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To: ajtj99 who wrote (44943)7/9/2002 11:20:37 PM
From: yard_man  Read Replies (4) | Respond to of 209892
 
but when does it become valid -- that's my point. I can't look at 2003 jan options and divine where prices are going to go can I?

Now, if prices are reasonably smooth close to expiration, doesn't it make sense that there is going to be a "center of gravity" for the options around where we close on expiry??

If you don't have a time element included it is completey worthless -- I just see it referenced when the market has taken a hit. I've seen it referenced 2 weeks out -- 1 month out -- even 2 months out. Do you have any idea what max pain was for July options 2 months ago?

You see my pt?



To: ajtj99 who wrote (44943)7/10/2002 9:09:37 AM
From: GraceZ  Respond to of 209892
 
Yeah, but it only works because both the stock price and max pain converge on each other. If you look at max pain a few weeks in advance it has little predictive value, yet on the day of expiry magically the max pain number and the stock price match, but then the max pain number is different then it was weeks earlier.


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