Pain Curve

Q: What is the pain curve?

Shows total option holder losses at each possible settlement price. The minimum is max pain.

Q: How to read the shape?

Steep V = strong pin. Flat = weak. Chart it to assess pin strength before trading.

Q: Why does Pain Curve matter for trading?

The pain curve reveals the strength of the max-pain signal. A deep U around the minimum means mechanical pin forces are strong and concentrated — a high-confidence short-strangle setup. A flat or multi-peaked curve means the pin is diffuse or absent, and the short-strangle risk-reward breaks down.

Q: When is Pain Curve good versus bad for a trader?

A steep, deep pain curve is a high-conviction pin setup — good for centered short strangles and butterflies. A flat curve is a no-trade: pin risk is too low to justify short-vol size. Skewed curves signal directional pin bias — short only on the side with shallower slope.

Canonical definition, formula, interpretation, and API reference.

Definition

Per-strike total option holder loss. Minimum = max pain. V-shape = strong pin, flat = weak pin.

Formula

Pain(K) = Sum max(K-K_put,0)*OI_put + Sum max(K_call-K,0)*OI_call

For each settlement price K, sum intrinsic value payouts.

Inputs

OI per strike (calls+puts)strike prices

Output

pain_curve[] with strike, call_pain, put_pain, total_pain

Interpretation

Sharp V: concentrated OI, strong pin — good for iron condors at max pain
Flat: dispersed OI, weak pin
Asymmetric: steeper put side = downside pinning pressure

API Reference

Endpoint

GET /v1/maxpain/{symbol}

Tier

Basic+

Response field

pain_curve[].strike, call_pain, put_pain, total_pain

Why Pain Curve Matters for Trading

TL;DR

The pain curve plots aggregate option-holder loss at every strike. A deep, U-shaped valley = strong pin. Flat or multi-peaked = no pin setup.

What it measures: The function P(K) = total option holder payout at expiry price K, computed strike-by-strike across the chain.
What it signals: The shape of the expiry pin. Max pain is the minimum; the pain curve tells you how deep and how narrow the minimum is.
Why we measure it: A single max-pain number hides the confidence of the signal. A flat curve means weak pin; a steep curve means strong. You need the curve to size the trade.
Who uses it: Expiry specialists, pin traders, systematic OPEX strategies, and options-flow analysts.

How to read Pain Curve

Steep U-shape

Strong, narrow pin at max pain
Short strangles at the minimum work
Price strongly repelled from tails
High-conviction setup

Good for: centered short strangles, butterflies

Flat or multi-peak

No clear pin center
Multiple local minima = uncertain target
Spot can settle anywhere in the flat zone
Low-conviction signal

Bad for: pin plays — skip

Asymmetric / skewed

Directional pain bias
Price tends toward the shallow side
Short one-sided plays work
Common pre-earnings unwinds

Directional

Rules of thumb

Shape matters more than the minimum. Same max pain with different curve shapes = totally different trades.
Depth scales with OI. Large chains produce deep curves; thin chains produce shallow ones.
Refresh intraday. New OI reshapes the curve continuously on expiry day.
Pair with pin risk. Pin risk quantifies probability; pain curve visualises why.
Asymmetric curves have a direction. A skewed curve means pin tilts one way — size the trade directionally.