JUN · ISSUE 25 · June 19, 2026
CONCEPTMax pain: the expiry magnet
On the day options expire, price tends toward the level where most of them end up worthless. That level has a name.
CONCEPT
MAX PAIN
the expiry magnet
FREQUENCY
4×/YEAR
strongest at quad witching
KEY
STRIKE
where most options die
THE IDEA
MAX PAIN
the strike where the most options expire worthless
Near expiry, those who sell options have an incentive for price to land where the largest number of contracts expire worthless. The result: price tends to 'magnetize' toward that level.
THE KEY
SIMPLE RULE$0
$0
what an out-of-the-money option is worth at expiry
If most options are worth zero at expiry, whoever sold them keeps the premium. That is why price tends toward that point.
An out-of-the-money option is worth zero at expiry. Max pain is the price where the largest number of contracts ends up worth exactly that.
- OUT OF THE MONEY
- — An option that gives no useful right at expiry; worth zero.
- PREMIUM
- — What the option buyer pays; what the seller keeps.
THE IDEA
PLAIN ENGLISHPrice gravitates toward the pain
“On expiry day, price doesn't seek what something is worth, but the point where the largest number of bets lose at once.”
It isn't a conspiracy: it's the sum of many interests pushing price to the level where most options die.
- OPEN INTEREST
- — The number of live option contracts at a strike.
- GRAVITATE
- — Price's tendency to drift toward a specific level.
- DEALER
- — One who sells options and hedges by trading the asset.
VISUAL
WHAT IT LOOKS LIKEThe pain curve
At the valley, the set of options keeps the least value possible: that level magnetizes price.
The total value all options would keep depending on where price closes. The minimum is max pain.
- VALLEY
- — The lowest point of the curve; here, the lowest aggregate value.
- AGGREGATE
- — The sum of all contracts, not just one.
THREE KEYS
THE ESSENTIALSThree things to know about max pain
WHY IT EXISTS
Those who sell options hedge by trading the asset. Near expiry, those hedges push price toward the level where the most contracts expire worthless.
WHEN IT MATTERS
Only near expiry, especially in the final hours. It is strongest at big expiries like the quarterly quad witching.
IT ISN'T MAGIC
It is a statistical tendency, not a guarantee. A strong headline breaks the effect: max pain guides, it doesn't rule.
Knowing when it applies stops you giving it more power than it has.
- HEDGE
- — A trade to neutralize the risk of an options position.
- QUAD WITCHING
- — Simultaneous expiry of 4 derivatives, 4 times a year.
- STATISTICAL
- — True on average, not always.
EXAMPLE
ILLUSTRATIVEHow options end up at expiry
Illustrative split: if so many options end at zero, it's clear which way price leans.
Illustrative split: most options are never exercised, and many expire with no value at all.
- EXERCISE
- — Using the option's right because it has value at expiry.
- IN THE MONEY
- — An option that does give a useful right at expiry.
WHERE IT SHOWS
EXAMPLESWhere max pain weighs most
| SPY | 740 | ▲ OI very high | The most-optioned ETF in the world: the magnet effect is most visible here. |
| QQQ | 520 | ▲ OI high | Nasdaq: heavy option volume, especially at big expiries. |
| IWM | 235 | ▼ OI medium | Small caps: fewer options, weaker effect than SPY or QQQ. |
| SPX | index | ▲ OI huge | Index options set the strikes that magnetize quad witching most. |
The larger the option open interest, the stronger the effect. Figures illustrative.
- OI
- — Open interest: the number of live option contracts.
- ETF
- — A listed basket that tracks an index or sector.
CLOSE
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- MAX PAIN
- — The strike where the most options expire worthless; price tends toward it.
- STRIKE
- — The price at which an option is exercised.