Snack info board

[Fossil-Fuel]

Hey you think there is any value to this???

http://www.maximum-pain.com/max-pain.aspx

Max pain theory ays that the option writers will hedge the contracts they have written. In the case of the market maker, the hedging is done to remain neutral in the stock. Consider the market makers position if he must write an option contract without wanting a position in the stock. As the maturity date approaches, the stock price changes. In addition, contracts may be closed by the option buyers. As a result the option writer must rebalance his hedges. This rebalancing is an effort to hedge the open contracts, thus maintaining a state where the least amount of money will be paid out. Rebalancing of positions in the stock provide pressure on the price to close at the max pain point.