18/09 Indices, page-21

Goodness Gracious Me

According to the Indian bloke in @redbacka 's video in this post:

Post #: 69891388

there is an Index Level for the Nifty 50 (Indian Stockmarket Index) which minimises the amount of money option writers (mainly institutions) lose and maximises the amount of pain to the option buyers.
The theory is that on expiry, institutions will aim to drive the Index to that level.

I did the numbers on the XJO Index options, due to expire this Thursday.
Based on the Max Pain theory, the best outcome for the option writers, is for XJO to open at 7,000 Thursday morning:




If that were the case, option writers' loss is minimised at $742 million
If XJO were to open at the current level of 7,230 the loss increases to $791 million
(so, there isnt too much in it)

The above chart and calculations were based on the latest XJO option data from the ASX website