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Technology Stocks : Lucent Technologies (LU)

LU 2.520

-1.4%

Nov 26 3:59 PM EST

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To: Ben Antanaitis who wrote (3926)	9/5/1998 1:39:00 AM
From: ed	Read Replies (1) of 21876

Your Max Pain Option analysis is meaningless, you are just wasting your time. Why ? The ratio of open interest of call to put is a dynamic factor and is changing every day, so the max pain price will be changing everyday, But the option expiration day is fixed, i.e the third friday of every month. Only the max pain price of the third thursday of the month is meaningful to the investors, because we assume the open interest ratio of call to put will not change too much due to the option expiration date is very close, and if your prediction is correct, then the investors may use that information to make some money at the option expiration date. Unfortunately, the prediction is most likely not accurate , so there will be big divergence between the close price and the max pain price at the option expiration date. And that is the reason why you are wasting your time. Your max pain price of today is meaningless, because the ratio of interest of put to call will be changed tomorrow, and your max pain price will be changed again accordingly !!!!!

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