Although there are two weeks to go in the December's it is time to start thinking about where the stock might get pinned.*
Here's one of the public "pain calculators" and their brief description:
What is Option Pain?We're still thinking "long ain't wrong" on the run-up to the Dec. 14 2011 Guidance Conference Call on Tuesday, December 14, 2010. The options expire three days later.
In the option market, wealth transfer between option buyers and sellers is a zero-sum game. On option expiration days, the underlying stock price often moves toward a point that brings maximum loss to option buyers. This specific price, calculated based on all outstanding options in the market, is called Option Pain. Option Pain is a proxy for the stock price manipulation target by the option selling group.
*See:
IMPA, Rio de Janeiro
Tenth Annual Workshop on Derivative Securities and Risk Management
Center For Applied Probability, Columbia University
A Market-Induced Mechanism For Stock Pinning
(23 page PDF)
Or:
