Max Pain
Strike where total option payouts are minimized at expiration. Shown for specific expirations only — hidden in TOTAL view.
Max Pain is the strike where the total value of all outstanding options is minimized at expiration — the price where option writers (market makers) pay out the least. Calculated from open interest and intrinsic value only, no Greeks involved.
Where it works:
- Expiration pinning — price drifts toward Max Pain in the final 24–48h before settlement
- OI sentiment gauge — a large gap between spot and Max Pain reveals directional positioning bias
- Best applied to a single near-term expiration
Why Max Pain is hidden in TOTAL view: When all expirations are combined, far-dated contracts (3–12 months out) carry massive OI at round-number strikes ($100K, $120K, $150K) and fully count in the Max Pain calculation — even though they have near-zero gamma and no impact on today's hedging. This drags TOTAL Max Pain far from spot with no structural relevance. To avoid misleading signals, we only show Max Pain when you select a specific expiration. For real-time equilibrium in TOTAL view, use the Flip Point — it's gamma-weighted, so far-dated contracts naturally contribute almost nothing.
How to trade: Use as a directional bias filter in the final session before expiry. Strongest signal when aligned with A1/A2. For real-time regime analysis use the Flip Point instead — it's gamma-weighted and responds as spot moves.
See also: Flip Point (F), Absolute Peaks (A1/A2)