Assignment
Assignment is when an option seller is required to fulfill the contract — delivering shares on a short call, or buying shares on a short put.
When a long holder exercises, the OCC assigns the obligation to a short holder, typically at random. Assignment can happen any time before expiration for American-style options, especially when an option is deep in-the-money or around ex-dividend dates.
A covered call seller delivers shares they already own; a cash-secured put seller buys shares at the strike with set-aside cash.
Example. You sold a 100-strike call; the buyer exercises, so you are assigned and must sell 100 shares at $100 even if the market is $108.
FAQ
Can I be assigned before expiration?
Yes — American-style options can be exercised and assigned any time before expiration; it is most likely when deep in-the-money or before a dividend.
How is assignment decided?
The OCC assigns exercised options to short holders, generally on a random basis through the clearing brokers.
Related terms
See also: Covered Call