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Options Assignment Explained: What Happens, What to Do, and How to Track It

Getting assigned on an option for the first time can feel like a fire alarm going off in your brokerage account. One morning you log in and instead of your short put, you now own 100 shares of stock. Or your covered call shares have vanished.

If you’re here because that just happened: take a breath. Assignment is a normal part of selling options. It’s not a failure — it’s a planned outcome that income traders build into their process.

This guide covers:

  • what actually happens mechanically when you get assigned
  • what to do in the first 48 hours (put assignment vs. call assignment)
  • when and why early assignment happens
  • how assignment fits into the wheel strategy and other income strategies
  • how to track assignment impact on your P&L over time

Not investment advice. Options involve risk of loss. Assignment can result in buying or selling shares at prices that may differ from current market value.

What is options assignment?

When you sell (write) an option, you take on an obligation:

  • Short put: you may be required to buy 100 shares at the strike price
  • Short call: you may be required to sell 100 shares at the strike price

Assignment is when the option buyer exercises their right and you (the seller) are required to fulfill that obligation.

The key thing to understand: only option sellers get assigned. If you bought an option, you have the right to exercise — you don’t get assigned.

The OCC (Options Clearing Corporation) randomly selects which sellers get assigned when a buyer exercises. Your broker then notifies you, typically before the next trading day.

What happens when you get assigned? (step-by-step)

The mechanics depend on whether you sold a put or a call.

Put assignment: you buy shares

If your short put is assigned:

  1. You buy 100 shares per contract at the strike price
  2. The cash collateral you set aside (for cash-secured puts) is used to pay for the shares
  3. The premium you collected when you sold the put is still yours — it doesn’t get returned
  4. Your account now shows 100 shares of the underlying stock instead of the short put position

Example:

  • You sold a $45 put on XYZ and collected $1.50 premium ($150)
  • XYZ drops to $42 and you’re assigned
  • You now own 100 shares at $45 (your obligation price)
  • Your effective cost basis: $45.00 - $1.50 = $43.50
  • The stock is at $42, so you’re down $1.50/share on paper — but your premium reduced the damage by $1.50

Call assignment: you sell shares

If your short call is assigned (typically a covered call):

  1. You sell 100 shares at the strike price
  2. The shares leave your account and you receive cash (strike price x 100)
  3. The premium you collected is still yours on top of the sale proceeds
  4. Your account now shows cash instead of the shares + short call

Example:

  • You own 100 shares of XYZ at $40 and sell a $45 call for $1.00 premium ($100)
  • XYZ rises to $48 and your call is assigned
  • You sell shares at $45 (your obligation price) — not $48
  • Total gain: $5.00/share capital gain + $1.00 premium = $6.00/share ($600)
  • You “missed” $3.00/share of upside — this is the trade-off you accepted when selling the call

The first 48 hours after assignment: what to do

Most assignment anxiety comes from not having a plan. Here’s a practical decision framework for each scenario.

After put assignment (you now own shares)

Step 1: Confirm the assignment details. Check your brokerage account for: which stock, how many shares, at what strike, and your new cost basis. Brokers usually show assignment as a “buy” transaction.

Step 2: Assess whether your thesis still holds. Ask yourself the same question you asked before selling the put:

  • Do I still want to own this stock at this price?
  • Has anything fundamentally changed (earnings miss, sector rotation, macro shift)?

Step 3: Decide your next move.

SituationActionWhy
Thesis intact, stock near strikeSell a covered callContinue generating income (this is the wheel)
Thesis intact, stock well below strikeHold and wait (or sell a call at/above your cost basis)Avoid locking in a loss by selling calls below your effective entry
Thesis brokenSell shares and move onDon’t hold a position you no longer believe in just to “make it back”
UnsureDo nothing for 24 hoursAssignment feels urgent but rarely requires same-day action

Step 4: Record the assignment in your tracking system. This is where most traders lose the thread. Brokers split the put P&L and the share purchase into separate transactions, making it hard to see the full picture. More on tracking below.

After call assignment (your shares were sold)

Step 1: Confirm the sale details. Your shares are gone, you received cash at the strike price, and you kept the call premium.

Step 2: Calculate your total return.

  • Capital gain/loss on the shares (sale price minus your cost basis)
  • Plus the call premium you collected
  • Plus any previous premiums from the wheel cycle (if applicable)

Step 3: Decide whether to restart.

