Options & derivatives
Assignment
Assignment happens when an option seller is required to fulfill the contract: deliver or buy the asset at the strike.
Assignment happens when an option seller is required to fulfill the contract: deliver or buy the asset at the strike.
When the buyer exercises, a seller is "assigned" and must comply. It is the risk specific to selling options: unlike buying (loss capped at the premium), the seller can be forced to act at an unfavorable price.
You sold a $55-strike call; the stock rises to $60 and you are assigned: you must sell your shares at $55.
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