All termsAdvanced Analysis and Market PositioningWorth knowing
Max Pain
Max Pain is an options market calculation intended to identify the underlying price at which aggregate option holder intrinsic payouts at expiration would be minimized under the methodology used.
Why it matters to you
Some traders monitor Max Pain as an expiration related reference. But it should not be treated as a reliable prediction that price will move toward that level. Markets move for many reasons, and Max Pain is a calculation based on options positioning rather than a guaranteed price magnet.
Terms that sit next to this one
Open Interest