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Option Pain
single chart
single chart
StrikeCall Pain (cr)Put Pain (cr) Total Pain(cr)
 Information

Option Pain

What is Option Pain?

Options Trading is a zero-sum game and Option Pain is the underlying level at which Option Buyers face having the maximum loss & Option Sellers will make the most profit or least loss at the point. (If held till expiration)

How is Max Pain Calculated?

Max Pain is calculated by multiplying the Open Interest with Intrinsic Value of Options at various expiry levels for each strike and further Pain Curve is derived by adding Call & Put P&L at each strike. Level with Max Profit or lowest loss being the Option Pain.

Importance of Max Pain?

Option Writers/Sellers are expected to be smart as they take an unfavourable Reward to Risk trade, and their trade has an unlimited loss scenario. So they tend to have a thoroughly researched approach, hence Max pain becomes key expiry level.Option Writers adjust positions with revised forecasts & the market as a whole tends to adhere to that.

Interpreting Option Pain

  • Pain Level should be used as an indicator to predict probable expiry levels as expiry day approaches.

  • Pain Level usually stands firm in oscillating markets.

  • Pain is not a static level, as markets and market participants change their position, Option Pain/Max Pain also moves.

  • If the pain level remains at the same level with the markets moving, it depicts the market participants do not think the direction is substantial & are not moving their positions with move in prices.

  • Option Pain is an indicator usually tracked for Index Options.

How to Buy PRO/ PRO+ Plan?

  • Step 1:- Sign Up your account with web.quantsapp.com

  • Step 2:- Click on GO PRO/PRO+ text highlighted on the top right corner

  • Step 3:- Select PRO/PRO+ after comparing & getting an idea of the subscription plans

  • Step 4:- Choose your payment mode & enter your credentials, hit pay now & start your journey of being a data-driven trader.

An option pain guide

We have many learning resources on the application & on Youtube to help you decode Option pain and use it for your expiry day trading. Learn from our videos by Mrs. Tina Gadodia (President, Quantsapp), Mr. Rahul Prajapati (Head Trainer) & Mr. Shubhankar Patil.