How do I use the max pain theory in option trading to my advantage?
The term max pain stems from the Maximum Pain theory, which states that most traders who buy and hold options contracts until expiration will lose money.So on the day of expiry options writer (mainly institutions ) will try that Index/Stocks expiry at the value at which they lose the minimum amount and pocket the maximum premium .If you need more details regarding max-pain theory can go through below link too which also help you out how it get calculatedMax Pain & PCR Ratio – Varsity by ZerodhaMax Pain & PCR Ratio – Varsity by ZerodhaSince max-pain changes on daily basis but its is quiet relevant in the last week of expiry , either you can plot your own max pain with the help of above formula or there are many sites which gives max pain of Bank Nifty/Nifty on daily basis .we also share max-pain graph every thursday for Bank Nifty options , interested traders can join us on telegram https://t.me/joinchat/AAAAAEqPc9...Hope this would help you :)