Max Pain Analysis
Options expiration price dynamics
Max Pain Analysis shows the strike price where total options value (puts + calls) is minimized over time—where option sellers profit most and buyers lose most.
Access: Navigate to Historical Analytics → Max Pain Analysis in the sidebar
How It Works
As expiration approaches, market maker hedging creates price pressure that can push stocks toward max pain. This effect is caused by gamma hedging dynamics, not manipulation.
When Max Pain Works
| Condition | Effect |
|---|---|
| 0-2 DTE | Strongest |
| High open interest | Stronger |
| Range-bound market | Stronger |
| Liquid stocks (SPY, QQQ, large-caps) | Stronger |
When Max Pain Fails
| Condition | Effect |
|---|---|
| >7 DTE | Weak/absent |
| Low open interest | Weak |
| Strong trend or momentum | Overridden |
| Major news/earnings | Overridden |
Weekly Pattern
- Mon-Wed: Weak max pain influence
- Thu-Fri: Effect strengthens
- Final hour Friday: Maximum gravitational pull
Key Takeaways
- Max pain is descriptive, not predictive
- Strongest effect is 0-3 DTE
- News and catalysts override max pain
- Never rely solely on max pain
- Combine with gamma exposure and option walls
Note: Max pain is one analytical tool among many. It describes a market phenomenon, not a prediction. Always do your own research and analysis.
