Max Pain Calculations .... by Pratap
Nice explanation by Pratap
Originally Posted by XRAY27
Pratap sir ,
What is the formula for this expected price of expiry !!!
lowest payout is maxpain
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I am taking lowest 2 and taking weighted OI average of that to get expected expiry
but note this number keeps updating as OI adjustments are done as market remains away from the level. on friday close it was 8200 8175 ... and now it is up here because mkt has continuously held upside
lets say lowest payout is at 8300
next lowest at 8350
then likely expiry will be 8325 if equal weight
what I do is
(8300 * OI of 8300 + 8350 * OI of 8350) / (OI of 8300 + OI of 8350)
generally that is 2-3 pts here or there to 8325 .. no big deal
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Just reproduced above 2 posts