Option Assignment: What Happens When a Short

Short put assignment

• A put seller who is assigned generally buys the underlying shares at the strike price.
• The premium received remains part of the economics, but the account now owns stock and is exposed to subsequent stock movement.

Short call assignment

• A covered-call seller who is assigned generally sells the covered shares at the call strike.
• That means upside above the strike has effectively been exchanged for the option premium.

Early assignment

• American-style equity options can generally be exercised before expiration.
• Dividend timing, remaining extrinsic value and deep in-the-money status can affect early-assignment incentives.

Plan assignment before entry

• Know whether you are willing to own or sell the shares.
• Know the resulting position size and concentration.
• Know whether your next action is hold, reduce, or potentially sell a covered call.

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