Assignment

Early Options Assignment: Why It Happens and How to Avoid It Most short options ride out their entire life without ever being exercised early — holders generally prefer to sell the contract rather than exercise it, since selling captures both intrinsic and extrinsic value while exercising throws the extrinsic value away. There’s one major exception: in-the-money short calls right before a stock’s ex-dividend date. That’s where the overwhelming majority of early assignments come from, and the reason comes down to a simple, calculable trade-off. ...

Options Assignment Risk: What It Is and How to Manage It If you sell options — whether covered calls, cash-secured puts, or naked positions — you’ve taken on the obligation to buy or sell stock if the person on the other side of the trade decides to exercise their contract. That obligation is called assignment risk, and understanding when it’s actually likely to happen (and what it does to your account) is one of the most practical skills an options seller can develop. ...