SPY Max Pain? What It Means and How Traders Use It

The Automated Trading Podcast by Advanced AutoTrades

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This episode discusses the concept of max pain in options trading, specifically relating to the SPY ETF. It explains that max pain represents the strike price where the largest number of options will expire worthless, causing the most financial difficulty for option holders while benefiting sellers. The hosts argue that while not a perfect predictor, understanding max pain can be a useful tool for traders, particularly as SPY expiration nears, especially when there are no major news events or high volatility. Experienced traders might use this information to refine their trading strategies, like selecting strikes for iron condors, although it should not be the sole basis for a trade. They also suggest that institutional pinning may play a role in price action gravitating towards max pain levels. Read the whole blog article at https://advancedautotrades.com/spy-max-pain/

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