Max Pain
The strike price at which the largest dollar value of options (calls + puts combined) would expire worthless — the theory being that price gravitates there into expiry as dealers delta-hedge.
Max pain is the strike at which aggregate open interest in both calls and puts results in the maximum total loss (i.e. maximum options expiring worthless) for option buyers — and by extension, maximum profit for option sellers (dealers and market makers).
The theory holds that dealers who are net short options will delta-hedge in a way that passively nudges price toward the max pain strike as expiry approaches, since that is where their hedging obligation is minimized. It is not a rule — large directional flows can easily overwhelm the gravitational pull.
Treat max pain as one contextual input near expiration, especially for highly optioned underlyings like SPY or large-cap tech. When max pain aligns with a key technical level, the confluence deserves attention.