Option Max Pain Excel – Option Max Pain Calculator FREE

Option Max Pain Excel

Option Max Pain Excel refers to the way of calculating option max pain in excel sheet. This process is very useful and trade friendly. Option max pain is also known as max pain in options. Read more to know how to download Option Max Pain calculator free.

Max Pain Theory – Option Max Pain calculates outstanding open interest at any point of time and calculates max pain. The theory suggests that before expiration the underlying stock moves to a point where there is maximum loss to option buyers. Before reaching to a conclusion it presumes the following.

  1. Buyers of option lose money mostly.
  2. Sellers are the institutional players or hedge funds who hedge their position by selling options.
  3. Sellers are big players who can induce the underlying to move to a point where the option buyers lose money mostly creating maximum pain for the option buyers.

It is seen that this theory holds true mostly and options traders can gain using this theory as part of the fundamental analysis for the stock price to be at the time of expiry.

What is Option Max Pain?

  • Option max pain theory calculates outstanding open interest of PE (puts) and CE (calls) at any point of time at different strike prices.
  • It is calculated for a particular expiry. This calculation will not be valid for other expiries.
  • All open interest data are imported to a MS-Excel sheet of all the PEs and CEs at different strike price for particular expiry.
  • The max pain is calculated at the strike price where minimum net loss occurs to option sellers.

Option Max Pain

Max Pain

As seen from the Excel file above and graphical representation thereof, the Max Pain is at 9600 where the combined open interest of PE and CE in minimum. That is Nifty is expected to expire at the strike price of 9600 where the option sellers loss is minimum.

Download Link Of The Option Max Pain Excel

The Option Max Pain Excel OR Option Max Pain calculator free can be downloaded from below. You need to use the social share buttons to unlock your download link.

Strategy – We can strategically trade option using option max pain excel in the following ways.

  • As Ratio Trade we can take a strategy by selling three lots of 9900 CE and 9300 PE each combining with selling of one lot of 9800 CE and 9400 PE each.
  • For a more aggressive strategy, in the last week of expiry we can sell  one lot ATM straddle of  9600 CE and PE and sell two lots of 9800 CE and 9400 PE.
  • We can also adopt a strategy of selling one lot of CEs and PEs at different strike prices equidistant from option pain strike price. The strategy should be properly hedged.

For more information on other technical indicators kindly visit our technical indicator page.

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Author Bio

Partha Dhar

Partha, an engineer by education, is theoratically actively following the stock and commodity markets since 1990. He is an active trader since 2003. He has received formal education in future and options and quantum analysis. He is presently working on research oriented projects using Python and data analytics.

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