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To: velociraptor_ who wrote (57995)	10/30/2002 1:08:16 AM
From: mishedlo	Read Replies (1) \| Respond to of 209892

I don't put a lot of support in Max pain and they tend to weigh only a little in my analysis. October expiration had QQQ max pain at 22 and it finished at 24 1/2 or so. Call writers suffered big time on that one under that analysis. Volatility should also have been limited in that last week as well. Yet, anyone smart enough to buy really cheap Calls around the area of the Oct 10th low could have made over 20:1 on a lot of different calls and about 50:1 on certain index calls. I would say Max pain theory failed big time then. Velo - I disagree with you on this one. First off, I call any hit of max pain during expiry week regardless of where it goes from there a Max Pain win. Of course that is MY rule and not the classic definition, but my rule says that max pain will be hit, but what happens after that is debatable. By THIS definition, max pain has only failed a couple of times this year. Ok. On to the next part. Call writers did not lose dime one as you suggest. All the time premium on both puts and calls went to near zero on the touch of max pain during expiry week. A clear victory for the writers on both sides, at that time. Then when the launch continued, the writers had to hedge the calls they sold so they were forced to buy equities to do it. That delta hedging helped fuel the launch up. The more calls that were bought the higher we went as $ poured in. The PUTs all expired worthless and although the calls did not, the writers hedged (during expiry week when it was easiest to do so), and that covered any call "losses" you presume happened. Now "da boys" would just assume have all the options expire worthless but when that is not possible, they simply delta hedge the other side. That is my take, and I am sticking to it. gg Those 50:1 long shots sometimes come in but IMO was a sucker play. Normally we would stop at pain not blast thru it buy 2.5 points. In that case those 20:1 and 50:1 bets would have gone to money heaven. But buying ITM options or options one month out and holding them, some 300-500% returns were there. On some equities, possibly a lot more. I feel like a moron cause I had calls and got shook out of them too soon. M