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What Is Option Assignment?
Academy->What Is Option Assignment
Assignment happens when the buyer of an option chooses to exercise the contract. If you sold that option, you must complete the obligation described in the contract. What happens next depends on whether you sold a call or a put.
Assignment on a Cash-Secured Put
If you're assigned on a cash-secured put, you buy the shares at the strike price. For many investors, this isn't a surprise. It's part of the strategy.
In return for accepting that possibility, you received the option premium when you sold the put.
Example
You sell:
- $25 Cash-Secured Put
- Premium Received: $1.00
If you're assigned:
- You purchase the shares for $25 per share.
- You keep the premium you already received.
Your premium helps reduce your overall cost basis.
Assignment on a Covered Call
If you're assigned on a covered call, your shares are sold at the strike price. Again, this is part of the agreement you accepted when selling the option.
You also keep the premium you received when opening the trade.
Example
You own shares.
You sell:
- $30 Covered Call
- Premium Received: $0.75
If you're assigned:
- Your shares are sold for $30 per share.
- You keep the premium from the option.
Is Assignment Good or Bad?
Assignment isn't automatically good or bad. It's simply one of the possible outcomes of selling options. Many income investors expect assignment as part of their trading strategy. The important thing is understanding what will happen before entering the trade.
OptionLogic in Practice
OptionLogic tracks every stage of an assigned position in a single journal.
From the original cash-secured put to assignment, covered calls, adjustments, and the final outcome, each step remains connected so you can see the complete history of the position.
OptionLogic STO Journal used in posts. Tracks the Put Sale, premium collected, assignment, covered calls and premiums collected.
Frequently Asked Questions
Can assignment happen before expiration?
Yes.
Although many assignments occur near expiration, early assignment is possible.
Do I lose the premium if I'm assigned?
No.
You keep the premium you received when you sold the option.
Can every option be assigned?
Only the seller of an option can be assigned.
Option buyers choose whether to exercise the contract.
Does assignment end the trade?
Not always.
If you're assigned on a cash-secured put, many traders continue the position by selling covered calls.
Should I be afraid of assignment?
Assignment is simply one possible outcome of selling options.
Understanding the process helps you decide whether it fits your trading strategy.
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