred by options buyers is also termed as “Options Pain” for our discussion.
What is Options Max Pain Theory?
Options Max Pain Theory suggests, “On option expiration day, the underlying stock price often moves toward a point that brings maximum loss to option buyers.”
How to calculate Options Max Pain Strike Price?
We need to calculate the strike the price at which the option buyer loses the maximum amount of money. This is also the point at which option writers will payout the least amount of money.
Illustration coming soon…
How can a trader benefit from “Max Pain Theory”?
Traders can utilize this concept to their advantage. Option writing can be done near expiry based on this theory, provided other technical indicators also favor the trade.
No trade should be taken without extensive study (of technicals or fundamentals of the underlying).
Interpretation of the above chart:
With the help of above charts you can identify the strike price corresponding to max pain point in options. The “Options Max Pain” charts are available for all derivative stocks in the “Options Max Pain Chart” above.
AAP says
Is this above chart taking into consideration for open Interest of all expiry or only near month expiry?
Is it possible to zoom into the above chart to a range between say 6500 to 10000.
RAJEEV SINGH says
PLS SHARE YOUR ILLUSTRATION, HOW IS CALCULATED FOR NIFTY.
Rajeev
8826466911
RAJEEV SINGH says
PLS SHARE YOUR ILLUSTRATION, HOW OPTION PAIN IS CALCULATED FOR NIFTY.
Rajeev
8826466911
KASHYAP says
Dear sir,
Everything about your data is so useful and one can trust about your research.
But I found that max pain in castrol India is 380 which your chart is showing 390 . I just analysis that ..
Correct me if I wrong.pardon me if I m wrong please.
Date 17 Dec 2016
Pradeep says
The difference in max pain is so small for the above that it might be shifting between 380 and 390.
When the difference is so small do not rely on “max pain” too much.
AAP says
Thank you for zooming the chart to 6500-10000.
Rajesh Rekhani says
Bank Nifty has now weekly options. Max pain as shown above for BN is for weekly or monthly?
Dr. RAJESH KUMAR SATPATHY says
increaseindustrywise exposer
ULHAS GHUGARDARE says
IF you can give values of MAXIMUM PAIN in excel format for all futures then it will be easy to come to conclusion on which call or put to be bought.
pravin bardolia says
i cant understand this chart
Rahul says
Hi Team,
I would like to have all the Max Pain Prediction from Nifty trader for for past 1 year & the actual expiry data.
Please let me know if I can contact you guys or email you.
Rahul says
Your Max Pain calculation isn’t live, this seems wrong to me first time.
The analysis show Max Pain should be around 21000. Please write back with your calculation behind Max Pain.
Shrinath Rasane says
How calculate option max pain chart
jegan says
Max Pain is not displayed right now. It is in loading state forever. can you correct it?
srinivasan says
I find that today many of the menu items do not work in your website.. The screen goes on and on without displaying anything, max pain points and option charts in particular.
Vidyadhar Belvalkar says
The BankNifty data used is for monthly expiry or the weekly expiry ?
Alok Kr Mukherjee says
What is CP & PP. How Pain is calculated. How We can predict the direction of Nifty from the Chart.
DEEPAK ARORA says
I ALSO WANT TO KNOW WHAT IS CP AND PP ??
Alok Kr Mukherjee says
CP and PP full form pl.
How to know instantly that CALL or PUT will be profit making for a day trader
Alok Kr Mukherjee says
Not getting replies
girish says
left side captions overlap rightside material making it dficult to read matter on RHS
Prakash says
Todays in bank nifty 25000 max pain level in ur chart. v have to buy pe if current price of bank nifty above 25000? is this way?