What is max pain?

Max pain theory is a term used to describe the specific price of a stock that can close on options expiration day in order to lead to the most dollar lost for those who bought options on that stock, therefore causing maximum pain for option buyers. On the other hand, this price will also maximize the overall profits to the option writers.

Using our Max Pain Analyzer, you can determine the maximum pain point for almost any stocks with options. You can specify the expiration month of the option you wish to analyze as well as which trading day's data to use.

For example, if you choose to analyze the Google stock (symbol GOOG), then enter expiration month of Aug 2007, and then enter trading date as 8-14-2007, the analyzer will return you the max pain graph for GOOG options that is expiring on August 2007 using the trading data on 8-14-2007. The default selection for expiration and trading day is to use the earliest expiring options and the most current trading date.

The y-axis represents the price of the underling stock and the x-axis represents the total value of all put and call options expiring that month if the stock where to close at the corresponding y-axis price. The bar with the minimum total options value represents the maximum pain price for the stock.

To perform historical time series analysis of Max Pain, try our Max Pain Historical Analysis tool!