Updated 2026-07-25
Max pain is the price at which the greatest total value of outstanding options would expire worthless, which is to say the point of maximum loss for option holders in aggregate. It is computed directly from open interest across strikes, so it is a fact about positioning rather than an opinion.
The theory attached to it is weaker than the number itself. The claim that price gravitates toward max pain into expiry has some mechanical support through gamma hedging and is a documented effect in large, options-heavy markets, but the strength varies a lot by market and by how much options open interest matters relative to spot. In crypto, where perpetual open interest usually dwarfs the options book, treat max pain as one landmark on the map next to liquidation clusters, not as a target price.