How to Use Max Pain With Credit Spreads and Iron Condors

In my 20+ years trading SPX credit spreads and iron condors, I’ve learned that the market doesn’t just move because of “news” or headlines. A huge part of what you see around expiration is driven by how options are positioned – and max pain is one of the few concepts that actually helps you understand that flow. If you want a full background on the idea itself, start with my max pain strategy guide and my plain-English primer on what max pain is and how I use it.

My goal with this guide is simple: show you how to use max pain in a way that actually improves execution.
Not as a magic indicator, but as a practical filter you can combine with delta, volatility and time
to expiration when you build SPX/SPY credit spreads and iron condors.

We’ll walk through:

• What max pain really means for options traders (no formulas needed)
• Why it matters specifically for credit spreads and iron condors
• How to think in terms of “distance from max pain” instead of just delta

By the end, you’ll know exactly where max pain fits into your process and where it doesn’t – so you can
avoid pin risk, choose safer short strikes, and trade with a lot less stress into expiration.

Quick Recap: What Is Max Pain?

At a high level, max pain is the price level where option buyers lose the most money and option
sellers lose the least. It’s the point where, if the underlying expired there, the combined open interest of
calls and puts would result in the smallest total payout to option holders.

You don’t need to calculate it by hand – most platforms will show a max pain level for a given expiration –
but you should understand what sits behind that number:

• Each strike has open call and put interest.
• For every possible settlement price, those options would pay out different amounts.
• The price where the total payout to option holders is smallest is labeled “max pain.”

In theory, because market makers and larger liquidity providers often carry the other side of customer
option flow, they have an incentive to hedge in ways that keep price near that level into expiration.
That’s where the idea of pinning comes from – price “pinning” around a strike as gamma and hedging
flows compress movement.

In practice, it’s not a magnet. News, trends, volatility spikes and ETF flows can easily overwhelm max pain.
So I treat it as:

• A gravitational target in calm, range-bound markets
• Background context, not a guaranteed closing print
• One more way to understand where stress points sit around expiration

Once you see max pain as a probability tool instead of a prediction tool, it becomes much easier to plug it
into your credit spread and iron condor decisions.

If you want to go deeper into the theory behind it, you can also check Investopedia’s overview of the max pain theory, then come back here to see how I turn that idea into practical credit spread and iron condor rules.

Why Max Pain Matters for Credit Spreads and Iron Condors

If you’re selling premium with credit spreads or iron condors, your entire game is based on
probability. You want the underlying to avoid your short strikes and let time decay do the heavy lifting.
Max pain adds another layer of information: it tells you where the market likes to settle when things are calm.

Here’s why that matters so much for spread traders:

• Expiration target: Max pain gives you a rough idea of the price zone that often attracts price late in the cycle.
• Strike selection: Knowing where max pain sits helps you avoid placing your short strike right on top of a potential pin zone.
• Risk framing: If your spread lives comfortably away from both the current price and the max pain level, the path to profit is usually smoother.
• Stress reduction: Understanding pin behavior makes it easier to stay calm when price chops around key levels near the close.

In other words, max pain doesn’t replace your existing system – it sharpens it. You still use your normal tools (delta, volatility, trend, support and resistance), but you layer max pain on top to:

• Skip trades when your short strike sits in the likely pin zone
• Favor setups where max pain is comfortably “behind” your risk
• Adjust position sizing when price and max pain are converging too quickly

If you’re curious how often this actually shows up in live markets, I broke it down in my data study on 100 recent SPX expirations.

Entry Timing: Using Distance From Max Pain

Most traders focus only on delta when choosing credit spreads — but that’s only half the story.
The distance between the current price and the max pain level is just as important,
and in many cases even more predictive of how “clean” the trade will feel into expiration.

When price is sitting right on top of max pain, you’re entering a potential pin zone.
When price is meaningfully away from max pain, you have a natural buffer that reduces whipsaws.

