Max pain in options: what it means and how it is worked out
Part 2 of 3 in Options
Updated 24 October 2026 · यह गाइड हिन्दी में पढ़ें →
Max pain is the expiry price at which the open options of one stock or index, all strikes together, would be worth the least. At that price option buyers as a group would receive the least money at expiry, and option sellers would pay out the least. It is worked out from the open interest in the option chain, and many option chain screens show it next to the put-call ratio.
You will often read that prices drift towards max pain before expiry. This page shows how the number is worked out, and then why that claim is weaker than it sounds.
How it is worked out
At expiry an option is worth only its intrinsic value. A call is worth the expiry price minus the strike, if that is above zero. A put is worth the strike minus the expiry price, if that is above zero. Everything else expires worthless. So:
- Pick one expiry and list every strike with its call open interest (OI) and put OI.
- Take each strike in turn as a possible expiry price.
- At that price, add up what every call and put would be worth: intrinsic value × OI.
- The strike with the smallest total is max pain.
Worked example
Here is a made-up option chain for Stock ABC, with OI shown in shares, as in our option chain guide:
| Strike | Call OI | Put OI |
|---|---|---|
| 900 | 1,00,000 | 10,00,000 |
| 950 | 3,00,000 | 13,00,000 |
| 1000 | 7,50,000 | 8,50,000 |
| 1050 | 12,00,000 | 2,50,000 |
| 1100 | 9,00,000 | 1,00,000 |
Suppose the stock settles at ₹1,000. The 900 and 950 calls are in the money, and so are the 1050 and 1100 puts. Everything else is worthless.
- Calls: (1,000 − 900) × 1,00,000 + (1,000 − 950) × 3,00,000 = ₹1,00,00,000 + ₹1,50,00,000 = ₹2,50,00,000
- Puts: (1,050 − 1,000) × 2,50,000 + (1,100 − 1,000) × 1,00,000 = ₹1,25,00,000 + ₹1,00,00,000 = ₹2,25,00,000
- Total: ₹4,75,00,000, or ₹4.75 crore
The same sum at every strike:
| Expiry price | Calls worth | Puts worth | Total |
|---|---|---|---|
| ₹900 | ₹0 | ₹20.75 crore | ₹20.75 crore |
| ₹950 | ₹0.50 crore | ₹8.25 crore | ₹8.75 crore |
| ₹1,000 | ₹2.50 crore | ₹2.25 crore | ₹4.75 crore |
| ₹1,050 | ₹8.25 crore | ₹0.50 crore | ₹8.75 crore |
| ₹1,100 | ₹20 crore | ₹0 | ₹20 crore |
The total is lowest at ₹1,000, so max pain for this expiry is ₹1,000. Notice that it is not where the open interest is biggest. The largest call OI is at 1050 and the largest put OI at 950. Max pain falls between those two, at the price where neither side is far in the money.
Why "pain", and why the idea is loose
The total above is what option buyers would receive at expiry, and what option sellers would pay out. A story is built on that: big option sellers, it goes, steer the price towards max pain so that they pay out as little as possible.
The story has holes:
- Payout is not profit. Sellers collected a premium when they sold. Whether they gained or lost depends on that premium, not on the payout alone.
- Sellers are not one team. The OI at each strike belongs to many different buyers and sellers, and many of them have hedged with futures, shares or other options.
- It moves every day. Max pain changes whenever OI changes, so the figure on Monday may not be the figure on expiry day.
- Prices follow news and orders. Results, global markets and large orders move a stock far more than any arithmetic on the option chain.
When the price does end near max pain, it is often because max pain was close to the price all along. Open interest gathers around the strikes nearest the price, so a quiet week leaves the two close together. In an expiry week with real news, the price can end far away. A number that is sometimes right is not a forecast.
Common mistakes
- Mixing expiries. Max pain belongs to one expiry. Each weekly and monthly expiry has its own.
- Mixing units. Exchanges and apps often show OI in contracts. Multiply by the lot size to get shares and rupees. As long as every strike uses the same unit, the max pain strike itself does not change.
- Treating it as a target. Max pain describes the open positions today. It is not a level the price has to reach.
- Forgetting your own premium. A call bought at ₹20 that expires ₹15 in the money still lost ₹5 a share. The option payoff calculator shows the whole picture for one position.
The risk side
Max pain is watched mostly by people trading options close to expiry. SEBI's studies (SEBI study, 2023 and 2025) found that about 9 in 10 individual F&O traders lost money in FY22 and FY25. No reading of the option chain changes those odds. If you trade, set your stop-loss and position size before you enter, and count the charges.
Questions people ask
- What is max pain in options?
- Max pain is the expiry price at which all the open calls and puts of one expiry would together be worth the least. At that price option buyers would receive the least, and sellers would pay out the least.
- How is max pain calculated?
- Take each strike as a possible expiry price. At each one, add up the intrinsic value of every call and put multiplied by its open interest. The strike with the smallest total is max pain.
- Does the price always go to max pain at expiry?
- No. Max pain changes as open interest changes, and prices follow news and orders. The price sometimes ends near it, often because it was near the price already, and on other expiries it ends far away.
- Is max pain the strike with the highest open interest?
- No. It uses the open interest at every strike. In the example on this page the largest call OI is at 1050 and the largest put OI at 950, while max pain is 1000.