options assigned early

Please upgrade your browser

E*TRADE uses features that may not be supported by your current browser and might not work as intended. For the best user experience,  please use an updated browser .

Understanding assignment risk in Level 3 and 4 options strategies

E*TRADE from Morgan Stanley

With all options strategies that contain a short option position, an investor or trader needs to keep in mind the consequences of having that option assigned , either at expiration or early (i.e., prior to expiration). Remember that, in principle, with American-style options a short position can be assigned to you at any time. On this page, we’ll run through the results and possible responses for various scenarios where a trader may be left with a short position following an assignment.

Before we look at specifics, here’s an important note about risk related to out-of-the-money options: Normally, you would not receive an assignment on an option that expires out of the money. However, even if a short position appears to be out of the money, it might still be assigned to you if the stock were to move against you just prior to expiration or in extended aftermarket or weekend trading hours. The only way to eliminate this risk is to buy-to-close the short option.

• Short (naked) calls

Credit call spreads

Credit put spreads, debit call spreads, debit put spreads.

• When all legs are in-the-money or all are out-of-the-money at expiration

Another important note : In any case where you close out an options position, the standard contract fee (commission) will be charged unless the trade qualifies for the E*TRADE Dime Buyback Program . There is no contract fee or commission when an option is assigned to you.

Short (naked) call

If you experience an early assignment.

An early assignment is most likely to happen if the call option is deep in the money and the stock’s ex-dividend date is close to the option expiration date.

If your account does not hold the shares needed to cover the obligation, an early assignment would create a short stock position in your account. This may incur borrowing fees and make you responsible for any dividend payments.

Also note that if you hold a short call on a stock that has a dividend payment coming in the near future, you may be responsible for paying the dividend even if you close the position before it expires.

An early assignment generally happens when the put option is deep in the money and the underlying stock does not have an ex-dividend date between the current time and the expiration of the option.

Short call + long call

(The same principles apply to both two-leg and four-leg strategies)

This would leave your account short the shares you’ve been assigned, but the risk of the position would not change . The long call still functions to cover the short share position. Typically, you would buy shares to cover the short and simultaneously sell the long leg of the spread.

Pay attention to short in-the-money call legs on the day prior to the stock’s ex-dividend date, because an assignment that evening would put you in a short stock position where you are responsible for paying the dividend. If there’s a risk of early assignment, consider closing the spread.

Short put + long put

Early assignment would leave your account long the shares you’ve been assigned. If your account does not have enough buying power to purchase the shares when they are assigned, this may create a Fed call in your account.

However, the long put still functions to cover the position because it gives you the right to sell shares at the long put strike price. Typically, you would sell the shares in the market and close out the long put simultaneously.

Here's a call example

• Let’s say that you’re short a 100 call and long a 110 call on XYZ stock; both legs are in-the-money.
• You receive an assignment notification on your short 100 call, meaning you sell 100 shares of XYZ stock at 100. Now, you have $10,000 in short stock proceeds, your account is short 100 shares of stock, and you still hold the long 110 call.
• Exercise your long 110 call, which would cover the short stock position in your account.
• Or, buy 100 shares of XYZ stock (to cover your short stock position) and sell to close the long 110 call.

Here's a put example:

• Let’s say that you’re short a 105 put and long a 95 put on XYZ stock; the short leg is in-the-money.
• You receive an assignment notification on your short 105 put, meaning you buy 100 shares of XYZ stock at 105. Now, your account has been debited $10,500 for the stock purchase, you hold 100 shares of stock, and you still hold the long 95 put.
• The debit in your account may be subject to margin charges or even a Fed call, but your risk profile has not changed.
• You can sell to close 100 shares of stock and sell to close the long 95 put.

Long call + short call

Debit spreads have the same early assignment risk as credit spreads only if the short leg is in-the-money.

An early assignment would leave your account short the shares you’ve been assigned, but the risk of the position would not change . The long call still functions to cover the short share position. Typically, you would buy shares to cover the short share position and simultaneously sell the remaining long leg of the spread.

Long put + short put

An early assignment would leave your account long the shares you’ve been assigned. If your account does not have enough buying power to purchase the shares when they are assigned, this may create a Fed call in your account.

All spreads that have a short leg

(when all legs are in-the-money or all are out-of-the-money)

Pay attention to short in-the-money call legs on the day prior to the stock’s ex-dividend date because an assignment that evening would put you in a short stock position where you are responsible for paying the dividend. If there’s a risk of early assignment, consider closing the spread.

However, the long put still functions to cover the long stock position because it gives you the right to sell shares at the long put strike price. Typically, you would sell the shares in the market and close out the long put simultaneously. 

What to read next...

How to buy call options, how to buy put options, potentially protect a stock position against a market drop, looking to expand your financial knowledge.

• Trading Strategies
• Options Trading Basics

Options Exercise, Assignment, and More: A Beginner’s Guide to Options Expiration

Learn about options exercise and options assignment before taking a position, not afterward. This guide can help you navigate the dynamics of options expiration.

Key Takeaways

• Learn the basics of options exercise and options assignment
• Understand the difference between in-the-money and out-of-the-money options
• The surest way to avoid exercise or assignment is to liquidate or roll a position ahead of expiration, but remember, assignment of a short option can happen at any time 

So your trading account has gotten options approval and you recently made that first trade—say, a long call in XYZ with a strike price of $105. Then the option expires, and at the time, XYZ is trading at $105.30.

Wait. The stock’s above the strike. Is that in the money (ITM) or out of the money (OTM)? Do I need to do something? Do I have enough money in my account? Help!

Please, please, please: Don’t be that trader. The time to learn the mechanics of options expiration is before you make your first trade. Opening an account at TD Ameritrade entitles you to a host of free trading education, including an entire course on options trading. (And at the end of this article, you’ll find a short video covering the basics.)

Here’s a guide to help you navigate options exercise and assignment — along with a few other basics.

Memorize This Table (or Cut It Out and Paste It to Your Screen)

The buyer (“owner”) of an option has the right, but not the obligation, to exercise the option on or before expiration. A call option gives the owner the right to buy the underlying security; a put option gives the owner the right to sell the underlying security.

Conversely, when you sell an option, you may be assigned the underlying asset—at any time regardless of the ITM amount—if the option owner chooses to exercise. The option seller has no control over assignment and no certainty as to when it could happen.

An option will likely be exercised if it’s in the option owner’s best interest to do so, meaning if it’s advantageous from a price standpoint for the owner to take or to close a position in the underlying security at the strike price rather than at the prevailing price in the open market. After the close on expiration day, ITM options may be automatically exercised, whereas OTM options are not and typically expire worthless (often referred to as being “abandoned”). The table below spells it out.

This assumes a position is held all the way through expiration. Of course, you typically don’t need to do that. And in many cases, the usual strategy is to close out a position ahead of the expiration date. We’ll revisit the close-or-hold decision in the next section and look at ways to do that. But assuming you do carry the options position until the end, there are a few things you need to consider:

• Know your specs .Each standard equity options contract controls 100 shares of the underlying stock. That’s pretty straightforward. Non-standard options may have different deliverables. Non-standard options can represent a different number of shares , shares of stock of more than one company, or underlying shares and cash. Other products—such as equity index options or options on futures—have  different contract specs .
• Offsetting positions will match and close .Suppose you’re long 300 shares of XYZ and short one ITM call that’s assigned. That call is deliverable into 100 shares, so you’ll be left with 200 shares of XYZ if the option is assigned.

Exercise and Assignment: It’s Not Just at Expiration!

Standard U.S. equity options are American-style options, meaning they can be exercised anytime before expiration. If you’re short an option that’s deep ITM, it’s possible you’ll get assigned early. ITM short call positions are particularly vulnerable if a company is about to issue a dividend. ( Learn more about options and dividend risk .)

• It’s automatic, for the most part . If an option is ITM by as little as $0.01 at expiration, it will automatically be exercised for the buyer and assigned to a seller. However, there’s something called a Do Not Exercise request that a long option holder can submit if they want to abandon an option. In such a case, it’s possible that a short ITM position might not be assigned. For more, see the note below on pin risk, or refer to this advanced options expiration article . 
• You’d better have enough cash . If an XYZ option is exercised or assigned and you don’t have an offsetting position, you’ll essentially be exchanging an options position for a position in the underlying. A long call or a short put will result in a long position in XYZ; a short call or a long put will result in a short position in XYZ. For long stock positions, you need to have enough cash to cover the purchase or else you’ll be issued a margin call, which you must meet by adding funds to your account. But that timeline may be short, and the broker, at its discretion, has the right to liquidate positions in order to meet a margin call. If exercise or assignment involves taking a short stock position, you need a margin account and sufficient funds in the account to cover the margin requirement.
• Short equity positions are risky business . An uncovered short call or a long put, if assigned or exercised, will result in a short position. If you’re short a stock, you have potentially unlimited risk because there’s no limit to the price increase of a security. There’s also no guarantee the brokerage firm can continue to maintain that short position for an unlimited time period. So if you’re a newbie, it’s generally inadvisable to carry a position into expiration if there’s a chance you might end up with a short stock position.   

A note on pin risk : It’s rare, but occasionally a stock settles right on a strike price at expiration. So if you were short the 105 calls and XYZ settled at exactly $105, there would be no automatic assignment, but depending on the actions taken by the option holder, you may or may not be assigned—and you may not be able to trade out of any unwanted positions until the next business day.

But it goes beyond the exact price issue. What if an option is ITM as of the market close, but news comes out after the close (but before the exercise decision deadline) that sends the stock up or down through the strike price? Remember: The holder of the option could submit a Do Not Exercise request. 

This uncertainty and potential exposure is called pin risk, and the best way to avoid it is to close your position before expiration.

The Decision Tree: How to Approach Expiration

As expiration approaches, you have three choices. Depending on the circumstances—and your objectives and risk tolerance—any of these might be the best decision for you. 

Are options the right choice for you?

