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Strategies & Market Trends : Ask Vendit Off-Topic Questions

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To: J.K. who wrote (5049)2/18/2005 4:08:57 AM
From: Walkingshadow   of 8752
 
Hi JK,

One other thing about the Max Pain Point. There are different sets of players in something like QQQQ, and these have various agendas. The options exchanges include one set, but where QQQQ goes is a summation of the various forces weighted according to their relative power.

So I think it is fair to say that if there is a discordance between the price of the underlying and the Max Pain Point, then the degree of pressure from the options exchanges to move the underlying up or down will tend to be in a direction so as to minimize the discordance between the Max Pain Point and the price of the underlying.

In some cases, this pressure from the options exchanges may be very strong, but in other cases it is not sufficient to overcome opposing pressure from other sources.

T
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