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Options Assignment Risk

Options Assignment Risk

Learn when assignment happens, how to avoid unwanted assignment, and what to do if you're assigned on short options positions.

Assignment

Short Options

Risk Management

Last Updated: November 21, 2025

13 min read

Reviewed by: ApexVol Trading Team

Fact-checked & Up-to-date

⚠️

Why This Matters

Assignment occurs when the option seller (short position) is obligated to buy or sell the underlying asset because the buyer exercised their option. Early assignment typically happens with ITM options near ex-dividend dates or when extrinsic value is minimal. Understanding assignment mechanics prevents costly surprises.

Not Monitoring ITM Short Options

critical

Letting short calls or puts go deep ITM without management. Assignment becomes increasingly likely as extrinsic value approaches zero.

✅ Solution

Monitor short options daily. Close or roll positions when they move significantly ITM. Set alerts for when short options approach your strike.

📋 Real Example

Sold $50 put, stock drops to $45. Put is now $5 ITM with minimal extrinsic. High chance of early assignment, especially if dividend approaches.

Ignoring Ex-Dividend Dates

critical

Short call holders are often assigned before ex-dividend when the dividend exceeds remaining extrinsic value. Catch traders off guard.

✅ Solution

Check dividend calendar before selling calls. Close or roll short calls before ex-dividend if ITM and extrinsic < dividend amount.

📋 Real Example

Sold slightly ITM covered call. Stock pays $1 dividend. Call has $0.50 extrinsic. Call buyer exercises to capture dividend. You lose shares.

Not Having Capital for Assignment

high

Selling cash-secured puts without actually having the cash, or selling naked calls without ability to buy shares. Margin calls follow.

✅ Solution

Only sell puts if you have cash to buy shares. Never sell naked calls. Use spreads for defined risk if capital is limited.

📋 Real Example

Sell $100 put 'for income' without $10,000 to back it. Assigned on gap down. Margin call forces liquidation at worst prices.

Forgetting About After-Hours Moves

high

On expiration Friday, options can be exercised based on after-hours moves until 5:30 PM ET. What's OTM at 4 PM may be ITM by 5:30.

✅ Solution

Close any near-the-money options before market close on expiration day. Don't gamble on OTM finishing OTM if it's close.

📋 Real Example

Short $100 put expires with stock at $100.50 (OTM). After-hours, stock drops to $99. Broker exercises put. Unexpected assignment Monday.

Not Understanding Spread Assignment

medium

Having one leg of a spread assigned while the other isn't. Creates unexpected directional exposure and margin impact.

✅ Solution

Close spreads before expiration if either leg is ITM. Don't let spreads expire - the risk/reward isn't worth the final pennies.

📋 Real Example

Bull put spread: short $100 put, long $95 put. Stock at $98. Short put assigned, you now own 100 shares. Long put worthless. Unintended stock position.

✅ Prevention Checklist

Monitor ITM short options daily

Check ex-dividend dates before selling calls

Only sell cash-secured puts with actual cash

Close positions before expiration day

Set alerts for short strikes

Use spreads for defined risk

Understand after-hours exercise rules

Assignment Probability Increases When:

Option is ITM and extrinsic value < $0.10
Ex-dividend date approaching (for calls)
Option is deep ITM (>10%)
Within final week before expiration
Hard-to-borrow stock (puts may be exercised)

Frequently Asked Questions

When can options be assigned?

American-style options (most stock options) can be assigned any time before expiration. Assignment is most likely when: 1) The option is deep ITM with minimal extrinsic value, 2) A dividend is approaching for short calls, 3) Near expiration when all extrinsic is gone. European-style options (like SPX) can only be exercised at expiration.

What happens if I get assigned on an option?

If assigned on a short put, you must buy 100 shares at the strike price. If assigned on a short call, you must sell/deliver 100 shares at the strike price. You'll need sufficient cash or margin for the transaction. The assignment appears in your account the next business day.