While options trading involves unique risks and is definitely not suitable for everyone, if you believe options trading fits with your risk tolerance and overall investing strategy, TD Ameritrade can help you pursue your options trading strategies with powerful trading platforms, idea generation resources, and the support you need.

Learn more about the potential benefits and risks of trading options.

Let the chips fall where they may . Some positions may not require as much maintenance. An options position that’s deeply OTM will likely go away on its own, but occasionally an option that’s been left for dead springs back to life. If it’s a long option, that might feel like a windfall; if it’s a short option that could’ve been closed out for a penny or two, you might be kicking yourself for not doing so.

Conversely, you might have a covered call against long stock, and the strike price was your exit target. For example, if you bought XYZ at $100 and sold the 110-strike call against it, and XYZ rallies to $113, you might be content with the $10 profit (plus the premium you took in when you sold the call, but minus any transaction costs). In that case, you can let assignment happen.

Close it out . If you’ve met your objectives for a trade—for better or worse—it might be time to close it out. Otherwise, you might be exposed to risks that aren’t commensurate with any added return potential (like the short option that could’ve been closed out for next to nothing, then suddenly came back into play).

The close-it-out category also includes ITM options that could result in an unwanted position or the calling away of a stock you didn’t want to part with. And remember to watch the dividend calendar. If you’re short a call option near the ex-dividend date of a stock, the position might be a candidate for early exercise. If so, you may want to consider getting out of the position well in advance—perhaps a week or more. Keep in mind, there is no guarantee that there will be an active market for an options contract, so it is possible to end up stuck and unable to close an options position.        

Roll it to something else . This is the third choice. Rolling is essentially two trades executed as a spread. One leg closes out the existing option; the other leg initiates a new position. For example, suppose you’re short a covered XYZ call at the July 105 strike, the stock is at $103, and the call’s about to expire. You could roll it to the August 105 strike. Or, if your strategy is to sell a call that’s $5 OTM, you might roll to the August 108 call. Keep in mind that rolling strategies can entail additional transaction costs, including multiple contract fees, which may impact any potential return. 

The Bottom Line on Options Expiration

You don’t enter an intersection and  then  check to see if it’s clear. You don’t jump out of an airplane and  then  test the rip cord. So do yourself a favor. Get comfortable with the mechanics of options expiration before you make your first trade. Your beating heart will thank you. 

Start your email subscription

Recommended for you, related videos, more like this, related topics.

Call Us 800-454-9272

Quick Links

• About Ticker Tape
• About TD Ameritrade
• Tools & Platforms
• For Active Traders
• Retirement Planning
• Rollover IRA
• IRA Selection Tool
• Income Solutions
• Goal Planning
• Find a Branch
• Funding & Transfers
• Form Library

Do Not Sell or Share My Personal Information

Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.

Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.

Margin trading increases risk of loss and includes the possibility of a forced sale if account equity drops below required levels. Margin is not available in all account types. Margin trading privileges subject to TD Ameritrade review and approval. Carefully review the Margin Handbook and Margin Disclosure Document for more details. Please see our website or contact TD Ameritrade at 800-669-3900 for copies.

The risk of loss on an uncovered call options position is potentially unlimited since there is no limit to the price increase of the underlying security. The naked put strategy includes a high risk of purchasing the corresponding stock at the strike price when the market price of the stock will likely be lower. Naked options strategies involve the highest amount of risk and are only appropriate for traders with the highest risk tolerance. 

Spreads and other multiple-leg options strategies can entail additional transaction costs which may impact any potential return. These are advanced options strategies and often involve greater risk, and more complex risk, than basic options trades.

Please note that the examples above do not account for transaction costs or dividends. Options orders placed online at TD Ameritrade carry a $0.65 fee per contract. Orders placed by other means will have additional transaction costs.

Market volatility, volume, and system availability may delay account access and trade executions.

Past performance of a security or strategy does not guarantee future results or success.

Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.

Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.

This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.

FINRA / SIPC , and a subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade Holding Corporation is a wholly owned subsidiary of the Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2024 Charles Schwab & Co., Inc. Member SIPC . --> TD Ameritrade, Inc., member FINRA / SIPC , a subsidiary of The Charles Schwab Corporation. © 2024 Charles Schwab & Co. Inc. All rights reserved.

This link takes you outside the TD Ameritrade Web site.

Trade Options With Me

For Your Financial Freedom

What is Options Assignment & How to Avoid It

If you are learning about options, assignment might seem like a scary topic. In this article, you will learn why it really isn’t. I will break down the entire options assignment process step by step and show you when you might be assigned, how to minimize the risk of being assigned, and what to do if you are assigned.

Video Breakdown of Options Assignment

Check out the following video in which I explain everything you need to know about assignment:

What is Assignment?

To understand assignment, we must first remember what options allow you to do. So let’s start with a brief recap:

• A call option gives its buyer the right to buy 100 shares of the underlying at the strike price
• A put option gives its buyer the right to sell 100 shares of the underlying at the strike price

In other words, call options allow you to call away shares of the underlying from someone else, whereas a put option allows you to put shares in someone else’s account. Hence the name call and put option.

The assignment process is the selection of the other party of this transaction. So the person that has to buy from or sell to the option buyer that exercised their option.

Note that an option buyer has the right to exercise their option. It is not an obligation and therefore, a buyer of an option can never be assigned. Only option sellers can ever be get assigned since they agree to fulfill this obligation when they sell an option.

Let’s go through a specific example to clarify this:

• The underlying security is stock ABC and it is trading at $100.
• Peter decides to buy 1 put option with a strike price of 95 as a hedge for his long stock position in ABC
• Kate sells this exact same option at the same time.

Over the next few weeks, ABC’s price goes down to $90 and Peter decides to exercise his put option. This means that he uses his right to sell 100 shares of ABC for $95 per share. Now Kate is assigned these 100 shares of ABC which means she is obligated to buy them for $95 per share. 

Peter now has 100 fewer shares of ABC in his portfolio, whereas Kate has 100 more.

This process is analog for a call option with the only difference being that Kate would be short 100 shares and Peter would have 100 additional shares of ABC in his portfolio.

Hopefully, this example clarifies what assignment is.

Who Can Be Assigned?

To answer this question, we must first ask ourselves who exercises their option? To do this, let’s quickly look at the different ways that you can close a long option position:

• Sell the option: Selling an option is probably the easiest way to close a long option position. Doing this will have no effect on the option seller.
• Let the option expire: If the option is Out of The Money , it would expire worthless and there would be no consequence for the option seller. If, on the other hand, the option is In The Money by more than $0.01, it would typically be automatically exercised . This would start the options assignment process.
• Exercise the option early: The last possibility would be to exercise the option before its expiration date. This, however, can only be done if the option is an American-style option. This would, once again, lead to an option assignment.

So as an option seller, you only have to worry about the last two possibilities in which the buyer’s option is exercised. 

But before you worry too much, here is a quick fact about the distribution of these 3 alternatives:

Less than 10% of all options are exercised.

This means 90% of all options are either sold prior to the expiration date or expire worthless. So always remember this statistic before breaking your head over the risk of being assigned.

It is very easy to avoid the first case of being assigned. To avoid it, just close your short option positions before they expire (ITM). For the second case, however, things aren’t as straight forward.

Who Risks being Assigned Early?

Firstly, you have to be trading American-style options. European-style options can only be exercised on their expiration date. But most equity options are American-style anyway. So unless you are trading index options or other kinds of European-style options, this will be the case for you.

Secondly, you need to be an options seller. Option buyers can’t be assigned.

These two are necessary conditions for you to be assigned. Everyone who fulfills both of these conditions risks getting assigned early. The size of this risk, however, varies depending on your position. Here are a few things that can dramatically increase your assignment risk:

• ITM: If your option is ITM, the chance of being assigned is much higher than if it isn’t. From the standpoint of an option buyer, it does not make sense to exercise an option that isn’t ITM because this would lead to a loss. Nevertheless, it is possible. The deeper ITM the option is, the higher the assignment risk becomes.
• Dividends : Besides that, selling options on securities with upcoming dividends also increases your risk of assignment. More specifically, if the extrinsic value of an ITM call option is less than the amount of the dividend, option buyers can achieve a profit by exercising their option before the ex-dividend date. 
• Extrinsic Value: Otherwise, keep an eye on the extrinsic value of your option. If the option has extrinsic value left, it doesn’t make sense for the option buyer to exercise their option because they would achieve a higher profit if they just sold the option and then bought or sold shares of the underlying asset. Typically, the less time an option has left, the lower its extrinsic value becomes. Implied volatility is another factor that influences extrinsic value.
• Puts vs Calls: This is more of an interesting side note than actual advice, but put options tend to get exercised more often than call options. This makes sense since put options give their buyer the right to sell the underlying asset and can, therefore, be a very useful hedge for long stock positions.

How can you Minimize Assignment Risk?

Since you now know what assignment is, and who risks being assigned, let’s shift our focus on how to minimize the assignment risk. Even though it isn’t possible to completely remove the risk of being assigned, there are things that you can do to dramatically decrease the chances of being assigned.

The first thing would be to avoid selling options on securities with upcoming dividend payments. Before putting on a position, simply check if the underlying security has any upcoming dividend payments. If so, look for a different trade.

If you ever are in the position that you are short an option and the ex-dividend of the underlying security is right around the corner, compare the size of the dividend to the extrinsic value of your option. If the extrinsic value is less than the dividend amount, you really should consider closing the position. Otherwise, the chances of being assigned are high. This is especially bad since being short during a dividend payment of a security will force you to pay the dividend.

Besides avoiding dividends, you should also close your option positions early. The less time an option has left, the lower its extrinsic value becomes and the more it makes sense for option buyers to exercise their options. Therefore, it is good practice to close your (ITM) short option positions at least one week before the expiration date.

The deeper an option is ITM, the higher the chances of assignment become. So the just-mentioned rule is even more important for deep ITM options.

If you don’t want to indefinitely close your position, it is also possible to roll it out to a later expiration cycle. This will give you more time and add extrinsic value to your position.

