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Max pain, as the name suggests, refers to the price level where options buyers, those who purchased call

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BTC trades well below the supposed expiry magnet of $72,000. (pithonius/Pixabay)

The theory suggests that ahead of expiry, these option writers actively try to push the spot price toward the max pain level, effectively pinning bitcoin there.

Key facts

Summary

Bitcoin’s price has fallen from about $67,000 to below $60,000 ahead of a $10 billion options expiry, undermining the popular “max pain” theory that prices gravitate toward a level where options buyers lose the most. The current max pain level for Friday’s expiry is around $72,000, far above spot prices, and recent settlements have not shown the expected price “pinning” effect, reinforcing skepticism among options experts. Even if max pain dynamics appear weak, the June Deribit expiry is still seen as a major liquidity event likely to spur volatility as billions of dollars in contracts expire or roll into future dates. Bitcoin’s BTC $ 61,062.11 price drop ahead of Friday's quarterly options settlement has once again cast doubt on the popular “max pain theory. The max pain level for this expiry stands at $72,000, significantly above current spot prices of around $61,700.

Read full article at CoinDesk →

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