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Have there been any academic or industry papers on options max pain? There seems to be a widespread belief (among retail traders) that the underlying price 'gravitates' toward the strike at which the greatest dollar value of options expire worthless. Does anyone have references to an investigation of this? I'd also be interested to hear experience or opinions on this.

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Using the terms"belief and retail traders" best answers your question.

That said, obviously, the more options expire worthless the more money option writers make. This is especially true in centralized single markets with no fungible assets and cross assets. But in markets such as spy or the main FX no one can truly reconstruct the real net positions. And only relying on available exchange OI data alone is misleading in terms of expected underline expiration. Max pain is naive in the assumption that the OI is also an open position (not hedged by the writers). IF you can assess that that is the case for a spesific market, then you can assume that there is a collective interest among those option writers for the market to expire max pain.

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