01
PCR: balance of puts and calls
Put-call ratio compares put open interest or volume with call open interest or volume. It describes positioning balance. It does not say who holds the contracts or how hedging will behave.
02
Max pain: where option buyers lose most at expiry
Max pain is the strike at which the total payout to option holders at expiry is lowest. It is computed from open interest alone and ignores gamma, so it says nothing about hedging flow during the session.
03
GEX: how hedging flow responds to price
GEX weights open interest by gamma and spot, so it highlights strikes that matter for hedging rather than strikes that merely hold the most contracts. It gives a regime (dampening or amplifying) and a flip level.
04
Side by side
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PCR: positioning balance, one number, no price levels.
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Max pain: an expiry-day price level from OI, no hedging dynamics.
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GEX: a regime and levels from OI, gamma and spot, with a dealer-sign assumption.
Used together they cross-check each other. Used alone, each is easy to over-read.
05
Frequently asked questions
Is max pain the same as the gamma flip?
No. Max pain comes from open interest at expiry. The gamma flip comes from gamma-weighted exposure at current spot.
Which one should I use?
They answer different questions. PCR for balance, max pain for an expiry reference level, GEX for hedging regime.
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