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To: JRI who wrote (93767)	4/12/2001 10:44:09 PM
From: mishedlo	Respond to of 436258

Mish...aren't most max-painers at or above Max Pain right now.....given that, would you expect that they tread water (until expiry)... Would kindof go against many thinking about a 23rd top....although, maybe with down early next week....the rebound only gets back to these levels (I'm not leaning that way....just trying to figure out a scenario in which maxpain could be hit).. Many Naz stocks are above pain. Mots NYSE stocks that I follow are just below it. There are many problems with max pain. When it works it works well. I can say this. When stocks start gravitating towards it, they hit it eventually. That is why I stayed out of IBM and MMM and many others that I think suck. Had I been a better trader, I would have gone long. LOL The problems are numerous but bear repeating. The biggest problem is we do not know 100% whether the option pits are long or short. All we see is the open interest. ON AVERAGE it works out (on most big issues) Let' look at last month for example. Max pain on CIEN was 70 (I think) . My example presumes this but it really does not matter just follow the concept. WE had 3 gap up days last month 1 week before expiry when CIEN gyrated wildly for three days between 60 and 70 (or 50 and 60) it does not matter. What happened during these gyrations is the option pits accumulated enough shares right at 70 (or 60 I am lazy and not checking the charts) and went short. Thus their short side was covered and all the calls were toast. Then they just let the bottom drop out. Undoubtedly they covered at the bottom and went long. This month, it appears the reverse might be true. They accumulated enough shares at the bottom to cover the longs then forced a rally on gap ups, and making a FN fortune on the way, expiring the puts worthless in the process making another FN fortune. The calls they do not give a shit about cause they bought enough shares to cover it. The puts are toast and the calls are covered with longs. Under this scenario if true, they will unload those those shares at the highest price they can get, then force the price down exactly to pain on thursday or friday. What a racket. If they are really good (and why not) they will sell and go short at the top and the bottom will fall out starting the following monday at the latest. This is my synopsis of how this crooked game works. When it does not play out this way, it is because we missed something (a cover at the top or bottom, calls sold rather than bought, tec). Under this scenario, Thursday and Friday before expiry will be bad for any stocks above pain, and the following Monday will totally suck for about everything. M