Here’s the simple rule I’ve followed for years:

The farther price is from max pain, the calmer your spread behaves.

When It’s Safer to Open Positions

I prefer entering spreads when:

• Price is at least 20–40 points away from SPX max pain
• The market is not trending hard toward max pain
• There’s more than one full trading session before expiration
• Volatility is stable or declining

These distances work best on SPX, where cash settlement and institutional order flow make max pain levels cleaner. If you’re trading SPY instead, be a bit more conservative with your buffers – I explain why in my SPX vs SPY max pain comparison.

When It’s Risky

Avoid opening spreads when:

• Price is sitting directly on or near the max pain strike
• Candles are tight and slow — classic pinning conditions
• It’s 0DTE or late in the session
• A major event (CPI, FOMC, NFP, Fed speech) is hours away

If you sell premium near max pain late in the day, you’re stepping right into the zone where
assignments, early exits, and last-minute reversals happen.
That’s where newer traders get hurt.

Strike Selection: Avoiding Short Strikes That Sit Too Close to Max Pain

One of the fastest ways to get pinned is selling your short strike too close to max pain.
I’ve seen this mistake hundreds of times from beginners — and I made it myself early in my career.

Here’s the problem:

• Price naturally drifts toward max pain late in expiration
• If your short strike is near that level, price will whipsaw around it
• You’ll see repeated ITM ↔ OTM flips
• That creates stress, premature exits, or unwanted assignment

Rules of Thumb That Work

• Always give a buffer between max pain and your short strike
• On SPX: avoid selling within 10–15 points of max pain on 0DTE
• On SPY: avoid selling within $1–$2 of max pain late in the day
• Combine delta and distance:Example: 10-delta AND 20+ points away from SPX max pain

Using distance + delta is one of the easiest ways to improve strike selection.
You’re not relying on delta alone — you’re using real-world positioning.

Real-World Examples (SPX & SPY)

Here are simple examples to show how I use max pain as a filter in real trading conditions:

SPX Example

• SPX Price: 5208
• Max Pain: 5175
• DTE: Same day (0DTE)

Price is 33 points above max pain.
That’s healthy buffer — not too close, not too far.

In this scenario, I might sell a put credit spread around 5130/5120 if volatility supports it.

Why not sell closer?

• SPX can drift 10–20 points toward max pain in minutes
• You want to stay well away from the likely pin zone

SPY Example

• SPY Price: 501.50
• Max Pain: 499
• DTE: 1 day

Price is $2.50 above max pain — decent distance for SPY. A spread at 494/492 makes sense here. But if price were only $0.50–$0.60 above max pain, I would skip the trade. For a full breakdown of how SPY behaves around expiry, see my dedicated guide on SPY max pain.

These examples show one core principle:

Use max pain as a filter — not as a prediction engine.

Automation Workflow

At Advanced AutoTrades, automation is the backbone of how we manage SPX and SPY credit spreads.
Max pain fits naturally into the rule set — not as a standalone trigger, but as a filter that improves
strike selection and reduces last-minute pin risk.

Here’s a simplified version of how max pain flows through an automated credit spread workflow:

1. Pull Max Pain + Market Data

Your system retrieves:

• Today’s SPX or SPY max pain level
• Current index price
• Open interest structure for the expiration cycle
• Volatility readings (VIX or IV rank)

2. Check Distance Thresholds

Automation evaluates:

• Price vs max pain distance (e.g., 20–40 points for SPX)
• Whether price is moving toward or away from max pain
• Trend filters (bull, bear, chop)
• Volatility stability (rising or falling)

If the distance is too small or the trend is too aggressive, the bot simply skips the trade. This alone eliminates a surprising number of high-stress positions and lines up with what I describe in the core max pain strategy and in the 100-expiration SPX pinning study.

