Max pain
The strike where the largest number of contracts would expire worthless. A statistical observation, not a prediction of where price ends up.
In the chapter
Reading the table of contracts
From the same chapter
- Option chainThe table of every contract on an underlying, by strike and expiration. It is the map: without reading it, picking a strike is guessing.
- Open interestHow many contracts remain open at that strike. Unlike volume it does not reset daily: it says where positions are, not where the rush was.
- Bid-ask spreadThe gap between what you are paid and what you are charged. On thinly traded options it eats the profit before you start.
- Mid priceThe point between bid and ask. A sensible reference for working the entry, not a price that fills by itself.