FAQs about Assignment

Last but not least, I want to answer some frequently asked questions about options exercise and assignment.

1. What happens if your account does not have enough buying power to cover the assigned position?

This is a common worry for beginning options traders. But don’t worry, if you don’t have enough capital to cover the new position, you will receive a margin call and usually, your broker will just automatically close the assigned shares immediately. This might lead to a minor assignment fee, but otherwise, it won’t significantly affect your account. Tatsyworks, for example, charges an assignment fee of only $5.

Check out my review of tastyworks

2. How does assignment affect your P&L?

When an option is exercised, the option holder gains the difference between the strike price and the price of the underlying asset. If the option is ITM, this is exactly the intrinsic value of the option. This means that the option holder loses the extrinsic value when he exercises his/her option. That’s also why it doesn’t make sense to exercise options with a lot of extrinsic value left.

This means that as soon as the option is exercised, it is only the intrinsic value that is relevant for the payoff. This is the same payoff as the option at its expiration date.

So as an options seller, your P&L isn’t negatively affected by an assignment. Either it stays the same or it becomes slightly better due to the extrinsic value being ignored.

As an example, if your option is ITM by $1, you will lose up to $100 per option or $1 per share that you are assigned. But this does not account for the extrinsic value that falls away with the exercise of the option. So this would be the same P&L as at expiration. Depending on how much premium you collected when selling the option, this might still be a profit or a minor loss.

With that being said, as soon as you are assigned, you will have some carrying risk. If you don’t or can’t close the position immediately, you will be exposed to the ongoing price fluctuations of that security.  Sometimes, you might not be able to close the new position immediately because of trading halts, or because the market is closed.

If you weren’t planning on holding that security, it is a good idea to close the new position as soon as possible. 

Option spreads such as vertical spreads, add protection to these price fluctuations since you can just exercise the long option to close the assigned share position at the strike price of the long option.

3. When an option holder exercises their option, how is the assignment partner chosen?

This is usually a random process. As soon as an option is exercised, the responsible brokerage firm sends a request to the Options Clearing Corporation (OCC). They send back the requested shares, whereafter they randomly choose another brokerage firm that currently has a client that is short the exercised option. Then the chosen broker has to decide which of their clients is assigned. This choice is, once again, random or a time-based priority system is used.

4. How does assignment work for index options?

As there aren’t any shares of indexes, you can’t directly be assigned any shares of the underlying asset. Therefore, index options are cash-settled. This means that instead of having to buy or sell shares of the underlying, you simply have to pay the difference between the strike price and the underlying trading price. This makes assignment easier and a lot less likely among index options.

Note that ETF options such as SPY options are not cash-settled. SPY is a normal security with openly traded shares, so exercise and assignment work just like they do among equity options.

I hope this article made you realize that assignment isn’t as bad as it might seem at first. It is just important to understand how the options assignment process works and what affects the likelihood of being assigned.

To recap, here’s what you should to do when you are assigned:

if you have enough capital in your account to cover the position, you could either treat the new position as a normal (stock) position and hold on to it or you could close it immediately. If you don’t have a clear trading plan for the new position, I recommend the latter.

If, on the other hand, you don’t have enough buying power, you will receive a margin call from your broker and the position should be closed automatically.

Assignment does not have any significant impact on your P&L, but it comes with some carrying risk. Options spreads can offer more protection against this than naked option positions.

To mitigate assignment risk, you should close option positions early, always keep an eye on the extrinsic value of your option positions, and avoid upcoming dividend securities.

And always remember, less than 10% of options are exercised, so assignment really doesn’t happen that often, especially not if you are actively trying to avoid it.

For the specifics of how assignment is handled, it is a good idea to contact your broker, as the procedures can vary from broker to broker.

Thank you for taking the time and reading this post. If you have any questions, comments, or feedback, please let me know in the comment section below.

22 Replies to “What is Options Assignment & How to Avoid It”

hi there well seems like finally there is one good honest place. seem like you are puting on the table the whole truth about bad positions. however my wuestion is when can one know where to put that line of limit. when do you recognise or understand that you are in a bad position? thanks and once again, a great site.

Well If you are trading a risk defined strategy the point would be at max loss and not too much time left until expiration. For undefined risk strategies however it can be very different. I would just say if you don’t have too much time until expiration and are far from making money you should use some common sense and admit that you are wrong.

What would happen in the event of a crash. Would brokers be assigning, options, cashing out these shares, and making others bankrupt. Well, I guessed I sort of answered my own question. Its not easy to understand, especially not knowing when this would come up. But seems like you hit the important aspects of the agreement.

Actually I wouldn’t imagine that too many people would want to exercise their options in case of a market ctash, because they probably wouldn’t want to hold stocks in this risky and volatile environment. 

And to the part of the questions: making others bankrupt. This really depends on the situation. You can’t get assigned more stock than your option covers. This means as long as you trade with reasonable position sizing nothing too bad can happen. Otherwise I would recommend to trade with defined risk strategies so your maximum drawdown is capped.

Thanks for writing about assignment Louis. After reading the section how assignment works, I feel I am somewhat unclear about how assignment works when the exerciser exercises Put or Call option. In both cases, if the underlying is an index, is the settlement done through the margin account money? Would you be able to provide a little more detail of how exercising the option (Put vs Call) would work in case of an underlying stock vs Index.

Thank you very much in advance

Thanks for the question. Indexes can’t be traded in the same way as stocks can. That’s why index options are settled in cash. If your index option is assigned, you won’t have to buy or sell any shares of the underlying index at the strike price because there exist no shares of indexes. Instead, you have to pay the amount that your index option is ITM to the exerciser of your option. Let me give you an example: You are short a call option with the strike price of 1000. The underlying asset is an index and it’s price is 1050. This means your call option is 50 points ITM. If someone exercises your long call option, you will have to pay him/her the difference between the strike price and the underlying’s price which would be 50 (1050-1000). So the main difference between index and stock options is that you don’t have to buy/sell any shares of the underlying asset for index options. I hope this helps. Please let me know if you have any other questions or comments.

Can the same logic be applied for ETFs as it does Indexes? For example, if I trade the SPY ETF, would it be settled in cash?

Thanks! Johnson

Hi Johnson, Exercise and assignment for ETFs such as SPY work just like they do for equities. ETFs have shares that are openly traded, whereas indexes don’t. That’s why indexes are settled in cash, whereas ETFs aren’t. I hope this helps.

There are many articles online that I read that are biased against options tradings and I am a bit surprised to read a really helpful article like this. I find this helpful in understanding options trading, what are the techniques and how to manage the risks. Before, I was hesitant to try this financial game but now, after reading this article, I am considering participating with live accounts and no longer with a demo account. A few months ago, I signed up with a company called IQ Options, but really never involved real money and practiced only with a demo account.

Thanks for your comment. I am glad to see that you liked the post. However, I don’t recommend sing IQ Option to trade since they are a very shady trading firm. You could check out my  Review of IQ Option for all the details.

this is a great and amazing article. i sincerely your effort creating time  to write on such an informative article which has taught me a lot more on what is options assignment and avoiding it. i just started trading but had no ideas on this as a beginner. i find this article very helpful because it has given me more understanding on options trading and knowing the techniques and how to manage the risks. thanks for sharing this amazing article

You are very welcome

Hello, the first thing that i noticed when i opened this page is the beauty of the website. i am sure you have put much effort into creating this article and the details are really clear here. after watching the video break down, i fully understood the entire process on how to avoid options assignment.

Thank you so much for the positive feedback!

I would love to create a website like yours as the design used is really nice, simple and brings about clarity of the write ups, but then you wrote a brilliant article on how to avoid options assignment. great video here. it was  confusing at first. i will suggest another video be added to help some people like me.

Thanks for the feedback. I recommend checking out my  options trading beginner course . In it, I cover all the basics that weren’t explained here.

Thanks for your very helpful article. I am contemplating selling a call that would cover half my shares on company X. How can ensure that the assignment process selects the shares that I bought at a higher price, so as to maximize capital losses?

Hi Luis, When you are assigned, you just automatically buy/sell shares of the underlying at the strike price. This means your overall portfolio is adjusted by these 100 shares. The exact shares and your entry price are irrelevant. If you have 50 shares of X and your short call is assigned, you will sell 100 shares of X at the strike price. After this, your position would be -50 shares of X which would be equivalent to being short 50 shares of X. I hope this helps.

Louis, I entered a CALL butterfly spread at $100 below where I intended, just 2 days before expiration date. I intended to speculate on a big earning announcement jump the next day. It was a debit of 1.25. Also, when I realized my mistake, I tried to close it for anything at all. The Mark fluctuated between 40 and 70, but I could not get it to close. So now I am assigned to sell 200 share at 70 dollars below the market price of the stock. I am having a heart attack. I do not have the 200 shares to deliver, so it seems I have to buy them at the market, and sell them for $70 less, for a loss of $14,000.

What other options are open to me? Can my trading firm force a close with a friendly market maker and make it as if it happened on Friday? I am willing to pay a friendly market maker several hundred dollars to make this trade. Is that an option? Other options the trading firm can do for me that would cost me less than $14,000?

Hi Paul, Thanks for your comment. From the limited information provided, it is hard to say what is actually going on. If you bought a call butterfly spread, your max loss should be limited to the premium you paid to open the position. An assignment shouldn’t have a huge impact on your overall P&L. I highly recommend contacting your broker and explaining your situation to them since they have all the information required to evaluate what’s actually going on. But if the loss is real, there is no way for you to make a deal with a market maker to limit or undo potential losses. I hope this helps.

What happens with ITM long call option that typically gets automatically exercised at expiration, if the owner of the call option doesn’t have the cash/margin to cover the stock purchase?

He would receive a margin call

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Receive Emails with Educational Content

Privacy Overview

Want to Become a Better Trader Today?

