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To: WebDrone who wrote (14119)	3/22/2000 10:14:00 PM
From: Ibexx	Read Replies (1) \| Respond to of 21876

I am well familiar with MaxPain. But the URL is still of use to those who haven't been exposed to this concept. I must also caution, however, that sometimes this works, other times it doesn't. Besides, a lot could happen between now and option expiry. Ibexx

To: WebDrone who wrote (14119)	3/23/2000 8:14:00 AM
From: Georgeb	Respond to of 21876

My first exposure to "max-pain". It has an intuitive appeal. As I understand it, in the absence of news or other market dynamics, options sellers begin to cover their sale as an in-the-money expiration approaches. Puts sellers fill their obligation by selling stock short or buying puts. Call sellers fill their obligation by starting to buy stock or buy calls. The reduction in open interest results for both puts and calls, and brings the market to the lowest open interest point. The closing of positions forces options prices higher because of buying pressure. The closing of options positions would not affect the stock price (just the options prices). The stock sale shorts and stock purchases force stock prices higher. What forces stock prices lower? another question: How much of the open interest call volume is covered calls from the beginning? Those calls would obviously not affect the curve. Max-pain would seem to force stock prices up to the intersection point if the stock price is below the intersection point, but not down if it is too high. True?