I know this is too late but a credit spread is what you needed. Buy the November 165 for insurance at the same time you sell the November 170's.
How low does open interest have to drop before I have to start worrying about early assignment? When does it make sense for the long to exercise early for a put? I assume the Dec put is safe for now unless it goes DITM and wipes out the TV? Thanks!
If OI goes down by one contract, that could be your contract getting assigned. Early assignment is about time premium, not open interest. Whether an individual exercises his option doesn't depend on how many other people hold positions in that series. You're safe as long as there's time value. Even if you get assigned on a contract with time value, you can reopen the position and be better off than you were before (which is why it never happens).
"You're safe as long as there's time value. Even if you get assigned on a contract with time value, you can reopen the position and be better off than you were before (which is why it never happens)." Not true. I was short CYD puts with months left on them and was assigned. Why, I don't know but for some reason, someone who was long puts wanted to exercise them.
Time value, I said. As in time premium. Not "time". Having time left is the very definition of being assigned early .
Market implied volatility for the past year had an average between 30-40. During very volatile times such as past July, August it popped up in a range of 50-60. Friday's close the average Put MIV for AAPL was at 52. If this market calms a bit and starts showing signs of building support those MIV's should start dropping. Typically options expiration week is a countertrend move when we have a large downward flush prior. I wouldn't be surprised to see a nice bounce into OX friday. At the same time, the market makers will be dropping MIV's to make all those options expire worthless. My advice is to stay calm, and close out your position after the first solid bounce. Don't panic and close too early.
It's tough to stay calm because I'll risk a blowup if I get assigned. If AAPL doesn't act right again on Monday, I'll bite the bullet and take loss on the position.
AAPL is not acting right. I'm out of the Nov puts. May close out the Dec puts as well. My whole year worth of gain is wiped out in one week. Ouch!
A few months ago someone posted this about selling options: "You eat like a mouse but shit like and elephant"