SituationActionWhy
You’d still wheel this stockSell a new cash-secured putRestart the wheel cycle
Stock has run up significantlyWait for a pullback or pick a different underlyingDon’t chase
Better opportunities elsewhereRedeploy capital to a different tickerThe wheel doesn’t require you to stay on the same stock forever

Early assignment: when it happens and why

Most assignments happen at expiration. But early assignment can happen any time with American-style options (which includes nearly all stock and ETF options in the US).

When early assignment is most likely

Early assignment typically happens when:

  1. Your option is deep in-the-money (ITM) with very little extrinsic (time) value remaining. When extrinsic value approaches zero, the option holder gains nothing by waiting — exercising is rational.

  2. A dividend ex-date is approaching (for short calls). If the stock pays a dividend and your short call is ITM, the call holder may exercise early to capture the dividend. This is most common when the remaining extrinsic value is less than the dividend amount.

  3. Near expiration with the option ITM. The closer to expiration, the less time value remains, making early exercise more likely.

How to monitor early assignment risk

Watch for these signals on your short options:

  • Extrinsic value < $0.10 — very high assignment risk
  • Deep ITM + less than 7 DTE — elevated risk
  • Ex-dividend date within the option’s life (for calls) — check if extrinsic value < dividend amount

How to spot early assignment risk in OptionIncome

What to do if you want to avoid early assignment

If you don’t want to be assigned early:

  • Close the position (buy back the option) before the trigger event
  • Roll to a later expiration to increase extrinsic value
  • For dividend-driven risk: close or roll before the ex-dividend date

But here’s the income trader’s perspective: sometimes early assignment is fine. If you sold a cash-secured put at a price you’re happy to own the stock, getting assigned a few days early doesn’t change your plan. The premium is already collected.

How assignment fits the wheel strategy

If you’re running the wheel strategy, assignment isn’t a risk event — it’s a transition point in a planned cycle:

Phase 1: Sell cash-secured puts → collect premium

  • If put expires worthless: repeat (collect more premium)
  • If put is assigned: move to Phase 2

Phase 2: Own shares, sell covered calls → collect more premium

  • If call expires worthless: repeat (sell another call)
  • If call is assigned: shares are sold, move back to Phase 1

The wheel treats assignment as the mechanism that rotates you between the two phases. Each rotation collects premium that reduces your effective cost basis over time.

The key tracking challenge: brokers show each leg in isolation. After multiple put premiums, an assignment, several covered call premiums, and a call assignment, your “true” P&L for the full wheel cycle is scattered across dozens of transactions.

How OptionIncome tracks wheel strategy cost basis

Assignment and your cost basis (the part brokers make confusing)

Your broker’s reported cost basis after assignment may not reflect reality if you’ve been selling options on the same stock over time.

Put assignment cost basis

When you’re assigned on a put:

  • Tax cost basis = strike price (what you paid per share)
  • Effective cost basis (for your own tracking) = strike price minus all premiums collected from CSPs on that ticker

Example across multiple cycles:

  • Sold $48 put → expired worthless → collected $1.20
  • Sold $47 put → assigned → collected $0.90
  • Tax cost basis: $47.00/share
  • Effective cost basis: $47.00 - $1.20 - $0.90 = $44.90/share

That $2.10 in premiums collected before assignment is real income that reduced your actual risk — but your broker won’t show it that way.

Covered call assignment cost basis

When your covered call is assigned:

  • You sell shares at the strike price
  • The call premium is additional income on top
  • Your total return includes: share capital gain/loss + all premiums collected during the holding period

Why tracking matters

If you’re selling options regularly, the difference between “what your broker shows” and “your actual performance” grows over time. After a few wheel cycles, the gap can be significant.

This is exactly why OptionIncome groups related trades into campaigns — so you can see the full P&L of a strategy, not just individual legs.

Common assignment scenarios (with what to do)

“I got assigned on my CSP and the stock is below my strike”

This is the most common assignment scenario. You’re now holding shares at a loss relative to the current price, but your premium reduced the effective entry.

What to do:

  • If the stock is near your strike: sell a covered call at or above your effective cost basis to start recovering
  • If the stock dropped significantly: consider whether your thesis still holds before selling calls below your cost basis (this caps your recovery)
  • Don’t panic-sell just because the position is red — you chose this stock for a reason

”My covered call was assigned and the stock kept going up”

You sold shares at the strike and the stock is now higher. You “left money on the table.”

