Max Pain
Also called: max pain theory, pin risk
Max pain is the strike at which the largest dollar value of options expires worthless — the price that would hurt option buyers most. The folk theory says prices gravitate there before expiry. There's a real mechanism behind part of it: dealers hedging large gamma positions buy weakness and sell strength near heavily-traded strikes, pinning the price. The manipulation story usually attached to it is far weaker than the hedging-flow story.
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