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Maxpainlevel

How "Max Pain" Can Become Your Ally in ETH TradingImagine standing on the edge of a cliff, peering down at a raging river below. That’s the feeling traders experience as the options expiration date approaches. At this moment, all bets are off, and the market is primed for sharp movements. Have you ever wondered how to turn this uncertainty into an advantage? Let’s break it down. The ETH market is buzzing with tension: open interest in options is soaring, and the ratio of in-the-money to out-of-the-money puts stands at 48% to 52%. This means nearly half of all puts have intrinsic value. Professional market participants, like skilled magicians, hedge their positions, transforming them into delta-neutral setups. But how do they do this? Right, by buying futures! This is the hidden growth driver we’ve been witnessing over the past few days. While I won’t dive into other factors like news, it’s crucial to understand that this dynamic could be the key to success. Now, let’s talk about “Max Pain.” The Max Pain level for this options series landed on the March 2nd trigger point, where we saw a powerful bullish candle. But are the bulls stuck there? I’m pretty sure they are. Now, we’re left to watch whether the market can break free from this grip. Personally, I see an opportunity to open a short position. But let’s see if the “law of gravity” will hold true for Max Pain this time. Stay tuned If you want to stay updated on forex and crypto trading nuances!
BINANCE:ETHUSDShort
by ClashChartsTeam
SPY Max Pain 01/28 ~ 02/11 (2022 W4-5)This is a first elaborated out and attempted to be simplified as much as possible (so the same process can be repeated for similar guidance under the same assumption). Assumption: The week close (this could be literally the last minute of the day, so 'it not being there' on Friday afternoon before close doesn't matter) will be near 'max pain' - the point at which the most options will lose the most extrinsic value possible at expiry- and lose all options buyers the most money, while maximizing what the hedged sellers retain. While implied by some sources to be potentially malicious (though not explicitly so, whatsoever), it more seems to me like it is a natural movement of the markets and a natural result of mathematics + the "entropy" of solving for the lowest common divisor. This charts the next two weeks relative to Options expiry (because any further and predictions become needlessly superfluous at this detail). This is assuming a mostly sideways movement which ends at the expiries each Friday. If the price moves dramatically, especially so dramatically that it crosses the upper green or lower red bounding bars, then the chart is essentially moot and whatever backup hedge must be performed if I am not already biased in that direction. In this case, since the foreseeable month or so or two even from now are mostly upwards (445~460), any significant dip is probably worth buying into, but only if I still hold an opposite hedge. This is just in case I am holding 3-4 calls, and not selling any, and have 1 put; even in a disaster situation the single put can sometimes outprice all three calls if the volatility and crash is harsh enough, and at least get me closer to neutral. Other strategies with put credit spreads etc need testing. Because this comes with the express understanding that it is incredibly likely that the price will only move up to expiry in the last two or three minutes of the day , such as this past Friday the 28th (441 was the max pain; so a perfect close). I was able to sell and buy a put in the last 20 seconds while I held the calls for the next week. So even if I am incorrect, the put should easily balance it out; then I can hold the put(s) and have that as my max risk for further upside, even if I sell all calls. Preferably I would want to hold onto at least some, but greed murdered me in December, so careful I should be. Mostly for my own record and so I can see whether the predictions had any veracity, though the predictions are mostly for fun. They are not needed to perform the strategy. However, from here on, I will need to count the success rate of the predicted op-ex value and how far it ended up from it, and in what direction. That way, I can adjust my uncertainty. ~ Sofie <3
AMEX:SPYLong
by rubyatmidnight
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