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

To: dwayanu who wrote (36526)	3/4/2002 12:00:04 AM
From: mishedlo	Read Replies (2) \| Respond to of 99280

Look at the PUTs vs Calls in March. If Puts outnumber calls at EVERY strike up to but not including 40, how can anything less than 40 be max pain? Max Pain simply has to make those PUT get toasted. Logically that must be, in my mind anyway. At a close of 40, every single PUT would get toasted 40 or below. Every Call 40 or above would get toasted. If there were strikes where CALL volume exceeded PUT volume then yes, it would not be 40. BTW - My eyeball method does include looking at volumes on the call side and put side when stating my eyeball case. Thus I do take into consideration what you suggested (value of contracts in the money, which is indeed relative to strike price), and must be weighted by distance from that strike price in relation to volume. In this case, the eyeball seems clear to me at 40. If Calls exceeded puts at strike 32 or 35 for example, my eyeball method would indeed take that into consideration. That said, a close analysis (looking at the actual difference between what would happen at 37 vs 40) was not statistically significant, to either my eyeball or my crude numerical analysis. Perhaps I am doing something wrong that someone can figure out, but your answer does NOT reflect what I am TRYING to accomplish by my eye. One possible explanation I can give I they are looking at current value of those options but I am looking at cash value as if we closed today at say 37 vs 40. If we were to force close March expiry today at precicely 40 vs 37 (see if you would come up with a different answer than I do). I believe more $ will finish in the money at 37 than at 40. If they are not looking at Current Value as opposed to "Closing Value" then they would not seem to be doing it correctly. M