Today at a close of $110 the open interest on Oct Call Options at $110 or less was 72,739 Contracts times 100 shares per contract which is 7,273,900 shares. People with call options at $110 or less will be exercised and they will be assigned those shares at the strike price of their option.
Today at a close of $110 the open interest on Oct Put Options was 14,821. That means anyone with Put options at $110 strike or higher will be able to sell at the strike price.
At minimum, if all open interest Put positions were hedged with open interest Call positions, the difference is 5,791,800 shares that will be assigned to open call option holders that can not sell them to a put holder in this month.
The November Open Interest is much greater below $110 for Puts along with Open Interest much higher for Calls above $110. It the people who were assigned shares today may be hedged with Puts next month but right now those out of the money Puts are not worth very much.
It would not surprise me if the people who were assigned shares today will be selling on Monday getting the highest price possible for the 5M shares assigned today and for them hopefully driving up the value of the Nov Put options.
Monday may be a very bloody day for RIMM. Lots of excess shares just now changing hands. An accounting scandle going on. Unpublished financials going on. Biweekly updates on financial information which haven't happened yet. Increased competition. A stock market that has just set new highs and is very overbought. Need I go on.
Monday should be a big down day!
<<That meant I lost and the ... owner of the option made out ok... I did get to keep the premium >>
Nothing unusual about this. Holder exercised his option to make a profit. You as writer got your premium but lost on the result (Anyway at $.25 on a volitile stock, this is just noise anyway and doesn't appreciably affect market price).
Unusual case at issue was: Holder voluntarily exercises option when it is to his disadvantage => he loses money and his loss is writer early Xmas present (gain).
Twice I have had Put options that were out of the money on the expiration assigned to me. It has happened in the past some time ago, but as I remember, I had two contracts assigned to me on a volatile stock that were out of the money by maybe $0.25. I actually found out that I was assigned that time by accident because on the Friday that the options expired I thought they were out of the money and it was over. On the following Monday I happened to be checking positions and found I was long the stock. I did some fast checking and called my brokerage. They said I had been assigned and they never had a good reason but basically that is the way it is.
I shook my head and put in a sell order for the stock. The stock opened gap down and I got out for a loss based on the strike price. That meant I lost and the original owner of the option made out ok (realatively speeking) I did get to keep the premium which lowered my cost basis and so overall I about broke even or made a small profit.
I can't remember the details on the other time I got assigned.
<<1. The Put holder will have the option to sell stock to the Put writer. The Put writer will have no option to not buy the stock if the option is exercised.>>
I believe I covered this => writer would be thrilled.
<<2. Each of the brokerages have their own way of treating their options settlement. If a client has an in the money Call or Put but does not have the financial strength or equity position to cover the exercise, then they may elect to not give the customer the choice of whether or not to exersise the ITM option.>>
Please let me know of any brokers out there who will back me up financially beyond the margin limits in my investment account. I should like to transfer my account there immediately.
<<3. I have actually been 'assigned' some un-profitable puts that I have written, but not often and not for many contracts.>>
You mean unprofitable for you or for the holder? If for you then that is standard. If for the holder then CONGRATULATIONS! Please share details. I have never heard of this. How much did you make? etc. etc.
Several points about your posts.
1. The Put holder will have the option to sell stock to the Put writer. The Put writer will have no option to not buy the stock if the option is exercised.
2. Each of the brokerages have their own way of treating their options settlement. If a client has an in the money Call or Put but does not have the financial strength or equity position to cover the exercise, then they may elect to not give the customer the choice of whether or not to exersise the ITM option.
3. There may be some idiots out there who exersise non profitable options, but I'm sure they typically are not dealing with large enough volumes of options to have any impact on the market. I have actually been 'assigned' some un-profitable puts that I have written, but not often and not for many contracts.
Yes. I'm flattered. I like you too, but this is hardly the time or place. Maybe someday you'll visit Vegas and I'll see you there on one of my visits. I'm sure I'll recognize you from you avatar. What do you figure the odds of that are? I'm beginning to think: better than making a killing on RIMM.