Maximum Modus Operandi - YouTube

what's up everyone we're going to  talk about max payne modus operandi  

sure you've heard of it also known as max payne  let's go and take a look at what this is all about

so before we begin let's just go back to the  basics and op an option contract is the right  

but not the obligation to buy or sell something  at a stated date at a stated price options are  

leveraged instruments meaning they permit traders  to enhance the advantage by risking littler sums  

than would some way or another be required if  exchanging the underlying asset itself the roots  

of option pain dates back to 2004 one might say  this is as yet an exceptionally youthful theory  

to the extent we know that there are  no scholarly or educational researching  

as far as when it comes to this novel field  of study there's not there hasn't been many  

uh scholarly articles or educational research  done on this topic and this article we're reading  

now is from 2020. now the theory of options pain  roots as inference that 90 of the options lapse  

useless henceforth options riders or vendors will  in general bring in return all the more regularly  

more reliably than the option purchasers so  basically they're saying the option writers  

or the ones selling calls are going to make more  money than the than the people buying the calls  

that is 100 correct we see it week after week in  the options chain you see a high high amount of  

volume and a low amount of open interest that's  retail if this consensus an announcement is valid  

at this juncture we can make a lot of consistent  reasonings at any point just anyone can bring  

in return that is either option vendors or option  purchasers and yet not both so one or the other is  

going to make the money the option vendors or the  option purchasers but it seems that both cannot

okay powerpoint's jacking up on me

so if option vendors will in general bring in  most extreme returns at that point it likewise  

implies that the cost of the option on expiry day  ought to be headed to a point where it would make  

least measure of misfortune to option writers now  if point two is valid at that point it further  

suggests that choice costs can be controlled at  any rate upon the arrival of expiry if point three  

is valid at that point it further suggests that  there exists a group of traders who can control  

the options costs at any rate upon the arrival of  expiry if such a group exists then it must be the  

option vendors since it is accepted that they  are the ones who bring in most extreme return  

and reliably bring in return trading options  presently contemplating all of the above focuses  

there must exist a solitary value point where  on the off chance that the market lapses at that  

point it would make least measure of agony the  option riders or cause the most extreme measure  

of torment to alternative purchasers on the off  chance that one can distinguish this value point  

at that point almost certainly  this is where markets will expire  

the option pain theory does not does only this  recognizes the cost at which the market is  

probably going to terminate considering least  measure of pain is caused to option writers

here is a step-by-step guide to calculate the max  paying value at this stage people may find this a  

bit complex but the following steps will get  clear once we take up a actual model now this  

is basically it there's five steps step one is  list the different strike prices on the trade  

and note the open interest of the both of and  apologize for the language this was written in  

uh pretty poor english so apologize about that  this basically saying list the different strike  

prizes on the trade and note the open interest of  both the calls and puts for these strike prices  

step two would be for every one of the strike  price that you have noted presume that the market  

expires at that strike price then calculate  how much return is lost by option writers  

both call option and put option presuming the  market expires according to the presumption  

on second and step two fourth step is add up the  return lost by call and put option writers lastly  

identify the strike price at which the return lost  by option riders is minimum if the strike price at  

which money lost by the option rider is minimum  it is the point which maximum pain is caused to  

option buyers with this idea the market price  is most likely to expire so in on their end of  

the field it's minimum pain on our end it's  maximum pain so max payne applies to us not

the ones riding the contracts now if the  strike price at which money lost by the  

option rider is minimum that's the point at  which maximum pain caused to option buyers  

and it works vice versa with this idea that  the market price is most likely to expire

now let's talk about the put call ratio the  pcr or the put call ratio is the proportion  

that encourages distinguishing extraordinary  bullishness or bearishness in the market  

foot call ratio is generally viewed as a  contrarian marker which means on the off  

chance that the put call ratio shows extraordinary  bearishness at that point we anticipate that the  

market should switch thus the vendors turn  bullish moreover on the off chance that put  

call ratio demonstrates extraordinary bullishness  at that point vendors anticipate that the business  

sector should opposite and decrease to compute  put call ratio one should simply isolate the  

all-out open interest of puts by the all-out  open interest of the calls so this is an example  

we have a table here we have strike prices right  here we have the call open interest here we have  

the put open interest here to calculate the  open interest ratio put call ratio simply um  

it's basically just the proportion between the put  option interest divided by call option interest  

and that gives us the pcr ratio so in this example  here this was measured on the 15th of may 2020  

the option interest of puts in the option interest  of calls have been computed and we have 370 uh  

that's not even he didn't write those numbers  right he missed the comma supposed to be 37

million 16 925 divided by 442 870  4200 to give us a 0.863385 pcr

now the general consensus of pcr is over one at  that point it brings that there are more puts  

than than calls obviously this has uh this has  suggests this suggests that the business sectors  

have turned very bearish and thusly kind of  oversold and the other way around obviously  

the non-exclusive way to deal with the put call  proportion is the quality somewhere in the range  

of the 0.7 and 1.0 mark that can be ascribed to  normal trading activity and can be disregarded  

so you want to look for for numbers for put call  ratio below this and above this to give you an  

indication of non-normal trading strategies now  what might truly bode well is to truly plot the  

day-by-day put call proportion for say one to two  years and distinguish these outrageous qualities  

it is likewise that the put call proportion  is utilized as a contrarian marker  

the clarification is somewhat precarious  yet the general feeling is this  

on the off chance that the merchants are bearish  or bullish at that point the majority of them have  

just taken their individual position henceforth  a high or low put call proportion and accordingly  

there are very few different players who can come  in and drive the situations in the ideal heading

conclusion the put call parity is an  option price relationship that if violated  

generates a straightforward arbitrage trade that  does not require rebalancing or information about  

volatility it's seen that maximum pain and put  call proportion technique is more than adequate  

for retail merchants to exchange options  expertly a considerable lot of the best  

alternative trading techniques are straightforward  rich and simple to execute by considering the less  

unpredictability and count and wanted rate of  return in options it is demonstrated with the  

above models that maximum pain and put  call proportion are more than adequate

join us at the discord let's go we have  some opportunity to take advantage of