• Find a Branch
• Schwab Brokerage 800-435-4000
• Schwab Password Reset 800-780-2755
• Schwab Bank 888-403-9000
• Schwab Intelligent Portfolios® 855-694-5208
• Schwab Trading Services 888-245-6864
• Workplace Retirement Plans 800-724-7526

... More ways to contact Schwab

  Chat

• Schwab International
• Schwab Advisor Services™
• Schwab Intelligent Portfolios®
• Schwab Alliance
• Schwab Charitable™
• Retirement Plan Center
• Equity Awards Center®
• Learning Quest® 529
• Mortgage & HELOC
• Charles Schwab Investment Management (CSIM)
• Portfolio Management Services
• Open an Account

The Risks of Options Assignment

Any trader holding a short option position should understand the risks of early assignment. An early assignment occurs when a trader is forced to buy or sell stock when the short option is exercised by the long option holder. Understanding how assignment works can help a trader take steps to reduce their potential losses.

Understanding the basics of assignment

An option gives the owner the right but not the obligation to buy or sell stock at a set price. An assignment forces the short options seller to take action. Here are the main actions that can result from an assignment notice:

• Short call assignment: The option seller must sell shares of the underlying stock at the strike price.
• Short put assignment: The option seller must buy shares of the underlying stock at the strike price.

For traders with long options positions, it's possible to choose to exercise the option, buying or selling according to the contract before it expires. With a long call exercise, shares of the underlying stock are bought at the strike price while a long put exercise results in selling shares of the underlying stock at the strike price.

When a trader might get assigned

There are two components to the price of an option: intrinsic 1 and extrinsic 2  value. In the case of exercising an in-the-money 3 (ITM) long call, a trader would buy the stock at the strike price, which is lower than its prevailing price. In the case of a long put that isn't being used as a hedge for a long stock position, the trader shorts the stock for a price higher than its prevailing price. A trader only captures an ITM option's intrinsic value if they sell the stock (after exercising a long call) or buy the stock (after exercising a long put) immediately upon exercise.

Without taking these actions, a trader takes on the risks associated with holding a long or short stock position. The question of whether a short option might be assigned depends on if there's a perceived benefit to a trader exercising a long option that another trader has short. One way to attempt to gauge if an option could be potentially assigned is to consider the associated dividend. An options seller might be more likely to get assigned on a short call for an upcoming ex-dividend if its time value is less than the dividend. It's more likely to get assigned holding a short put if the time value has mostly decayed or if the put is deep ITM and close to expiration with a wide bid/ask spread on the stock.

It's possible to view this information on the Trade page of the thinkorswim ® trading platform. Review past dividends, the price of the short call, and the price of the put at the call's strike price. While past performance cannot be relied upon to continue, this information can help a trader determine whether assignment is more or less likely.

Reducing the risk associated with assignment

If a trader has a covered call that's ITM and it's assigned, the trader will deliver the long stock out of their account to cover the assignment.

A trader with a call vertical spread 4 where both options are ITM and the ex-dividend date is approaching may want to exercise the long option component before the ex-dividend date to have long stock to deliver against the potential assignment of the short call. The trader could also close the ITM call vertical spread before the ex-dividend date. It might be cheaper to pay the fees to close the trade.

Another scenario is a call vertical spread where the ITM option is short and the out-of-the-money (OTM) option is long. In this case, the trader may consider closing the position or rolling it to a further expiration before the ex-dividend date. This move can possibly help the trader avoid having short stock on the ex-dividend date and being liable for the dividend.

Depending on the situation, a trader long an ITM call might decide it's better to close the trade ahead of the ex-dividend date. On the ex-dividend date, the price of the stock drops by the amount of the dividend. The drop in the stock price offsets what a trader would've earned on the dividend and there would still be fees on top of the price of the put.

Assess the risk

When an option is converted to stock through exercise or assignment, the position's risk profile changes. This change could increase the margin requirements, or subject a trader to a margin call, 5 or both. This can happen at or before expiration during early assignment. The exercise of a long option position can be more likely to trigger a margin call since naked short option trades typically carry substantial margin requirements.

Even with early exercise, a trader can still be assigned on a short option any time prior to the option's expiration.

1  The intrinsic value of an options contract is determined based on whether it's in the money if it were to be exercised immediately. It is a measure of the strike price as compared to the underlying security's market price. For a call option, the strike price should be lower than the underlying's market price to have intrinsic value. For a put option the strike price should be higher than underlying's market price to have intrinsic value.

2  The extrinsic value of an options contract is determined by factors other than the price of the underlying security, such as the dividend rate of the underlying, time remaining on the contract, and the volatility of the underlying. Sometimes it's referred to as the time value or premium value.

3  Describes an option with intrinsic value (not just time value). A call option is in the money (ITM) if the underlying asset's price is above the strike price. A put option is ITM if the underlying asset's price is below the strike price. For calls, it's any strike lower than the price of the underlying asset. For puts, it's any strike that's higher.

4  The simultaneous purchase of one call option and sale of another call option at a different strike price, in the same underlying, in the same expiration month.

5  A margin call is issued when the account value drops below the maintenance requirements on a security or securities due to a drop in the market value of a security or when buying power is exceeded. Margin calls may be met by depositing funds, selling stock, or depositing securities. A broker may forcibly liquidate all or part of the account without prior notice, regardless of intent to satisfy a margin call, in the interests of both parties.

Just getting started with options?

More from charles schwab.

Weekly Trader's Outlook

Today's Options Market Update

Options Strategy: The Covered Call

Related topics.

Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Please read the options disclosure document titled  Characteristics and Risks of Standardized Options before considering any options transaction. Supporting documentation for any claims or statistical information is available upon request.

With long options, investors may lose 100% of funds invested.

Spread trading must be done in a margin account.

Multiple leg options strategies will involve multiple commissions.

Commissions, taxes and transaction costs are not included in this discussion, but can affect final outcome and should be considered. Please contact a tax advisor for the tax implications involved in these strategies.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

• Trading Blog

• Remember me Not recommended on shared computers

Forgot your password?

Or sign in with one of these services

• All Content
• This Article
• This Category
• Advanced Search

We’ve all been there… researching options strategies and unable to find the answers we’re looking for. SteadyOptions has your solution.

Get educated about the nuances and risks of options trading. Have access to resources and be a resource to other traders. Get quick responses from the SteadyOptions team.

Everything You Need to Know About Options Assignment Risk

By Pat Crawley

The  fear of being assigned early on a short option position is enough to cripple many would-be options traders into sticking by their tried-and-true habit of simply buying puts or calls. After all, theoretically, the counterparty to your short options trade could exercise the option at any time, potentially triggering a Margin Call on your account if you’re undercapitalized.

But in this article, we're going to show you why early assignment is a vastly overblown fear, why it's not the end of the world, and what to do if it does occur.

What is Assignment in Options Trading?

Do you remember reading beginner  options books  or articles that said, "an option gives the buyer the right, but not the obligation, to buy/sell a stock at a specified price and date?" Well, it's accurate, but only for the buy side of the contract.

The seller of an option is actually obligated to buy or sell should the buyer choose to exercise their contract. So when options, assignment is when you, the lucky seller of an options contract, get chosen to make good on your obligation to buy or sell the underlying asset.

Let's say you sold a call option on a stock with a strike price of $50, which you held until expiration. At expiration, the stock trades at $55, meaning it's automatically exercised by the buyer. In this case, you are forced to sell the buyer 100 shares at $50 per share.

So when selling options, assignment is when you, the lucky seller of an options contract, get chosen to make good on your obligation to buy or sell the underlying asset.

What is Early Assignment in Options Trading?

Early assignment is when the buyer of an options contract that you're short decides to exercise the option before the expiration and begins the assignment process.

Many beginning traders count early assignments as one of their biggest trading fears. Many traders' fear of early assignment stems from their lack of understanding of the process. Still, it's typically not something to worry about, and we'll show you why in this article. But first, let's look at an example of how the process works.

For instance, say we collect $1 in premium to short a 30-day put option on XYZ with a strike price of $45 while the underlying is trading at $50. Fast forward, and it's the morning of expiration day. Options will expire at the close of trading in a few hours. The underlying stock is hovering around $44.85. Our plan pretty much worked as planned until, for some reason, the holder of the option exercises the option. We're confused and don't know what's going on.

It works exactly the same way as ordinary options settlement . You fulfill your end of the bargain. As the seller of a put option, you sold the right to sell XYZ at $45. The option buyer exercised that right and sold his shares to you at $45 per share.

And now, let's break down what happened in this transaction:

• You collected $1 in premium when opening the contract  
• The buyer of the option exercises his right to sell at $45 per share.  
• You’re now long 100 shares of XYZ that you paid $45 for, and you sell them at the market price of $44.80 per share, realizing a $0.20 per share loss.  
• Your profit on the transaction is $0.80 because you pocketed $1 from the initial sale of the option but lost $0.20 from selling the 100 shares from assignment at a loss.

Why Early Assignment is Nothing to Fear

Many beginning traders count early assignments as one of their biggest trading fears; on some level, it makes sense. As the seller of an option, you're accepting the burden of a legitimate obligation to your counterparty in exchange for a premium. You're giving up control, and the early assignment shoe can, on paper, drop at any time.

Exercising Options Early Burns Money

People rarely exercise options early because it simply doesn't make financial sense. By exercising an option, you're only capturing the option's intrinsic value and entirely forfeiting the extrinsic value to the option seller. There's seldom a reason to do this.

Let's put ourselves in the buyer's shoes. For instance, we pay $5 for a 30-day call with a strike price of $100 while the underlying is trading at $102. The call has $2 in intrinsic value, meaning our call is in-the-money by $2, which would be our profit if the option expired today.

The other $3 of the option price is extrinsic value. This is the value of time, volatility, and convexity. By exercising early, the buyer of an option is burning that $3 of extrinsic value just to lock in the $2 profit.

A much better alternative would be to sell the option and go and buy 100 shares of the stock in the open market.

Viewed in this light, an option seller can’t be blamed for looking at early assignment as a good thing, as they get to lock in their premium as profit.

