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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Kayaker who wrote (23331)	1/18/2002 6:26:05 PM
From: ajtj99	Read Replies (1) \| Respond to of 99280

Kayaker, our resident options expert, Mish, has often explained how this works. It is not as easy as the numbers punched in on iqauto.com. There are numerous factors involved in determining Max Pain, including out of the money options. I trust Mish' eyeball method more than iqauto's automated results. You also have to understand that Max Pain Theory applies to positions 2-days prior to options expiration, I believe. In other words, to check the Max Pain values, you would have to have checked Wednesday's values for Max Pain before coming to any conclusions. You also have to be aware of delta hedging, which is what the MM does when the Max Pain point starts to get away from them.

To: Kayaker who wrote (23331)	1/19/2002 12:12:49 PM
From: mishedlo	Respond to of 99280

Kayaker, That is why you have to pick your targets and your stocks. That is also why I prefer my eyeball to www.Iquato.Com, and once again you have applied Max Pain to some low optioned stocks, and crap like EMLX that is in a world of its own. It is clear that EMLX does not track max pain well, so why bother. In fact, I specifically commented on that in my max pain post. NTAP is hardly a key issue with tons of options either. It was not on my list as a reliable candidate. One must be selective. The more heavily optioned a stock is, the more likely it will hit, or at least trend towards max pain. One must also realize that News will move a stock regardless of what Pain says. Lets see how my Eyeball did. KLAC 50 AMAT 40 BRCD 35 CSCO 19 INTC (I wavered between 32 1/2 and 35) NSFT 70 (but pretty horrible news) BRCM 45 AMZN 10 (called for 10 on the noze) QCOM 50 (but with a warning that stock was weak and closed well below pain last month) VRTS 45 (I think that is what I said, do not remember) QQQ 39-40 How did I do? Not bad since KLAC dropped about 58 at the time of my call AMZN dropped from 11.4 at the time of my call INTC was at 35.5 or so at the time of my call CSCO was somethingh like 21.4 at the time of my call QQQ was at 42 (and not for horrible MSFT news QQQ would likely have closed between 39 and 40). BRCD dropped 6 points, did you want 11? Was a 10% drop towards pain not good enough for you? AMZN, CSCO, BRCD, KLAC AMAT hit "my" targets ON THE NOSE or nearly so, at any rate most of the above stocks on MY list dropped 10% or better in the direction of max pain. Is that not good enough? One again I think Max pain worked to near perfection. Screw Iquato. Use a little intrepretation and be selective. M