Assignments & Exercises

One of the trickiest aspects of options trading is dealing with options assignments. In this video, we explain what obligations you have as an options writer and how to deal with them. Also, we discuss when they are likely to occur mathematically.

When you own a short option (sell a put or call) you run the risk of getting assigned when the option is in-the-money. When you sell the option you are selling a right for someone to exercise a profitable position, whereas you are obligated to deliver on that right.

Assignments most commonly occur just before the dividend date or on expiry date when the option expires in the money.

In this video, we explain what happens when there is an assignment, what you can do to repair your trade and we explain when you're likely to be assigned on call and put options.

After watching this video, you should be able to understand how to handle assignments and factor assignment risk when you are building your strategies.

Video Contents

• What is an obligation vs a right?
• Understanding exercises and assignments
• What happens when there is an assignment?
• When is an option most likely to get assigned?
• Multi-leg strategies and managing assignments