Assigned

Assignment happens to the seller (writer) of an options contract when the buyer on the other side decides to exercise their right under that contract. If you sold an option, you don't control whether this happens to you — it's triggered by someone else's decision, and your broker notifies you after the fact that you've been "assigned."

To understand it, remember that an option is a contract between two parties: a buyer who holds the right to buy or sell a stock at a set price (the strike price), and a seller who has taken on the obligation to do the other side of that trade if asked. When the buyer exercises a call option, they are choosing to buy the underlying shares at the strike price; the seller who gets assigned must sell those shares to them at that price, even if the market price is much higher. When the buyer exercises a put, they are choosing to sell shares at the strike price; the seller who gets assigned must buy those shares at that price, even if the market price is much lower.

Assignment is most likely when an option is "in the money" — meaning exercising it is profitable for the buyer — and becomes especially common as expiration approaches, since options lose their remaining time value and holders have less reason to sell the contract instead of exercising it. Some assignment can also happen early, before expiration, particularly around dividend dates for call options, though the exact mechanics and likelihood depend on the option type and exchange rules.

The nuance that trips people up: assignment isn't something you request or schedule, and it can happen overnight, so a trader who sold options can wake up with a completely different position than they went to sleep with — suddenly long or short 100 shares per contract, with the cash impact that implies. This is why option sellers need to think not just about the premium they collect, but about what happens if they actually have to deliver or take the shares.