InvestorsHub Logo
Followers 20
Posts 1031
Boards Moderated 0
Alias Born 10/17/2006

Re: frrol post# 54399

Saturday, 02/20/2016 3:20:19 AM

Saturday, February 20, 2016 3:20:19 AM

Post# of 458342
fwiw from Investopedia

http://www.investopedia.com/terms/m/maxpain.asp

"DEFINITION of 'Max Pain '

The point at which options expire worthless. The term, max pain, stems from the Maximum Pain theory, which states that most traders who buy and hold options contracts until expiration will lose money. According to the theory, this is due to the tendency for the price of a underlying stock to gravitate towards its "maximum pain strike price" - the price where the greatest number of options (in dollar value) will expire worthless.

BREAKING DOWN 'Max Pain '

About 60% of options are traded out, 30% of options expire worthless and 10% of options are exercised. Max pain is the point where option owners feel "maximum pain," or will stand to lose the most money. Options sellers, on the other hand, may stand to reap the most reward. The Maximum Pain theory is controversial, and there is disagreement regarding if the tendency for the underlying stock's price to gravitate to the maximum pain strike price is by chance, or by some sort of market manipulation. "




Volume:
Day Range:
Bid:
Ask:
Last Trade Time:
Total Trades:
  • 1D
  • 1M
  • 3M
  • 6M
  • 1Y
  • 5Y
Recent AVXL News