Every large options expiry comes with headlines about max pain. Here is what the level actually is and how much weight it deserves.

What max pain is

Every option has a strike, the price at which you can buy (a call) or sell (a put) the coin. At expiry some options expire worthless and some pay out. Max pain is the price at which the total payout to option buyers is smallest, so holders lose the most and option sellers make the most.

How it is calculated

For each possible strike you add up what all open calls and puts would be worth if price settled there. The strike with the lowest total is max pain. It is calculated separately for each expiry date.

Why price sometimes drifts toward it

Option sellers are mostly market makers, and they hedge with futures and spot. Before expiry those hedges get rebalanced, and price can pin near strikes with large open interest. The effect is most visible on big monthly and quarterly expiries, which settle on the last Friday of the month at 08:00 UTC.

Why it is not a forecast

Max pain ignores the main thing: supply and demand in spot and futures. If big buying or news hits the market, price moves away from max pain on expiry day without any trouble. And for near-dated expiries with little open interest the level means nothing. Treat it as background: the larger the expiry, the more likely it influences price in the last days before it.

What to read alongside it

The put/call ratio shows what traders are paying for: upside or protection. Open interest by strike shows where the biggest bets are. Both are on the BTC and ETH options page. After expiry the hedging pressure disappears and volatility often picks up, so it is a good time to keep the liquidation heatmap open.