Echelon Corporation (ELON) Message Board

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Technology Stocks : Echelon Corporation (ELON)

ELON 21.88

+10.1%

Oct 6 5:00 PM EST

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To: Silver Clay Art who wrote (2320)	6/14/2000 1:26:00 PM
From: IngotWeTrust	Read Replies (2) of 3076

Max Pain equals the theoretical price point where the maximum pain is inflicted upon losing option write-[calls] money, and meets the maximum pain inflicted on losing option write [puts] money. That point of maximum money loss to each side DOES converge and is approximately where the stock price will close on Option Expiry Friday each cycle month. It can be calculated in advance and has a pretty high predictability correlation, periodically, in historical instances...save for wildly volatile stocks. I have used its predictability repeatedly to write covered and naked options for income. That is my experience with Max Pain.

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