Zeev's Turnips Patch-No Politics (ZEEV)

[Zeev Hed]

I agree with that tenet, and would like to add a small corollary observed over many years (unfortunately, I did not keep a "tight record"), when the powers manage to close expiry at max pain (and they do quite often), then the next week initial movement is often counter to the expiry week's movement. My "hand waving argument" to explain that observation is that positions taken in order to bring about max pain are unwound. Namely if the market was going down toward max pain due to market makers selling positions, they buy them back early in the next week and vice versa. In your observation, you point correctly, IMTO, that when expiry ends with inefficient max pain inducement, the market makers have to rush in to cover their losses and thus amplify the movement at expiry (under max leads to lower beginning and above max to higher beginning of the week).

Every so often, some external effects take hold of the market and skew these trends, so it is not a bankable one... (g).

Zeev