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Technology Stocks : Intel Corporation (INTC)
INTC 43.48+8.6%Dec 2 3:59 PM EST
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To: nihil who wrote (65725)10/2/1998 8:32:00 AM
From: Ben Antanaitis  Read Replies (2) of 186894
 
nihil,

You have the definition right on. Whether the Max-Pain&#153 effect is a deliberate effort or a secondary effect of just trying to maximize premiums kept, or a random effect that just seems to have a predictable influence, I cannot say. But you have hit on one of the key unknown variables, there are MM's, pleural, not one monolithic master MM, singular. Because of this, one MM's profit point may be another's loss point. So any ebb and flow of the stock price to enhance one MM's position might not be toward the Max-Pain Point&#153 which is the average over all players.

Yes, I coined the term Max-Pain&#153 from the open interest buyer's point of view. It clearly is their pain when they hold the contract to expiry day and the contract expires worthless.
But by tracking it over a spectrum of issues, I hope to find a statistical link and perhaps a subset of issues that have higher than 50 - 50 odds of tracking with the effect.

Ben A.

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