Options expiration is tomorrow Friday. Currently, max pain numbers are significantly higher than the corresponding stock prices. Here are the current max pain values compared to the stock prices:
SPY - Max Pain: 85, current price: 79.03, difference: 7.55%
DIA - Max Pain: 81, current price: 75.76, difference: 6.91%
IWM - Max Pain: 48, current price: 42.29, difference: 13.50%
XLF - Max Pain: 9, current price: 7.97, difference: 12.92%
With the recent significant declines in the stock market, max pain has not been accurate, as in accuracy of predicting the final price on expiration day. However, in general, the max pain value and the current price tend to converge to each other, at least partially, at expiration. If this holds, we would expect to see a sharp drop in max pain values and a rise in share prices.
Of the above, IWM is the most undervalued.
Thursday, February 19, 2009
Max Pain for February, Price Convergence Watch
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February
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- Stay Away from 2X ETFs, Cause and Effect Relations...
- Don't Buy USO or USL, Buy UGA Instead
- UCO Straddles: Proof of Concept
- Mitsubishi Shifts Production from Japan to Brazil,...
- Unemployment in the USA From 2007 to 2009
- Job Market for 2009
- Protect Yourself: Straddles for March
- February Max Pain Update, Demystifying MaxPain
- President Barack Obama Visits Canada
- Update on USO and March Oil Contracts
- SPY and IWM Options Action Today, Max Pain in Prac...
- Buyers of USO Beware
- Max Pain for February, Price Convergence Watch
- Correlation of the Dow 30 Stocks
- UCO Straddles for This Week and March
- Snow Artists, Protectionism, and Obama Visits Canada
- World's Oil Production: Top Consumers and Producer...
- Updated UCO and USO Straddles
- Results for UCO, USO, UNG Straddles
- Straddles for Oil and Natural Gas, USO, UCO, UNG
- Oil Consumption To Drop to Lowest Levels in 27 Years
- Straddles for February 9 and 10
- The Tale of USO, USL and Contango.
- AKAM, AMZN and WY Straddles Analysis
- Ice Artists
- UCO Straddle Results
- Catedral Bar Offers Madoff drinks
- Straddles for Tomorrow Friday
- UCO Straddles for February and March
- The DJIA, DOW 30... or is it the DOW 15? A Skewed ...
- SunLife Insurance Straddles
- Straddles for the Week of February 2 to February 6
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