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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Sam Citron who wrote (57991)	12/21/2001 1:37:16 AM
From: StanX Long	Read Replies (1) \| Respond to of 70976

“Is maxpain a natural tendency that can be explained or is it thought to be caused by some kind of conspiracy by MMs to overtly manipulate the market in some fashion?” Here is what I think, MaxPain is the dollar value where the least amount of Pain is felt over the total distribution of puts and calls. The Big Money / MMs want every option trader to feel that either they won or were very close with a small lost. The closer they keep their customer away from a point of Maximum Pain, then that customer will try again next month. MM want the transaction cost, they don’t care what is the absolute price of any stock, only that their customers were not totally burned in the deal. So to help keep customers, they manipulate the option expiration value to minimize the pain for the greatest number of contracts. This keeps the customer coming back for another try. The contracts expire with the least damage to a customer, insuring “his” wife won’t be so mad at him for loosing so much money that he can never play again. MaxPain is based on the value of the premiums being the profits that MM wants, again and again and again. BWDIK Stan