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When an option seller is required to fulfill the contract obligation.
Why It Matters
Assignment is the seller's obligation coming due. If you sold a call, assignment means you must sell 100 shares at the strike. If you sold a put, you must buy 100 shares at the strike. Assignment usually happens at expiration but can occur anytime for American-style options.
Key Points
- Most common at expiration but can happen anytime for ITM options
- Cash-settled options (like index options) settle in cash, not shares
- Early assignment is more likely when there's a dividend or the option is deep ITM
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Related Terms
Common Questions
When an option seller is required to fulfill the contract obligation. Assignment is the seller's obligation coming due. If you sold a call, assignment means you must sell 100 shares at the strike.
Assignment is the seller's obligation coming due. If you sold a call, assignment means you must sell 100 shares at the strike. If you sold a put, you must buy 100 shares at the strike. Assignment usually happens at expiration but can occur anytime for American-style options.
Most common at expiration but can happen anytime for ITM options
Cash-settled options (like index options) settle in cash, not shares
Early assignment is more likely when there's a dividend or the option is deep ITM