What to do:

  • Accept that this is the defined trade-off of covered calls. You chose certainty (premium + capped gain) over uncertainty (unlimited upside).
  • If you want back in: sell a new cash-secured put at a price you’re comfortable with
  • Don’t chase the stock higher just because of FOMO

”I got assigned early and wasn’t expecting it”

Early assignment usually happens because of dividends or because your option had almost no extrinsic value left.

What to do:

  • Check the ex-dividend calendar — this was likely the reason
  • The financial impact is usually minimal (you were already deep ITM)
  • Proceed with your post-assignment plan as normal

”I have a spread and one leg was assigned”

This is more complex. If you have a vertical spread and only the short leg is assigned:

  • You now have a stock position plus a long option
  • Contact your broker to understand the margin implications
  • Close or exercise your long leg to resolve the position
  • This is rare for income-focused strategies (CSPs and covered calls don’t have this problem)

Reducing assignment anxiety: the income trader’s mindset

Most assignment content online treats it as a risk to fear. For income traders, the better frame is:

Assignment is a planned outcome with a known price.

When you sell a cash-secured put at $45, you’re saying: “I’m willing to buy this stock at $45.” If you get assigned, you got what you planned for. The premium is a bonus.

When you sell a covered call at $50, you’re saying: “I’m willing to sell at $50.” If you get assigned, you sold at your target. The premium is a bonus.

The anxiety comes from not having a plan, not from assignment itself. If your plan is:

  • I know my entry price ✓
  • I know my exit price ✓
  • I know what I’ll do after assignment ✓
  • I can track the full cycle’s P&L ✓

Then assignment is just the wheel turning.

How to track assignment impact over time

Assignment creates a tracking problem that gets worse over time:

  • Your put P&L and your stock position are in different places
  • Covered call premiums are separate from your stock cost basis
  • Rolling campaigns span multiple contracts
  • Your broker’s “total return” number doesn’t reflect premiums collected earlier in the cycle

What you should be tracking (minimum)

For each ticker you sell options on:

  • Total premiums collected (puts + calls, across all cycles)
  • Effective cost basis after premiums (not just the strike)
  • Assignment count (how often you’ve been assigned on this stock)
  • Full-cycle P&L (from first CSP to final call assignment)
  • Annualized return on capital deployed in this strategy

How OptionIncome helps

OptionIncome automatically connects the dots that brokers leave fragmented:

FAQ

What happens when you get assigned on an option?

If you sold a put, you buy 100 shares at the strike price. If you sold a call, you sell 100 shares at the strike price. In both cases, you keep the premium you collected when you originally sold the option.

Can I avoid options assignment?

You can reduce assignment risk by closing or rolling positions before expiration, especially when extrinsic value is low. But if you sell options, assignment is always a possibility — it’s part of the strategy.

Does assignment cost money?

Most major brokers (Schwab, Fidelity, E*Trade, Tastytrade) charge no fee for assignment. Check your broker’s fee schedule to confirm.

Is options assignment bad?

Not for income traders. Assignment is a planned transition point, not a failure. If you sold a CSP at a price you were comfortable buying, getting assigned means the plan worked. The same applies to covered calls — getting called away means you sold at your target price plus premium.

What is early assignment and should I worry about it?

Early assignment happens before expiration, usually when your option is deep ITM with very little time value, or when a dividend ex-date is approaching. It’s uncommon for out-of-the-money options. Monitor extrinsic value and dividend dates to anticipate it.

How does assignment affect my taxes?

For put assignment, your tax cost basis is the strike price (the premium is a separate short-term gain when the put closes). For call assignment, the premium is added to your sale proceeds. Tax rules for options are complex — consult a tax professional for your specific situation.

What’s the difference between exercise and assignment?

Exercise is when the option buyer chooses to use their right. Assignment is when the option seller is obligated to fulfill that exercise. They’re two sides of the same event.

Summary

Options assignment is one of those topics that feels overwhelming the first time and routine by the fifth time:

  • Put assignment = you buy shares at the strike (minus premium collected)
  • Call assignment = you sell shares at the strike (plus premium collected)
  • Early assignment is uncommon but predictable — watch extrinsic value and dividend dates
  • For income traders, assignment is a planned part of the wheel, not a failure
  • The real challenge is tracking P&L across the full cycle — brokers fragment it, but a dedicated tracker connects the dots

The difference between a panicked trader and a confident one isn’t whether they get assigned — it’s whether they have a plan for what happens next.