2 years agoFrom Investopedia:
Max pain, or the max pain price, is the strike price with the most open contract puts and calls and the price at which the stock would cause financial losses for the largest number of option holders at expiration
My take: Missed my chance to take a snapshot of this Friday's trades in puts and calls. Here are last Friday's, when Apple also closed less that a dollar below $500.
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Travis Lewis warned us, years ago.
Monday ought to be interesting with the split shares trading for the first time.
Could it be something as sinister as the market has generally settled on $500 as AAPL’s current value, and profit taking occured above that print?
I don’t care. I held two options positions going into Friday’s Close: $480 – $485 Call Spreads and $492.50 – $495 Call Spreads (I didn’t start buying the latter until AAPL was trading above $505). Both paid off at maximum value yielding a blended ROI for the week of 42.5%.
As an aside, my goal is to buy at Monday’s low of the day. I failed. The same thing happened with my second position.
Buying or selling: in-the-money Spreads offer high yields with very good risk management.
Just my opinion, but I would wait till Tuesday this week.
I think/hope Monday may be crazy up, with sell-off Tuesday or maybe Weds. (planning on selling a bit on Monday, for later re-entry).
If considering taking this advice, remember, in considering its worth, how much you paid me for it (not counting PED subscription).
I do think a lot of this could be “algorithmic” and very quickly executed based on requests such as:
“If AAPL is at over $500 on Friday before the stock split, SELL.” I don’t think that that is technically a STOP-LOSS if someone brought below $500, or $400, or $300..
There could, of course, be STOP-LOSS orders to that effect for folks who bought at the peak.
I have to assume that there are similar mechanisms for short sellers.
I think the fact of a Friday or an Options Due Date or an impending Split could all generate such machinations.
I’m eager for the Split-Adjusted $130 shares Philip referenced on Sunday.