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What is Assignment?

April 26, 2017assignment

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What is Assignment?

3 Answers

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When holder of an option exercises his right to buy/ sell, a randomly selected (by computer) option seller is assigned the obligation to honor the underlying contract, and this process is termed as Assignment.

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When holder of an option exercises his right to buy/ sell, a randomly selected option seller is assigned the obligation to honor the underlying contract, and this process is termed as Assignment.

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In case you have a Sell position, you may be assigned the contract i.e. you will have to Buy the Underlying in case of Put and sell the Underlying in case of Call. However since options are currently cash settled you would have to pay or receive the Money.