I appreciate Max pain is a convenient narrative to hang things on, but at the end of the day, it is a fictional narrative.
As a guy that's traded options since the early 90's, some years full time, and a guy who used to drink heavily with the CBOE traders at the Berghoff mens standup bar in Chicago (http://www.berghoff.com/) I beg to differ.
I've seen it many, many, many more times than not in an actively traded, higher priced stock. It's not unlikely that its
coincidence, it's impossible.
But I don't think we'll agree on this, and I have to meet the wife for dinner, so I'll call a truce.
(I will say that the sites that calculate max pain make things much more complicated than they are in the real world). |
