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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Tony Viola who wrote (66648)	10/14/1998 4:38:00 PM
From: Burt Masnick	Read Replies (3) \| Respond to of 186894

I'll take a crack. I think that the max pain indicates the price that causes the least profit (or most loss) to the universe of option holders for the monthly puts and calls that expire that day. Takes into account the number of puts and calls and the various strike prices of those puts and calls. There is a cynical assumption that market makers manipulate the price of the underlying stock (INTC in this case) to maximize their profits and minimize their losses) by moving the price real close to or dead onto the max pain price. This cynicism is supported by the fact that the max pain price seems to be a magnet price for the closing price on option settlement days (once a month). I am guessing that this is the argument for how max pain is calculated and why. Welcome any corrections.