Option Assignment
The contractual fulfillment of an option seller's obligation when the long holder exercises. For a short call writer, assignment means delivering 100 shares of the underlying at the strike price. For a short put writer, assignment means buying 100 shares of the underlying at the strike. Assignment is mechanical, not optional or reversible -- the option exchange matches exercises to short positions, and the matched seller has no recourse to "undo" the trade. Premium collected at trade initiation is retained regardless of assignment; that income is the compensation the seller already received for taking on the obligation.
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Related terms
American Option · Asian Option · Barrier Option · Basket Option · Butterfly Spread · Calendar Spread
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