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Max Pain Chart

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Max Pain Chart

What is max pain?

The max pain is the price at which the stock can cause the highest level of financial losses for all the options holders who have the contracts at that strike price at the time of expiration. 

The situation is defined with the stock price (the underlying asset) engaged in the strike price of the options contract at the date of expiry.

The max pain chart aims to determine how options traders can suffer big losses if the underlying asset’s spot price locks in with the contract’s strike price.


Why to use the max pain chart?

By using the Options Max pain chart feature in options trading, you can now easily know the strike price at which maximum losses can happen when a contract expires on a particular strike price. 

All you need to do is to select the contract in the contract section, it will automatically plot the Nifty max pain, Banknifty max pain and other options max pain.


Options Max Pain Calculator

Max pain is calculated using the Open Interest of options. The calculation is simple and is summed up below


  • You need to list down the different strikes of the option chain along with their open interests.
  • You need to calculate the profit/loss incurred to the option writers if the underlying expires at that level. This calculation should sum up the profit/loss for put as well as call option at that strike price.
  • The strike price where the loss is minimum is called the Max Pain strike price.


Options Max Pain Chart – Banknifty Max Pain


Bank Nifty max pain helps you to identify the price at which the underlying asset could expire.


Theoretical Perspective while using Max Pain Chart:- Option Sellers make money in the market, whereas Option buyers face losses


We try to find out a point at which option buyers could get maximum losses.


We can assume that


at 40,000, Call Buyers would get maximum losses


At 32,800, Put Buyers would get maximum losses.


We already discussed that Max Pain is a point where the option buyers could face maximum losses (both call and put buyers)


Here in Bank Nifty 36200 works as Max Pain Strike Price. Both Call Buyers and Put Buyers could have to face the losses at this level.


40,000 Call is considered as OTM (Out of the Money)


32,800 Put is considered as OTM (Out of the Money)


Usually, on Expiry Days, OTM Strikes will be zero.


So, most of the options buyers will have to face losses.


Let us take an example of Banknifty max pain, when you select bank nifty from the contract section, it will automatically plot a max pain chart, in which the strike price is 38210. The green bars indicate the put pain and the red bars indicate call pain for a particular strike price.

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