3. Select Strike Width and Side

The system then chooses:

• Short strike that meets BOTH delta and distance requirements
• Spread width based on risk rules
• Which side of the iron condor aligns with market drift

This prevents the number one retail mistake:
selling spreads directly on the most likely pinning level.

4. Auto-Execute or Follow Alerts

Depending on your setup, your trading bot could:

• Submit orders through IBKR’s API
• Route through Tradier or AutoShares
• Trigger SMS, email, or push alerts

A similar process is used in our Weekly Premium system,
where thousands of live trades have shown that combining delta, volatility, and max pain
creates cleaner, better-behaved spreads.

When Max Pain Helps vs. When It Completely Fails

Like any market tool, max pain has a “good side” and a “bad side.”
It works beautifully under the right conditions — and becomes nearly useless under the wrong ones.

Max Pain Works Best In:

• Range-bound markets (grinding sideways)
• Low-to-moderate volatility (VIX under ~18–20)
• Quiet news cycles (no CPI, no FOMC, no earnings waves)
• Afternoon sessions on expiration days

When markets are calm, dealer hedging flows dominate and price often drifts toward the
high-open-interest strikes — creating a natural pinning effect.

Max Pain Fails In:

• High volatility (VIX spikes → hedging becomes reactive)
• Strong trends (uptrends or breakdowns overpower OI)
• Macro weeks (CPI, FOMC, NFP, Fed speeches)
• Sudden news shocks (geopolitics, oil spikes, earnings surprises)

In these conditions, directional flows completely overpower any “gravitational pull”
from open interest structure.
Treat max pain as background context only.

Final Practical Checklist

Before opening your next credit spread or iron condor, run through this quick checklist.
If all seven conditions line up, you generally have a cleaner, calmer setup:

1. Distance: Price is far enough away from max pain
2. Expiration: Not too late in the session
3. Trend: Market not rushing toward max pain
4. Delta: Short strike meets your delta rules
5. Buffer: You’re not selling directly on the pin zone
6. Volatility: VIX stable or declining
7. Automation Filters: Everything matches your system rules

If several conditions don’t line up — especially distance, trend, or volatility —
it’s usually better to skip the trade than to fight max pain in the final hour.

Conclusion

Using max pain the right way has nothing to do with guessing the closing price.
It’s about stacking small, repeatable edges that make your SPX and SPY credit spreads cleaner, safer, and easier to manage.

In my 20+ years trading defined-risk spreads, this has been one of the simplest filters to improve trade quality:

Never place your short strike where the market wants to pin.

By combining distance-from-max-pain analysis with delta, volatility, and your expiration timing, you avoid the
classic retail mistakes — getting pinned, getting whipsawed, or watching a good spread flip ITM in the last hour.

Use max pain as:

• A context filter
• A strike-selection guide
• A risk-reduction tool

When volatility is low, news is quiet, and the market is stable, max pain becomes a genuine advantage — especially for defined-risk premium strategies like credit spreads and iron condors.

But when volatility spikes or CPI/FOMC is on the calendar?
Ignore it completely and rely on your core rules.

Ready to Trade Max-Pain-Filtered SPX Signals Automatically?

If you want ready-to-trade SPX and SPY credit spreads filtered through:

• max pain
• volatility conditions
• trend filters
• institutional-level open interest data
• automatic strike-selection logic

…then our Weekly Premium service does all of this for you.

Every signal is fully rules-based, fully defined-risk, and built from
thousands of automated trades executed across real accounts.

Trade smarter, not harder. If you’d rather have these max-pain filters, distance checks, and volatility rules handled for you, my Weekly Premium SPX signals service automates defined-risk credit spreads and iron condors using the same logic you’ve just read about.

How does max pain help with credit spreads and iron condors?

Max pain helps you understand where the market often gravitates into expiration. Instead of using it to
guess the exact closing price, you can use it as a filter when selling credit spreads and
iron condors: avoid placing short strikes directly on or near the max pain level and favor setups where
there is a comfortable buffer between your short strike, current price, and max pain.