Max pain (options)
Max pain is the expiration price at which the total intrinsic value of all outstanding options on an underlying, calls and puts weighted by open interest, would be smallest. It is a calculation on open interest, sometimes presented as a price magnet into expiry; that claim rests on assumptions the data does not support directly.
Senzoukria · Glossary · Updated September 2026
At a glance
- Definition
- Settlement price minimising Σ OI × intrinsic value over all calls and puts
- Inputs
- Open interest per strike for one expiry
- Status
- A calculation, not an observed force
The calculation
For each candidate settlement price S, compute what every open option of the expiry would pay: for calls, open interest × max(S − K, 0); for puts, open interest × max(K − S, 0), each times the multiplier. Add them up. The candidate with the smallest total is the max pain price, usually quoted as a strike. It is the price at which option holders as a group would collect the least at expiry.
Worked example
One expiry has three strikes. Open interest: at 95, 1,000 calls and 4,000 puts; at 100, 3,000 calls and 3,000 puts; at 105, 5,000 calls and 500 puts. The table computes the total payout to holders, with a multiplier of 100, at each strike used as the settlement price.
| Settlement price | Calls pay | Puts pay | Total |
|---|---|---|---|
| 95 | 0 | 2,000,000 dollars | 2,000,000 dollars |
| 100 | 500,000 dollars | 250,000 dollars | 750,000 dollars |
| 105 | 2,500,000 dollars | 0 | 2,500,000 dollars |
What the theory assumes
- That option writers as a group are able and motivated to move the underlying toward the strike where they pay least; no mechanism for that coordination is documented.
- That writers are the dealers and holders are clients, which open interest does not show.
- That the open interest used is current; it is published once a day and changes as positions are opened and closed on expiry day.
- That the options market can move the underlying; for broad indices the futures and cash equity markets are far larger than the expiring options' hedges.
Using it responsibly
If max pain is used at all, it should be treated as a descriptive statistic about where open interest sits, and tested like any other hypothesis: record it before expiry, measure the distance from the settlement price across many expiries, and compare with a naive benchmark such as the previous close. Hedging-based explanations of closes near large strikes are discussed under strike pinning and gamma exposure. Senzoukria does not compute max pain; its GEX module reports open interest and modelled gamma per strike, with the assumptions shown.
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Frequently asked questions
- Is max pain a reliable price target?
- There is no established evidence that it is. It summarises the open-interest distribution, and the settlement price may land anywhere. Closing near a large strike can have other explanations, such as long-gamma hedging, and often does not happen at all.
- Why do websites show different max pain values for the same expiry?
- They use open interest snapshots from different times, different candidate price grids and sometimes include only some expiries or exclude adjusted contracts. The calculation is simple, so differences come from the inputs.