Pain Curve
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(S) = Σ max(Kᵢ_put - S, 0) × OIᵢ_put + Σ max(S - Kⱼ_call, 0) × OIⱼ_call
For each candidate settlement price S, sum intrinsic value payouts across strikes K.
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.
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