An Option Writer (seller of Options) is chosen at random (or 'Assigned') by the operator of the Option Exchange where the Option is being sold.
In the case of American Style Options, this can happen at any time before expiry and is known as Early Assignment and an Option Contract owner can Exercise at whether the Strike Price is, irrespective of whether it is currently In The Money, Out Of The Money or At The Money.
When the Option Contract expires or if it is European Style option (which can only be exercised on expiry) if the Strike Price of the option is In The Money, the option is automatically exercised and assigned to an Option Writer.
Related Directory Entries
Featured Video View All
Prevent early assignment
Mark Wolfinger, author of Options For Rookies presents a short video on why early exercise generally offers no advantages for options holders (and hence why it is rare unless the underlying is a stock about to go ex-dividend),
External Links
Options Assignment FAQhttp://www.optionseducation.org/tools/faq/options_assignment.html
An FAQ prepared by the Options Industry Council about Options Assignment.
View OIC Options Glossary in Options Market Glossary Directory
Exercise and Assignment, Early or Otherwisehttps://www.thinkorswim.com/tos/displayPage.tos?webpage=lessonExercise
A ThinkOrSwim article explaining Options Assignment and Exercise.
View ThinkOrSwim in Options Market Glossary Directory
Options Quick Facts - Expiration, Exercise and Assignmenthttp://www.cboe.com/learncenter/concepts/beyond/expiration.aspx
CBOE article on Options Exercise and Assignment.
View CBOE Options Dictionary in Options Market Glossary Directory
What Is Early Exercise And Assignment?http://www.optionsplaybook.com/managing-positions/early-options-exercise/
Options Playbook article describing Assignment and Early Exercise.
View The Options Playbook in Options Market Glossary Directory
Can Options Assignment Cause Margin Call?https://steadyoptions.com/articles/can-options-assignment-cause-margin-call-r109/
Guest post on the SteadOptions.com site by Christopher B. Welsh where he describes how the assignment of short (sold) call options can result in receiving a margin call from your broker.
View Steady Options in Options Market Glossary Directory
Trading Traps for the Unwary IIhttp://blog.mdwoptions.com/options_for_rookies/trading-traps-for-the-unwary-ii/
Mark D. Wolfinger describes some hazards of holding stock options (including ETFs) during ex-dividend periods and expiration.
View Options for Rookies in Options Market Glossary Directory
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