A common but risky idea is to treat "max pain" as an exact trading target before expiry. In reality, it is better used as a sentiment and positioning signal rather than a mechanical buy or sell instruction.
A leading global cryptocurrency platform,suitable for both beginners and experienced traders.
New user benefit: 20% off trading fees upon registration!！
Below I break it down from three angles: the principle, the conditions where it can work, and its limitations. This should help you build a more practical framework.
What is it? The logic of a "gravity point"
Max pain refers to the strike price at which option buyers, both calls and puts, would lose the most money at expiry, while option sellers would profit the most.
There is a popular "max pain theory" in the market. Because option sellers, usually market makers or institutions, have an incentive to push the spot price or use futures trading toward this pain point, the price is expected to be pulled toward that level like a magnet before expiry. During periods of low volatility and sideways trading, this "gravity" effect can sometimes be more visible.
When can it be relatively useful? Three key conditions
According to several analysts and academic studies, if you want to use max pain as a reference, the following conditions should be met at the same time for it to have stronger value:
It must be a major expiry date: Quarterly expiries in March, June, September, and December have the largest scale, often worth more than ten billion dollars. Their market influence is far greater than ordinary weekly or monthly expiries. For example, one recent quarterly expiry had a notional value of $10.2 billion, with max pain far above $72,000, yet its "pinning" effect on price was very weak.
The market is in a trendless, range-bound period: If there is a strong macro trend or breaking news, any "max pain gravity" can be overwhelmed quickly.
The pain point lines up with key technical levels: If the max pain level happens to sit at an important support or resistance area, the reliability of this signal increases significantly.
Why should you not treat it as a "target"?
Because the "gravity" often fails and can be overpowered by stronger forces.
Recent failure examples: On June 25, 2026, $10.2 billion worth of BTC options expired. Max pain was as high as $72,000, but the spot price fell below $60,000. CoinDesk reported that the so-called "pinning effect" barely appeared, weakening many people's trust in this theory. Likewise, in a January 2026 expiry, the price settled slightly above max pain rather than exactly at it.
A more powerful force: Gamma pinning: A technically more convincing mechanism than max pain is "gamma pinning." Option market makers, in order to stay risk neutral or delta neutral, buy or sell spot in the opposite direction when the price moves. When a large amount of options is concentrated near a certain strike price, market makers' hedging activity can create a mechanical force that "sucks" the price toward that level. What you see as price moving toward max pain may actually be driven more deeply by this market maker hedging behavior.
A leading global cryptocurrency platform,suitable for both beginners and experienced traders.
New user benefit: 20% off trading fees upon registration!！
So how should you use it in practice?
Think of it as a "short-term reference point", not a "trading target".
Manage position expectations: If you hold a large spot position before expiry and know that the current price is far from a major pain point, you can expect that the market may see some short-term pull and volatility instead of a clean breakout.
Look for unusual trading opportunities: If the price moves far away from max pain because of external events such as news, and a major expiry is approaching, you can watch for short-term mean reversion opportunities toward the pain point. But this is short-term speculation and requires strict stop losses.
Pay attention to volatility after expiry: After options expiry, the hedging forces that previously suppressed volatility, such as gamma squeeze, can suddenly disappear. The directional movement after expiry is often more worth watching. Instead of betting on the exact price before expiry, it may be better to prepare for possible trending moves after expiry.
So when you see max pain data, you do not need to treat it as a "target price" that must be reached. Instead, use it as a reference coordinate for understanding short-term market structure and sentiment, and combine it with deeper mechanisms like "gamma pinning" for a more complete judgment.
