Options & derivatives
Assignment
Being required to fulfil an option you sold, because the buyer exercised it.
How it works
An option seller does not choose when this happens. If you sold a put and the buyer exercises, you must buy the shares at the strike regardless of the current price.
Assignment can arrive early on American-style options, particularly around dividend dates.
Where it misleads people
Early assignment on a spread can leave you holding one leg without the other over a weekend, with a large unhedged exposure you did not intend.
Related terms
- American and European optionsAmerican options can be exercised any time before expiry; European ones only at expiry.
- OptionA contract giving the right, but not the obligation, to buy or sell something at a set price by a set date.
- Covered callSelling a call option on shares you already own, to collect premium in exchange for capping your upside.
- Cash-secured putSelling a put while holding enough cash to buy the shares if assigned.
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Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.