Thanx. It was on my list of assumptions, but was not sure.
Will_Wong
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Actually the max pain option expiration for March 27 was $125. Next week is $126 but it can change.
tradearcher
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Yah. They are not fixed. Its on my watch since it moved to DOW. Observe its behavior for a bit.
Will_Wong
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IMO, this sharp $2 drop in the last 10 minutes is related to options expiration. The market maker tried to force the closing stock price as close as possible to the Max Pain price to minimize their payout with regards to both the puts and calls.
tradearcher
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For the MMs, even getting near (±1) max pain strike is significantly in their favor as well.
Will_Wong
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For option traders, it pays to watch the max pain strike as OpEx approaches and cash out ITM options earlier. For AAPL option traders, today's is a good lesson.
tradearcher
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I agree. That is why I recommend people to learn AAPL and its trading and liquidity.
Will_Wong
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Someone posted that AAPL tends to consolidate before an earnings report and this may be happening in time for the next earnings report in April.