Max Pain
The strike price at which the total value of all outstanding options (puts and calls) would expire worthless, causing maximum loss to option holders.
Explained Simply
Max pain theory suggests stocks tend to gravitate toward the max pain price at options expiration because market makers (who sold the options) profit most at that level. While not a guaranteed predictor, max pain provides a magnet-like target that can influence price action in the last few days before expiration, especially on monthly OpEx. Stocks more than 3% away from max pain often converge toward it.
How Tradewink Uses Max Pain
Our max pain loop runs every 30 minutes, scanning for stocks with price more than 3% away from the max pain level. When detected, the AI generates a signal suggesting the stock may gravitate toward max pain as expiration approaches. This is particularly useful for short-term mean-reversion plays in the final 2-3 days before OpEx.
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See Max Pain in action
Tradewink uses max pain as part of its AI trading signal pipeline. Start getting signals that use this concept to find real opportunities.