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Max Pain is the strike price at which, if the underlying settled exactly there at expiry, the total payout to all option holders across every strike would be smallest — equivalently, the price where option writers as a group would face the least combined loss.

At expiry, every in-the-money option pays its holder some amount, funded by whoever wrote that option. Max Pain asks a specific question: across every possible settlement price, which one minimizes the total amount option writers would have to pay out, summed across every strike and both calls and puts at once? That price is called Max Pain. It's a real, fully computable number — not a guess or an average, but the actual minimum of a specific calculation, worked through in full below.

For each candidate settlement price, add up:

• Every call's payout: (settlement price − strike) × that strike's call Open Interest, for every strike where this is positive.
• Every put's payout: (strike − settlement price) × that strike's put Open Interest, for every strike where this is positive.

Summing both gives the total payout at that candidate price. Max Pain is whichever candidate price makes that total the smallest.

Using the same five-strike Open Interest snapshot as the Put-Call Ratio page:

Computing total payout at every candidate settlement price:

The smallest total payout, ₹175,000,000, occurs if Nifty settles at 24,000 — that's the Max Pain strike for this expiry. Every other candidate price produces a larger total payout, confirmed directly in the table rather than assumed from which strike happens to carry the most Open Interest (though in this particular example, they do coincide).

Some traders believe the underlying tends to gravitate toward the Max Pain strike as expiry approaches, on the theory that option writers (often large, well-capitalized participants) have some incentive or ability to influence price toward the level that minimizes their own payout. This idea is genuinely debated — it's a real, calculable number, but whether the market actually "pins" to it reliably is a separate, contested claim, not a guaranteed outcome.

• Some traders use Max Pain as one input for strike selection on range-bound strategies like an Iron Condor or Short Straddle, treating it as a plausible expiry-week gravitational point alongside other signals.
• It shifts as Open Interest itself shifts — Max Pain calculated today isn't fixed; new positions opening or closing throughout the week can move it before expiry actually arrives.
• It's most often discussed for index expiries like Nifty, where deep, liquid Open Interest across many strikes makes the calculation more meaningful than for a thinly traded underlying.

• Max Pain is not a guarantee or a prediction. It's the output of one specific calculation on today's Open Interest — the underlying is free to settle anywhere, and often does settle away from it.
• The "pinning" theory is contested. Some researchers and traders find only weak or inconsistent evidence for expiry-day pinning behavior; treating Max Pain as a reliable price target is a common overstatement of what the number actually represents.
• Max Pain moves as OI changes, so a figure calculated days before expiry may not match the figure calculated the morning of expiry.