I keep hearing about max pain in options trading, but I’m not sure how it affects my trades.
Is it something I should be concerned about? How do you use this information in your trading decisions?
I’ve been trying to understand it, but it’s still a bit confusing.
Max pain burned me bad when I first started options. Lost 40% on SPY calls thinking it’d hit max pain.
Now I use it as a guide, not gospel. Last month, I spotted AAPL max pain at 175. Bought puts at 180, netted a sweet 62% gain when it dipped.
Remember, big players can manipulate this. Trust your gut and price action too.
Max pain’s an interesting concept, but it’s not the holy grail some make it out to be. Been watching it for a while now, and it’s hit or miss.
Sometimes it’s spot on, other times the market just does its own thing. Use it as part of your toolkit, but don’t bet the farm on it.
Keep an eye on volume and price action too. They often tell a clearer story than max pain alone.
Max pain’s just one piece of the puzzle. I check it, but don’t rely on it completely. Last week, TSLA max pain was 250. Bought calls at 245, made a quick 30% when it popped.
Max pain is the strike price where options expire worthless for most holders. It’s useful, but don’t obsess over it. I check it as one of many factors before entering a trade. It can hint at where big money thinks the price might go, but it’s not a crystal ball. Focus more on your own analysis and risk management. Max pain is just another tool in the box, not a holy grail. I’ve seen plenty of times where price moved away from max pain. Use it to complement your strategy, not as the main decision maker.
Max pain: strike where most options expire worthless.
• Indicates potential price target
• Not reliable standalone indicator
• Use with other technical analysis
• Consider volume, open interest
• Don’t overweight in decisions
Backtest before applying.