Options Basics
What is Assignment?
When an option seller is required to fulfill their contract obligation.
📖 Complete Definition
Assignment occurs when an option holder exercises their right, obligating the seller to fulfill the contract. Call sellers must sell shares at the strike price; put sellers must buy shares at the strike. American-style options can be assigned anytime before expiration. Assignment typically happens when options are deep ITM or approaching expiration.
💡 Examples
- →Sold a $100 call, stock goes to $110, you're assigned and must sell 100 shares at $100
- →Early assignment often happens on short calls before ex-dividend dates
❓ Frequently Asked Questions
How do I avoid unwanted assignment?
Close positions before expiration, especially deep ITM options. Watch for ex-dividend dates on short calls. Roll positions to later expirations before they get too ITM.
🔗 Related Terms
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