Your Risk Doesn’t Change

One of the biggest worries about early assignment is that being assigned will somehow open the trader up to additional risk. For instance, if you’re assigned on a short call position, you’ll end up holding a short position in the underlying stock.

However, let me prove that the maximum risk in your positions stays the same due to early assignment.

How Early Assignment Doesn’t Change Your Position’s Maximum Risk

Perhaps you collect $2.00 in premium for shorting an ABC $50/$55 bear call spread. In other words, we're short the $50 call for a credit of $2.50 and long the $55 call, paying a debit of $0.50.

Before considering early assignment, let's determine our maximum risk on this call spread. The maximum risk for a bear call spread is the difference between the strike minus the net credit you receive. In this case, the difference between the strikes is $5, and we collect a net credit of $2, making our maximum risk on the position $3 or $300.

You wake up one morning with the underlying trading at $58 to find that the counterparty of your short $50 call has exercised its option, giving them the right to buy the underlying stock at $50 per share.

You'd end up short due to being forced to sell the buyer shares at $50. So you're short 100 shares of ABC with a cost basis of $50 per share. On that position, your P&L is -$800, the P&L on a $55 long call is +$250, on account of you paying $0.50, and the call being $3.00 in-the-money. And finally, because the option holder exercised early, you get to keep the entire credit you collected to sell the $50 call, so you've collected +$250.

So your P&L is $300. You've reached your max loss. Let's get extreme here. Suppose the price of the underlying runs to $100. Here are the P&Ls for each leg of the trade:

• Short stock: -$5,000  
• Long call: +$4,450  
• Net credit received from exercised short option: +$250  
• 5,000 - (4,450 + 250) = $300

While dealing with early assignments might be a hassle, it doesn’t open a trader up to additional risk they didn’t sign up for.

Margin Calls Usually Aren’t The End of the World

Getting a margin call due to early assignment isn't the end of the world. Believe it or not, stock brokerages have been around for a long time. They have seen early assignments many times before, and they have protocols for it.

Think about it intuitively, your broker allowed you to open the short option position knowing that the capital in your account could not cover an early assignment. Still, they let you make the trade anyways.

So what happens when you get an early assignment that you can’t cover? Your broker issues you a margin call. Once you’re in violation of their margin rules, they pretty much have carte blanche to handle the situation as they wish, including liquidating the assigned stock position at their will.

However, most brokers will give you some time to react to the situation and either decide to deposit more capital, liquidate the position on your own, or exercise offsetting options to fulfill the margin call in the case of an option spread.

Even though a margin call isn't fun, remember that the overall risk of your position doesn't change due to an early assignment, and it's typically not a momentous event to deal with. You probably just have to liquidate the trade.

When Early Assignment Might Occur?

Dividend Capture

One of the few times it might make sense for a trader to exercise an option early is when he's holding a call that is deep in-the-money, and there's an upcoming ex-dividend date.

Because deep ITM calls have very little extrinsic value (because their deltas are so high), any negligible extrinsic value is often outweighed by the value of an upcoming dividend payment , so it makes sense to exercise and collect the dividend.

Deep In-The-Money Options Near Expiration

While it's important to emphasize that the risk of early assignment is very low in most cases, the likelihood does rise when you're dealing with options with very little extrinsic value, like deep-in-the-money options. Although, even in those cases, the probabilities are pretty low.

However, an options trader that is trading to exploit market anomalies like the volatility risk premium, in which implied volatility tends to be overpriced, shouldn't even be trading deep-in-the-money options anyhow. Profitable option sellers tend to sell options with very little intrinsic value and tons of extrinsic value.

Bottom Line

Don't let the  fear of early assignment discourage you from selling options. Far worse things when shorting options! While it's true that early assignment can occur, it's typically not a big deal. Related articles

• Can Options Assignment Cause Margin Call?
• Assignment Risks To Avoid
• The Right To Exercise An Option?
• Options Expiration: 6 Things To Know
• Early Exercise: Call Options
• Expiration Surprises To Avoid
• Assignment And Exercise: The Mental Block
• Should You Close Short Options On Expiration Friday?
• Fear Of Options Assignment
• Day Before Expiration Trading
• Accurate Expiration Counting

What Is SteadyOptions?

12 Years CAGR of 122.7%

Full Trading Plan

Complete Portfolio Approach

Diversified Options Strategies

Exclusive Community Forum

Steady And Consistent Gains

High Quality Education

Risk Management, Portfolio Size

Performance based on real fills

Non-directional Options Strategies

10-15 trade Ideas Per Month

Targets 5-7% Monthly Net Return

Visit our Education Center

Featured Articles

Useful resources, recent articles, spx options vs. spy options: which should i trade.

Trading options on the S&P 500 is a popular way to make money on the index. There are several ways traders use this index, but two of the most popular are to trade options on SPX or SPY. One key difference between the two is that SPX options are based on the index, while SPY options are based on an exchange-traded fund (ETF) that tracks the index.

By Mark Wolfinger, March 15

• Added by Mark Wolfinger

Yes, We Are Playing Not to Lose!

There are many trading quotes from different traders/investors, but this one is one of my favorites: “ In trading/investing it's not about how much you make, but how much you don't lose" - Bernard Baruch. At SteadyOptions, this has been one of our major goals in the last 12 years.

By Kim, March 11

• 1,115 views

• Added by Kim

The Impact of Implied Volatility (IV) on Popular Options Trades

You’ll often read that a given option trade is either vega positive (meaning that IV rising will help it and IV falling will hurt it) or vega negative (meaning IV falling will help and IV rising will hurt).   However, in fact many popular options spreads can be either vega positive or vega negative depending where where the stock price is relative to the spread strikes.  

By Yowster, March 7

• 1,138 views

• Added by Yowster

Please Follow Me Inside The Insiders

The greatest joy in investing in options is when you are right on direction. It’s really hard to beat any return that is based on a correct options bet on the direction of a stock, which is why we spend much of our time poring over charts, historical analysis, Elliot waves, RSI and what not.

By TrustyJules, March 5

• Added by TrustyJules

Trading Earnings With Ratio Spread

A 1x2 ratio spread with call options is created by selling one lower-strike call and buying two higher-strike calls. This strategy can be established for either a net credit or for a net debit, depending on the time to expiration, the percentage distance between the strike prices and the level of volatility.

By TrustyJules, February 22

• 1,668 views
• February 22

SteadyOptions 2023 - Year In Review

2023 marks our 12th year as a public trading service.   We closed 192 winners out of 282 trades (68.1% winning ratio).   Our model portfolio produced 112.2% compounded gain on the whole account based on 10% allocation per trade.   We had only one losing month and one essentially breakeven in 2023. 

By Kim, January 5

• 6,131 views

Call And Put Backspreads Options Strategies

A backspread is very bullish or very bearish strategy used to trade direction; ie a trader is betting that a stock will move quickly in one direction. Call Backspreads are used for trading up moves; put backspreads for down moves.

By Chris Young, October 14, 2023

• 9,703 views

• Added by Chris Young
• October 14, 2023

Long Put Option Strategy

A long put option strategy is the purchase of a put option in the expectation of the underlying stock falling. It is  Delta  negative,  Vega  positive and   Theta  negative strategy. A long put is a single-leg, risk-defined, bearish options strategy. Buying a put option is a levered alternative to selling shares of stock short.

By Chris Young, October 11, 2023

• 11,341 views
• October 11, 2023

Long Call Option Strategy

A long call option strategy is the purchase of a call option in the expectation of the underlying stock rising. It is  Delta  positive,  Vega  positive and Theta  negative strategy. A long call is a single-leg, risk-defined, bullish options strategy. Buying a call option is a levered alternative to buying shares of stock.

By Chris Young, October 8, 2023

• 11,752 views
• October 8, 2023

What Is Delta Hedging?

Delta hedging is an investing strategy that combines the purchase or sale of an option as well as an offsetting transaction in the underlying asset to reduce the risk of a directional move in the price of the option. When a position is delta-neutral , it will not rise or fall in value when the value of the underlying asset stays within certain bounds. 

By Kim, October 6, 2023

• 9,833 views
• October 6, 2023

We want to hear from you!

There are no comments to display.

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account. It's easy and free!

Already have an account? Sign in here.

• Existing user? Sign In
• Education Center
• Members Reviews
• SteadyOptions Strategy
• Anchor Trades Strategy
• Simple Spreads Strategy
• Steady Collars Strategy
• SteadyVol Strategy
• SteadyYields Strategy
• Managed Accounts
• Performance

Mike Martin

Option exercise and assignment explained w/ visuals.

• Categories: Options Trading

Last updated on February 11th, 2022 , 06:38 am

Buyers of options have the right to exercise their option at or before the option’s expiration. When an option is exercised, the option holder will buy (for exercised calls) or sell (for exercised puts) 100 shares of stock per contract at the option’s strike price.

Conversely, when an option is exercised, a trader who is short the option will be assigned 100 long (for short puts) or short (for short calls) shares per contract.

• Long American style options can exercise their contract at any time.
• Long calls transfer to +100 shares of stock
• Long puts transfer to -100 shares of stock
• Short calls are assigned -100 shares of stock.
• Short puts are assigned +100 shares of stock.
• Options are typically only exercised and thus assigned when extrinsic value is very low.
• Approximately only 7% of options are exercised.

The following sequences summarize exercise and assignment for calls and puts (assuming one option contract ):

Call Buyer Exercises Option   ➜  Purchases 100 shares at the call’s strike price.

Call Seller Assigned  ➜  Sells/shorts 100 shares at the call’s strike price.

Put Buyer Exercises Option  ➜  Sells/shorts 100 shares at the put’s strike price.

Put Seller Assigned   ➜  Purchases 100 shares at the put’s strike price.

Let’s look at some specific examples to drill down on this concept.

New to options trading? Learn the essential concepts of options trading with our FREE 160+ page Options Trading for Beginners PDF.

