for week ending 9/20 it's at $100 or $105. stock is already at $118.
can someone explain if MMs and options sellers are really getting toasted? how can they let it happen? they are the majority in this game.
I understand the stock price doesn't and hasn't been correlating with max pain at all.
but max pain is max pain i.e option sellers are loosing it since stock price is at $118.
anyone with more knowledge than me here please? Thanks in advance
NVDA max-pain of $100 not making sense
byu/chai2048 inoptions
Posted by chai2048
11 Comments
I mean they cant win 100% of the time
Max pain isn’t that predictive.
MM are not degenerate regarded gamblers they are hedged. Right or wrong I think of it like a book maker. They off load one sided bets and make money on the juice, they are not gambling.
Delta neutral
Max pain only matters when the money is close. If it’s that far itm already, they are already Delta hedged neutral on it, so it’s irrelevant unless price drops significantly and they are taking hedges off
Max pain doesn’t predict anything my dude. How about you stop with the astrology and actually try to come up with a consistently profitable strategy? Thank me later.
You do realize their transactions don’t ever stop. Max pain is at 100? No problem they’ll keep selling you options at 130 and 140 strike and every time those options go in the money they will automatically fully hedge and offset losses as the stock keeps going up.
Don’t try to make sense of things that you can not possibly understand, who’s max pain? There are thousands of participants so whos pain?
Just trade.
Institutions that write options are delta-hedged such that underlying drift isn’t a problem. They have some jump risk, but this isn’t that.
1) No, options sellers are not losing it. You can be long or short on the underlying if you sell an option. Same for buying an option.
2) MMs are not getting toasted. They are market neutral.
3) Max pain means there is a tendency for the stock to drift towards that price. That’s it. That by itself doesn’t mean anything if you look at it in a vacuum. Just like while there is a tendency for stock prices to drift upwards, there are going to be red days and green days for stocks and you don’t go yelling that there shouldn’t be red days cos’ stocks are inclined to drift upwards.
I don’t understand this at all.