Welcome To Aaplpain.com
November 29, 2011 | 
Author
A site dedicated to open interest Max Pain theory and AAPL options sentiment.
What is Max Pain?
It is a theory which states on options expiry a stock will close at the point where the most puts and calls combined expire worthless — via dollar value. The name is derived on the basis that the most “Pain” is felt to option holders at a certain price or point.
What is open interest (OI) Max Pain and how does it differ?
The original Max Pain theory uses dollar value to conclude where a stock will expire, at an exact strike. Using dollar value misses some very key stock moves or stalls. Switching to OI as a Max Pain range is far superior for trading as we can observe and prepare for probable breakouts or breakdowns. Not only can we be privy to how a stock will react at each strike, our probability using a range instead of a single strike is greatly improved.
This is the only site I know which uses open interest and a range. This site does not use dollar value nor an exact strike. If you recognize Max Pain theory but OI/Max Pain is something new to you, don’t worry. This site is trying to differentiate itself from the “original” to a new “high probability trading” theory.
Enjoy,
Travis Lewis
AAPLPAIN.COM
Posted in 
Visualizing The Internals
I wanted to give a visual of what happens underneath Apple’s surface. This data is specific to 02/10/12 weekly opex. The two area graphs represent the highest volume, one for each call and put. The two line graphs represent the actual OI after the close. This is actually what was left on expiry or going into Saturday. You will not find this data elsewhere.
I want to concentrate on the highest volume strikes for the day. This happens to be ~46K contracts on the $490 puts and ~70K contracts on the $495 calls. I do not want to get into delta/gamma hedging, but concentrate on what happens when options close. When a call closes it causes selling pressure. When a put closes it causes buying pressure. In the above graph I want to display a visual. Picture the call ‘pyramid’ collapsing as calls close down. This sends the stock straight down hill. Now, picture the put ‘pyramid’ collapsing. This sends the stock higher. Both forces repeal AAPL, squeezing it harder and harder until — the closing bell rings. You can also think of these like two opposing magnets. AAPL is the ferrous metal forced to the center of these two magnets.
Apple’s trading range was $488.55 – $497.62 with a closing price of $493.42. This happened to be right in the middle of the highest put and call volume. While all this is short-term trading info, I hope it helps shed some light if you are ever scratching your head on AAPL’s trading patterns.
Apple In Review
I have a little glitch in my recording system that causes a split second to not get recorded. It’s at random. So thats why you may hear it get cut off. — The glitch happened at 3:50 area. What got cut off was saying “thats what we saw this week was that frame 5 run” (something like that)