Exercise and Assignment Examples

In the following table, we’ll examine how various options convert to stock positions for the option buyer and seller:

As you can see, exercise and assignment is pretty straightforward: when an option buyer exercises their option, they purchase (calls) or sell (puts) 100 shares of stock at the strike price . A trader who is short the assigned option is obligated to fulfill the opposite position as the option exerciser. 

Automatic Exercise at Expiration

Another important thing to know about exercise and assignment is that standard in-the-money equity options are automatically exercised at expiration. So, traders may end up with stock positions by letting their options expire in-the-money.

An in-the-money option is defined as any option with at least $0.01 of intrinsic value at expiration . For example, a standard equity call option with a strike price of 100 would be automatically exercised into 100 shares of stock if the stock price is at $100.01 or higher at expiration.

What if You Don't Have Enough Available Capital?

Even if you don’t have enough capital in your account, you can still be assigned or automatically exercised into a stock position. For example, if you only have $10,000 in your account but you let one 500 call expire in-the-money, you’ll be long 100 shares of a $500 stock, which is a $50,000 position. Clearly, the $10,000 in your account isn’t enough to buy $50,000 worth of stock, even on 4:1 margin.

If you find yourself in a situation like this, your brokerage firm will come knocking almost instantaneously. In fact, your brokerage firm will close the position for you if you don’t close the position quickly enough.

Why Options are Rarely Exercised

At this point, you understand the basics of exercise and assignment. Now, let’s dive a little deeper and discuss what an option buyer forfeits when they exercise their option.

When an option is exercised, the option is converted into long or short shares of stock. However, it’s important to note that the option buyer will lose the extrinsic value of the option when they exercise the option. Because of this, options with lots of extrinsic value remaining are unlikely to be exercised. Conversely, options consisting of all intrinsic value and very little extrinsic value are more likely to be exercised.

The following table demonstrates the losses from exercising an option with various amounts of extrinsic value:

As we can see here, exercising options with lots of extrinsic value is not favorable. 

Why? Consider the 95 call trading for $7. Exercising the call would result in an effective purchase price of $102 because shares are bought at $95, but $7 was paid for the right to buy shares at $95. 

With an effective purchase price of $102 and the stock trading for $100, exercising the option results in a loss of $2 per share, or $200 on 100 shares.

Even if the 95 call was previously purchased for less than $7, exercising an option with $2 of extrinsic value will always result in a P/L that’s $200 lower (per contract) than the current P/L. F

or example, if the trader initially purchased the 95 call for $2, their P/L with the option at $7 would be $500 per contract. However, if the trader decided to exercise the 95 call with $2 of extrinsic value, their P/L would drop to +$300 because they just gave up $200 by exercising.

7% Of Options Are Exercised

Because of the fact that traders give up money by exercising an option with extrinsic value, most options are not exercised. In fact, according to the Options Clearing Corporation,  only 7% of options were exercised in 2017 . Of course, this may not factor in all brokerage firms and customer accounts, but it still demonstrates a low exercise rate from a large sample size of trading accounts.

So, in almost all cases, it’s more beneficial to sell the long option and buy or sell shares instead of exercising. We like to call this approach a “synthetic exercise.”

Congrats! You’ve learned the basics of exercise and assignment. If you’d like to know how the exercise and assignment process actually works, continue to the next section!

Who Gets Assigned When an Option is Exercised?

With thousands of traders long and short options in the market, who actually gets assigned when one of the traders exercises their option?

In this section, we’ll run through the exercise and assignment process for options so you know how the assignment decision occurs.

If a trader is short a single option, how do they get assigned if one of a thousand other traders exercises that option?

The short answer is that the process is random. For example, if there are 5,000 traders who are long a call option and 5,000 traders who are short that call option, an account with the short option will be randomly assigned the exercise notice. The random process ensures that the option assignment system is fair

Visualizing Assignment and Exercise

The following visual describes the general process of exercise and assignment:

If you’d like, you can read the OCC’s detailed assignment procedure here  (warning: it’s intense!).

Now you know how the assignment procedure works. In the final section, we’ll discuss how to quickly gauge the likelihood of early assignment on short options.

Assessing Early Option Assignment Risk

The final piece of understanding exercise and assignment is gauging the risk of early assignment on a short option.

As mentioned early, only 7% of options were exercised in 2017 (according to the OCC). So, being assigned on short options is rare, but it does happen. While a specific probability of getting assigned early can’t be determined, there are scenarios in which assignment is more or less likely.

The following scenarios summarize  broad generalizations  of early assignment probabilities in various scenarios:

In regards to the dividend scenario, early assignment on in-the-money short calls with less extrinsic value than the dividend is more likely because the dividend payment covers the loss from the extrinsic value when exercising the option.

All in all, the risk of being assigned early on a short option is typically very low for the reasons discussed in this guide. However, it’s likely that you will be assigned on a short option at some point while trading options (unless you don’t sell options!), but at least now you’ll be prepared!

Next Lesson

Options Trading for Beginners

Intrinsic and Extrinsic Value in Options Trading Explained

Option Greeks Explained: Delta, Gamma, Theta & Vega

Projectfinance options tutorials.

➥ Bullish Strategies

➥ Bearish Strategies

➥ Neutral Strategies

➥ Vertical Spreads Guide

☆ Options Trading for Beginners ☆

➥ Basics of Calls and Puts

➥ What is a Strike Price?

➥ Option Expiration

➥ Intrinsic and Extrinsic Value

➥ Exercise and Assignment

➥ The Bid-Ask Spread

➥ Volume and Open Interest

➥ Option Chain Explained

➥ Option Greeks 101

➥ Delta Explained

➥ Gamma Explained

➥ Theta Explained

➥ Vega Explained

➥ Implied Volatility Basics

➥ What is the VIX Index?

➥ The Expected Move

➥ Trading VIX Options

➥ Trading VIX Futures

➥ The VIX Term Structure

➥ IV Rank vs. IV Percentile

➥ Option ​Order Types 101

➥ Stop-Loss Orders On Options Explained

➥ Stop Limit Order in Options: Examples W/ Visuals

➥ Limit Order in Option Trading Explained w/ Visuals

➥ Market Order in Options: Don’t Throw Away Money!

➥ TIF Orders Types Explained: DAY, GTC, GTD, EXT, GTC-EXT, MOC, LOC

Additional Resources

Exercise and Assignment – CME Group

Learn About Exercise and Assignment – CME Group

About the Author

Chris Butler received his Bachelor’s degree in Finance from DePaul University and has nine years of experience in the financial markets. 

Chris started the projectfinance YouTube channel in 2016, which has accumulated over 25 million views from investors globally.

Our Authors

Share this post

Leave a reply cancel reply.

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

Quick Links

Other links.

• Terms & Conditions
• Privacy Policy

© 2024 projectfinance, All Rights Reserved.

Disclaimer: Neither projectfinance or any of its officers, directors, employees, other personnel, representatives, agents or independent contractors is, in such capacities, a licensed financial adviser, registered investment adviser, registered broker-dealer or FINRA|SIPC|NFA-member firm. projectfinance does not provide investment or financial advice or make investment recommendations. projectfinance is not in the business of transacting trades, nor does projectfinance agree to direct your brokerage accounts or give trading advice tailored to your particular situation. Nothing contained in our content constitutes a solicitation, recommendation, promotion, or endorsement of any particular security, other investment product, transaction or investment. Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. Past Performance is not necessarily indicative of future results.

tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with Project Finance(Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade and/or any of its affiliated companies. Neither tastytrade nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website. tastytrade does not warrant the accuracy or content of the products or services offered by Marketing Agent or this website. Marketing Agent is independent and is not an affiliate of tastytrade.

Assignment in Options Trading

Introduction articles, what is an options assignment.

In options trading , an assignment occurs when an option is exercised.   

As we know, a buyer of an option has the right but not the obligation to buy or sell an underlying asset depending on what option they have purchased. When the buyer exercises this right, the seller will be assigned and will have to deliver or take delivery of what they are contractually obliged to. For stock options, it is typically 1 , 000 shares per contract for the UK ; and 100 shares per contract in the US.   

As you can see, a buyer will never be assigned, only the seller is at risk of assignment. The buyer, however, may be auto exercised if the option expires in-the-money .

The Mechanics of Assignment

Assignment of options isn’t a random process. It’s a methodical procedure that follows specific steps, typically beginning with the option holder’s decision to exercise their option. The decision then gets routed through various intermediaries like brokers and clearing +houses before the seller is notified.

• Exercise by Holder: The holder (buyer) of the option exercises their right to buy (for Call ) or sell (for Put ).
• Random Assignment by a Clearing House: A clearing house assigns the obligation randomly among all sellers of the option.
• Fulfilment by the Writer: The writer (seller) now must fulfill the obligation to sell (for Call) or buy (for Put) the underlying asset.

Option Assignments: Calls and Puts

Call option assignments.

When a call option holder chooses to exercise their right, the seller of the call option gets assigned. In such a situation, the seller is obligated to sell the underlying asset at the strike price to the call option holder.

Put Option Assignments

Similarly, if a put option holder decides to exercise their right, the put option seller gets assigned. The seller is then obligated to buy the underlying asset at the strike price from the put option holder.

The Implications of Assignments for Options Traders

Understanding assignment in options trading is crucial as it comes with potential risks and rewards for both parties involved.

For Option Sellers

Option sellers, or ‘writers,’ face the risk of unexpected assignments. The risk of being assigned early is especially present for options that are in the money or near their expiration date. We explain the difference between American and European assignments below.

For Option Holders

For option holders, deciding when to exercise an option (potentially leading to assignment) is a strategic decision. This decision must consider factors such as the intrinsic value of the option, the time value, and the dividend payment of the underlying asset.

Can Options be assigned before expiration?

In short, Yes, but it depends on the style of options you are trading. 

American Style – Yes, this type of option can be assigned on or before expiry. 

European Style – No, this type of option can only be assigned on the expiry date as defined in the contract specifications.

