Max pain

The strike at which the most option premium expires worthless, causing the greatest total loss for option buyers.

Max pain is the strike price at which the largest number of outstanding options (calls and puts combined) would expire worthless, causing the greatest total loss for option buyers. The idea comes from the notion that, at expiration, the underlying tends to drift toward the price where option holders collectively lose the most and option sellers keep the most premium.

In practice, traders calculate it by adding up the value of all open calls and puts at each strike, then finding the strike where that total payout to holders is smallest. If a stock trades at 102 with heavy open interest clustered at the 100 strike, the 100 level may act as a magnet into expiration Friday.

Treat it as one clue, not a prediction. Max pain shifts as open interest changes, it only really matters near expiration for very liquid names, and plenty of stocks close nowhere near it. Using it as your sole reason to enter a trade is the common mistake.

← Back to the glossary · Guides · Strategies

All options terms

Call Put Strike price Premium Expiration In the money (ITM)At the money (ATM)Out of the money (OTM)Intrinsic value Time value (extrinsic)Delta Gamma Theta Vega Implied volatility (IV)Open interest Assignment Exercise Spread Break-even Probability of profit (POP)Assignment risk / early assignment LEAPS Naked (uncovered) option Rho Historical volatility (HV)Volume Bid-ask spread Moneyness Covered call Cash-secured put Vertical spread Iron condor Straddle Strangle Rolling Margin American-style option European-style option Contract multiplier Debit vs credit Volatility skew The Greeks Underlying Hedge Leverage Expected move Notional value Protective put Collar Butterfly spread Iron butterfly Calendar spread Diagonal spread Credit spread Debit spread Bull call spread Bear put spread Ratio spread Synthetic position The wheel strategy Poor man’s covered call (PMCC)Box spread Put-call parity Pin risk IV crush IV rank / IV percentile Ex-dividend date Deep in the money Weeklys 0DTE (zero days to expiration)Order types (to open / to close)Buying power reduction Cash settlement Market maker Slippage Mid price Black-Scholes model

Educational use only. Quotes are delayed ~15 minutes and nothing here is financial advice. Options trading involves substantial risk of loss.