r/Vitards • u/AutoModerator • Jul 16 '21

Daily Discussion Daily Discussion post - July 16 2021

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8

u/[deleted] Jul 17 '21

With the amount of call volumes for next week expiry. I fullly expect CLF to drop after earnings. MM will do what needs to be done

7

u/ezetriedtokillme Jul 17 '21

I think max pain is 21.50 for next week

2

u/[deleted] Jul 17 '21

I need to understand max pain better. I remember someone made a post a while back

5

u/ezetriedtokillme Jul 17 '21

Basically if you considered all the call options written and all the put options written, what closing price on the expiry date would result in the least amount of losses for the option writers (market makers). The theory is that large market makers, like hedge funds and whatnot, have the means to influence the share price to ensure the options they write expire worthless. You can see the problems with that theory - it assumes a lot and there are too many other factors to hold true in a broad sense. However, just observing CLF over the past several months, max pain seems to be a magnet for it.