Options Assignment Example

For example, an investor buys XYZ PLC 400 call when the stock is trading at 385. The stock in the coming weeks rises to 425 after some good news, the buyer then decides to exercise their right early to buy the XYZ PLC stock at 400.  

In this scenario, the call seller (writer) has been assigned and will have to deliver stock at 400 to the buyer (sell their stock at 400 when the prevailing market is 425).   

An option typically would only be assigned if it is in the money, considering factors like dividends which do play an important role in exercise/assignments.

Can an Options Assignment be Prevented?

Assignment can sometimes come as a bit of a surprise but normally you should see it coming. You can only work to prevent assignment by closing the option before expiry or before any possible risk of assignment.

Managing Risks in Options Trading

While options trading can offer high returns, it is not devoid of risks. Therefore, understanding and managing these risks is key.  

Buyers Risk: The premium paid for an option is at risk. If the option is not profitable at expiration, the premium is lost.  

Writers Risk: The writer takes on a much larger risk. If a call option is assigned, they must sell the underlying asset at the strike price, even if its market price is higher.

Options Assignment Summary

The concept of ‘assignment’ in options trading, although complex, is a cornerstone of understanding options trading. It not only clarifies the responsibilities of an options seller but also helps the traders to gauge and manage their risks more effectively. Successful trading involves not just knowing your options but also understanding your obligations.

Options Assignment FAQs

What is options assignment.

Options assignment refers to the process by which the seller (writer) of an options contract is obligated to fulfill their contractual obligation to buy or sell the underlying asset, as specified by the terms of the options contract.

When does options assignment occur?

Options assignment can occur when the buyer of the options contract exercises their right to buy (in the case of a call option) or sell (in the case of a put option) the underlying asset before or at expiration .

How does options assignment work?

When a buyer exercises their options contract, a clearing house randomly assigns a seller who is short (has written) the same options contract to fulfill the obligations of the exercise.

What happens to the seller upon options assignment?

If assigned, the seller (writer) of the options contract is obligated to fulfill their contractual obligation by buying or selling the underlying asset at the specified price (strike price) per the terms of the options contract.

Can options be assigned before expiration?

Yes, options can be assigned at any time (depending on contract type) before expiration if the buyer chooses to exercise their right. However, it is more common for options to be assigned closer to expiration as the time value diminishes.

What factors determine options assignment?

Options assignment is determined by the buyer’s decision to exercise their options contract. They may choose to exercise if the options contract is in-the- money and it is financially advantageous for them to do so.

How can I avoid options assignment? 

As a seller (writer) of options contracts, you can avoid assignment by closing your position before expiration through a closing trade (buying back the options contract) or rolling it over to a future expiration date.

What happens if I am assigned on a short call option?

If assigned on a short call option, you are obligated to sell the underlying asset at the specified price (strike price). This means you would need to deliver the shares . To fulfill this obligation, you may need to buy the shares in the open market if you do not hold them .

What happens if I am assigned on a short put option?

If assigned on a short put option, you are obligated to buy the underlying asset at the specified price (strike price). This means you would need to purchase the shares .  

How does options assignment affect my account?

Options assignment can impact your account by requiring you to fulfill the obligations of the assigned options contract, which may involve buying or selling the underlying asset. It is important to have sufficient funds or margin available to cover these obligations.

OptionsDesk Tips & Considerations

You should always have enough funds in your account to cover any assignment risk. If you have a short call position and it is in-the-money at the time of an ex-dividend be aware of extra assignment risk here as buyer/holder of the option may look to exercise to qualify for the dividend. Assignments can happen at any time!

Check out our other articles

Important information : Derivative products are considerably higher risk and more complex than more conventional investments, come with a high risk of losing money rapidly due to leverage and are not, therefore, suitable for everyone. Our website offers information about trading in derivative products, but not personal advice. If you’re not sure whether trading in derivative products is right for you, you should contact an independent financial adviser. For more information, please read our Important Derivative Product Trading Notes .

Great, you have saved this article to you My Learn Profile page.

Clicking a link will open a new window.

4 things you may not know about 529 plans

Important legal information about the email you will be sending. By using this service, you agree to input your real email address and only send it to people you know. It is a violation of law in some juristictions to falsely identify yourself in an email. All information you provide will be used solely for the purpose of sending the email on your behalf. The subject line of the email you send will be “Fidelity.com”.

Thanks for you sent email.

Exercising your options

Managing an options trade is quite different from that of a stock trade. Essentially, there are 4 things you can do if you own options: hold them, exercise them, roll the contract, or let them expire. If you sell options, you can also be assigned.

If you are an active investor trading options with some percentage of your overall investment funds, here’s how you can evaluate the available choices for an options trade.

Holding your options

During the life of an options contract you’ve purchased, you can simply hold them (i.e., take no action). Suppose you own call options (which grant the right, but not the obligation, to buy a specified amount of an underlying stock at a specified strike price up and until a specified expiration date) and you believe the underlying stock price will rise within the time remaining until expiration. In this scenario, you would hold the option so that they increase in value over time.

The primary objective of this approach is potential appreciation of the option (based on the underlying stock rising and/or an increase in expected volatility for the underlying stock using our example of buying a call), in addition to delaying additional cost of buying the stock or any tax implications after you exercise the options.

To exercise an option means to take action on the right to buy or sell the underlying position in an options contract at the predetermined strike price, at or before expiration. The order to exercise your options depends on the position you have. For example, if you bought to open call options, you would exercise the same call options by contacting your brokerage company and giving your instructions to exercise the call options (to buy the underlying stock at the strike price).

There are a variety of reasons why you might choose to exercise options before they expire (assuming they are in the money, which means they have value). In addition to wanting to capture realized gains on your options, you may want to exercise:

Be aware that closing out an options position triggers a taxable event, so you would want to consider the tax implications and the timing of closing a trade on your specific situation. You should consult your tax advisor if you have additional questions.

In sum, there are many scenarios that might cause you to want to exercise your options before expiration, and they depend primarily on your outlook for the underlying stock and your objectives/risk constraints.

Employee stock plan options

There are additional choices you can make when exercising employee stock plan options . 1  These include:

• Exercise-and-hold (cash-for-stock)
• Exercise-and-sell-to-cover
• Exercise-and-sell

Rolling your options

Before expiration—and, more commonly, near the end of the contract—you can also choose to roll the contract. This involves closing out your existing options position (by selling to close a long position or buying to close a short position) that is about to expire and simultaneously purchasing a substantially similar options position, only with a later expiration date. You might want to roll out your position if you want to have the same options exposure after your contract is set to expire.

In a covered call position, for example, you can also roll up, roll down, or roll out. This involves closing out your existing short options position that is about to expire, and simultaneously selling another options position, typically with a later expiration date. While there are differences among these choices, the objective is the same: to obtain similar exposure to an existing position.

If you sell an option, you have an obligation to sell stock if you are short a call, and an obligation to buy stock if you are short a put. The owner of call or put options has the right to assign the contract to the seller. This is known as assignment.

Assignment occurs when the buyer exercises an options contract on or before expiration, and the seller must fulfill the obligation by either buying or selling the underlying security at the exercise price. As a seller of options, you can be assigned at any time prior to expiration regardless of the underlying share price—meaning you might have to receive or deliver shares of the underlying stock.

Depending on your position, settlement can occur in a variety of ways. If you are assigned on a covered call, for example, the shares you own will be sold automatically.

Let the options expire

Remember, options have an expiration date. They either have intrinsic value (for calls, the stock is above the strike price, and for puts, the stock is below the strike price) or they will expire worthless. If the options have intrinsic value, you should plan to exercise at or before expiration, or anticipate having it automatically exercised at expiration if in the money. If they do not have intrinsic value, you can simply let your options expire. Of course, letting options expire can also have tax consequences.

Research options

Get new options ideas and up-to-the-minute data on options.

More to explore

5 steps to develop an options trading plan, discover more options strategies, subscribe to fidelity viewpoints ®, looking for more ideas and insights, thanks for subscribing.

• Tell us the topics you want to learn more about
• View content you've saved for later
• Subscribe to our newsletters

We're on our way, but not quite there yet

Oh, hello again, thanks for subscribing to looking for more ideas and insights you might like these too:, looking for more ideas and insights you might like these too:, fidelity viewpoints ® timely news and insights from our pros on markets, investing, and personal finance. (debug tcm:2 ... decode crypto clarity on crypto every month. build your knowledge with education for all levels. fidelity smart money ℠ what the news means for your money, plus tips to help you spend, save, and invest. active investor our most advanced investment insights, strategies, and tools. insights from fidelity wealth management ℠ timely news, events, and wealth strategies from top fidelity thought leaders. women talk money real talk and helpful tips about money, investing, and careers. educational webinars and events free financial education from fidelity and other leading industry professionals. fidelity viewpoints ® timely news and insights from our pros on markets, investing, and personal finance. (debug tcm:2 ... decode crypto clarity on crypto every month. build your knowledge with education for all levels. fidelity smart money ℠ what the news means for your money, plus tips to help you spend, save, and invest. active investor our most advanced investment insights, strategies, and tools. insights from fidelity wealth management ℠ timely news, events, and wealth strategies from top fidelity thought leaders. women talk money real talk and helpful tips about money, investing, and careers. educational webinars and events free financial education from fidelity and other leading industry professionals. done add subscriptions no, thanks. options trading entails significant risk and is not appropriate for all investors. certain complex options strategies carry additional risk. before trading options, please read characteristics and risks of standardized options . supporting documentation for any claims, if applicable, will be furnished upon request. there are additional costs associated with option strategies that call for multiple purchases and sales of options, such as spreads, straddles, and collars, as compared with a single option trade. greeks are mathematical calculations used to determine the effect of various factors on options. 1. this is a complex decision with potentially significant tax consequences and requires careful analysis and, ideally, the involvement of a tax and/or financial planning professional. past performance is no guarantee of future results. fidelity brokerage services llc, member nyse, sipc , 900 salem street, smithfield, ri 02917 939787.2.0 mutual funds etfs fixed income bonds cds options active trader pro investor centers stocks online trading annuities life insurance & long term care small business retirement plans 529 plans iras retirement products retirement planning charitable giving fidsafe , (opens in a new window) finra's brokercheck , (opens in a new window) health savings account stay connected.

