I have been trading max pain type data since 2007 after noting odd trading patterns centered around options expiry. I am a more conservative trader/investor and only take high probability trades. I prefer to know where stocks won’t be rather than guess where they will be. Trading with this mind set gives you 80% plus probability of being correct. I have always been a stock market enthusiast. My formal training is that of informal. I am self taught, soaking up as much knowledge as can be absorbed. I love the financial industry and would work for free. I am a fundamental investor at heart and like crunching the numbers. I picked up on Max Pain theory and use option data as a main thesis in taking my positions. In the beginning; when studying Max Pain I was truly amazed at the power it had in pulling or pushing AAPL around. I have seen the stock drop 5% out of nowhere with no news. The only news would be it was the 3rd Friday of the month. I then picked up on hitting the Max Pain strike was about 50/50 odds. Max Pain would give you a tell on what direction AAPL would start heading for expiry. I started to build a strategy from my studies. Using the Max Pain strike is not really tradable, good to know, but not tradable. So I started to study open interest (OI) and its affect on AAPL. Long story short, I have altered the original Max Pain theory and morphed it into what my own studies have concluded. I call this OI/Max Pain, it uses open interest and a range. This way it is tradable as I now have a high probability range. It doesn’t stop there, using OI will tell you so much more. How a stock reacts at each strike depending on the amount of OI is a major tell. Conclusion: When using open interest you can accomplish multiple things. We can use it for OI/Max Pain when AAPL is stuck in a range and we can use it for catching breakouts, breakdowns, buy and sell points. Enjoy. I want to give a special thanks to some of my early influences: Turley Muller, Andy Zaky and Jason Schwarz. I thank Philip Elmer-Dewitt for his coverage on AAPL and letting us have a voice, Horace Dediu for his tireless studies and anyone attached to the AAPL community.
My name is Bill Judkins, and as of July, 2012 I am semi-retired. I have been trading as a hobby for over 10yrs in the equities market and over the past 4yrs I have been trading Options, buying Puts and Calls. I am currently a student of OptionsAnimals to learn more about Spread Trading to create an income and to learn how to adjust my trades if they go against me. I was recently introduced to Travis Lewis by a good friend of mine and now a part of Seeking Alpha.
Currently reside in Scottsdale, AZ.
Trading stocks, commodities, currencies since 1978.
Prefer technicals, but am a pragmatist - whatever works
to book a profit. I always scoff at "true believers" in this
system or that. Why not use all the tools?
Find what works for you.
My background is electronics, telecommunications.
My profile pic is in Jardins des Tuileries in Paris.
Hope to retire there soon.
I trade because I'm good at it,
but my passion is the arts and science.