Last month I published an interview on Seeking Alpha with Whatstrading.com options strategist and Seeking Alpha contributor Frederic Ruffy about manipulation and the options market. Ruffy concludes that it's not necessarily manipulation that pins stocks to a particular price at options expiration; rather, it involves what amounts to a statistical phenomenon known as the theory of maximum pain.
Max pain basically states that an underlying stock will gravitate towards the strike price where the greatest number of options contracts will expire worthless. I use OptionPain.com's calculator to compute the maximum pain price for relatively volatile and/or highly-watched and traded stocks that investors often believe suffer from manipulation at the hands of big-time traders. I have used this calculator for awhile and found that it performs reliably. It uses a formula close to the one Ruffy describes in the article. By "reliable," I don't mean that it predicts where a stock
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