• News Releases
• About Fidelity
• International
• Terms of Use
• Accessibility
• Contact Us , (Opens in a new window)
• Disclosures , (Opens in a new window)

Steps in the assignment process for early exercise

• Decision to exercise Option holders may choose to exercise early when market conditions align, potentially fearing a reversal in stock prices that could erode profits, or wanting to capitalize on an upcoming dividend
• Initial notification The Options Clearing Corporation is informed upon early exercise, randomly assigning a brokerage client who is short a matching option.
• Assignment notification The short option holder is notified by their brokerage about being assigned and is now responsible for meeting the option contract's terms.
• Fulfilling the obligation Option writers must deliver the underlying asset for call options or pay for the underlying asset for put options. This is typically an automated process carried out by brokerages.

Assignment at expiration

Risk of assignment, avoiding assignment, basic example, options resource center.

• Search Search Please fill out this field.
• Options and Derivatives
• Strategy & Education

What Is Early Exercise? Benefits to Selling a Call Option Early

James Chen, CMT is an expert trader, investment adviser, and global market strategist.

What Is Early Exercise?

Early exercise of an options contract is the process of buying or selling shares of stock under the terms of that option contract before its expiration date . For call options, the options holder can demand that the options seller sell shares of the underlying stock at the strike price. For put options it is the converse: the options holder may demand that the options seller buy shares of the underlying stock at the strike price.

Key Takeaways

• Early exercise is the process of buying or selling shares under the terms of an options contract before the expiration date of that option.
• Early exercise is only possible with American-style options.
• Early exercise makes sense when an option is close to its strike price and close to expiration.
• Employees of startups and companies can also choose to exercise their options early to avoid the alternative minimum tax (AMT).

Understanding Early Exercise

Early exercise is only possible with American-style option contracts, which the holder may exercise at any time up to expiration. With  European-style option  contracts, the holder may only exercise on the expiration date, making early exercise impossible.

Most traders do not use early exercise for options they hold. Traders will take profits by selling their options and closing the trade. Their goal is to realize a profit from the difference between the selling price and their original option purchase price. 

For a long call or put , the owner closes a trade by selling, rather than exercising the option. This trade often results in more profit due to the amount of  time value remaining in the long option lifespan. The more time there is before expiration, the greater the time value that remains in the option. Exercising that option results in an automatic loss of that time value.

Benefits of Early Exercise

There are certain circumstances under which early exercise may be advantageous for a trader:

• For example, a trader may choose to exercise a call option that is deeply in-the-money (ITM) and is relatively near expiration. Because the option is ITM, it will typically have negligible time value.
• Another reason for early exercise may be a pending ex-dividend date of the underlying stock. Since options holders are not entitled to either regular or special dividends paid by the underlying company, this will enable the investor to capture that dividend . It should more than offset the marginal time value lost due to an early exercise.

Early Exercise and Employee Options

There is another type of early exercise that pertains to company awarded stock options (ESO) given to employees. If the particular plan allows, employees may exercise their awarded stock options before they become  fully vested  employees. A person may choose this option to obtain a more favorable tax treatment.

However, the employee will have to foot the cost to buy the shares before taking full vested ownership. Also, any purchased shares must still follow the vesting schedule of the company's plan.

The money outlay of early exercise within a company plan is the same as waiting until after vesting, ignoring the time value of money . However, since the payment is shifted to the present, it may be possible to avoid short-term taxation and the alternative minimum tax (AMT) . Of course, it does introduce the risk that the company may not be around when the shares are fully vested.

Early Exercise Example

Suppose an employee is awarded 10,000 options to buy company ABC's stock at $10 per share. They vest after two years.

The employee exercises 5,000 of those options to purchase ABC's stock, which is valued at $15, after a year. Exercising those options will cost $7,000 based on a federal AMT rate of 28%. However, the employee can reduce the federal tax percentage by holding onto the exercised options for another year to meet requirements for long-term capital gains tax .

Financial Industry Regulatory Authority. " Options: Types ."

Financial Industry Regulatory Authority. " Trading Options: Understanding Assignment ."

Financial Industry Regulatory Authority. " Options: Risk ."

Titan. " How to Exercise Employee Stock Options ."

Internal Revenue Service. " Form 6251, Alternative Minimum Tax - Individuals ." Page 1.

Internal Revenue Service. " Topic No. 409, Capital Gains and Losses ."

• Terms of Service
• Editorial Policy
• Privacy Policy
• Your Privacy Choices

We couldn’t find any results matching your search.

Please try using other words for your search or explore other sections of the website for relevant information.

We’re sorry, we are currently experiencing some issues, please try again later.

Our team is working diligently to resolve the issue. Thank you for your patience and understanding.

News & Insights

Options Basics: How the Option Assignment Process Works

July 23, 2021 — 12:46 pm EDT

Written by [email protected] for Schaeffer  ->

There is a lot of technical jargon that is specific to the options market. For a beginner who is aiming to learn how to trade options, understanding these technical terms is crucial to optimizing trading results. One phrase that is a critical part of this options trading language is “assignment.” Simply defined, the assignment of an option refers to the fulfillment of the options contract by the seller. An option holder has the right to buy or sell the underlying equity at the given strike price. Once the holder decides to exercise the option, the option is said to be “assigned.” If a trader sells options, he must be aware of the assignment process and the risks it entails. We recommend subscribing to one of Schaeffer's options trading newsletters  to gain the ultimate insights into the language of the options market while making money, too.

What Does it Mean to Write an Option?

When an options seller writes an options contract, this is known as a “sell to open” trade, as he is essentially opening a new position. As the trader is selling the option to open this position, he is technically said to be “short” that underlying stock. The seller accepts a responsibility to sell or buy the underlying security in lieu of a premium received from the buyer. As a general rule, an option holder can exercise his rights any time before the contract expires. In order to learn to trade options, it is necessary to grasp this structure of corresponding rights and duties. It's important to also note that most options are exercised when they are nearing expiry because, after that, the options contract is worthless.

How Does the Option Assignment Process Work?

The assignment process is done at random by the Options Clearing Corporation (OCC) . A trader will become more acquainted with the operations of the OCC as he or she learns to trade options. When a buyer exercises his option, the OCC will randomly connect them with a brokerage that is short on options of that equity. Due to the lottery-like nature of the process, it is almost impossible to predict when an investor’s option may be assigned.

2 Categories of Options to Understand

As a brief summary, let’s go over the two basic categories of options. These categories and their respective merits become apparent as one learns to trade options. In a call option, the option holder possesses the right to buy the security before the contract expires. In this scenario, the seller’s obligation is to sell the option upon assignment.

The inverse of this is the put option. In this category, the holder has the right to sell to the security at the contract price. The consequence of this is that upon assignment, the seller must purchase the security at the strike price. If an investor does not own the stock, he must first buy it. After this, he must deliver it to the holder.

Initially, a seller has an edge in the options trading process. He starts with a net benefit as a premium is paid to him by the buyer without him giving any monetary return immediately. If an option is never exercised, the seller actually retains the premium if the contract expires.

However, the issues arise as the contract nears its expiry, as the chances of assignment increase exponentially. The problem for investors when called to assign are three-fold: 1) they have no control over when the option is exercised, 2) they must fulfill their end of the bargain irrespective of whether this could lead to a loss or a low gain, and 3) even if the underlying stock is not trading, in a call option the deliver the stock to the buyer.

Can an Options Seller Predict When an Option Will Be Exercised?

It would be misleading if we were say there is some magic formula that we could use to predict when an option will be exercised. Traders will understand how frequent assignment occurs once they more completely learn to trade options. However, a general statistic is that approximately 7% of options are actually ever exercised. Even though, technically, an option can be assigned any time while the contract remains open, option holders usually exercise their option near its expiration date. This is because traders usually wait to find the ideal time and observe trading prices. As you learn to trade options, you will realize that very few buyers ever exercise options ahead of expiration.

When is Options Assignment Less Likely?

Even though we cannot accurately predict when an option will be exercised, there are certain indicators traders can use. These indicators are easier to see when you learn to trade options and observe market trends.

An assignment is less probable when an option is out-of-the-money. An option is out-of-the-money when the security is trading at a higher value in the market as compared to the strike price. It is rarely recommended to sell an option that is out-of-the-money. This is because if the strike price is lower than the market value, the option holder will make a loss on the contract. If the strike price is $30, and the market value is $20 and the holder exercises the call option, they will end up taking a loss since they are buying it at a higher price. As investors learn to trade options, they can better predict the time of assignment with greater accuracy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.

To add symbols:

• Type a symbol or company name. When the symbol you want to add appears, add it to My Quotes by selecting it and pressing Enter/Return.
• Copy and paste multiple symbols separated by spaces.

These symbols will be available throughout the site during your session.

Your symbols have been updated

Edit watchlist.

• Type a symbol or company name. When the symbol you want to add appears, add it to Watchlist by selecting it and pressing Enter/Return.

Opt in to Smart Portfolio

Smart Portfolio is supported by our partner TipRanks. By connecting my portfolio to TipRanks Smart Portfolio I agree to their Terms of Use .

Cookie banner

We use cookies and other tracking technologies to improve your browsing experience on our site, show personalized content and targeted ads, analyze site traffic, and understand where our audiences come from. To learn more or opt-out, read our Cookie Policy . Please also read our Privacy Notice and Terms of Use , which became effective December 20, 2019.

By choosing I Accept , you consent to our use of cookies and other tracking technologies.

Follow The Ringer online:

• Follow The Ringer on Twitter
• Follow The Ringer on Instagram
• Follow The Ringer on Youtube

Site search

• March Madness
• What to Watch
• Bill Simmons Podcast
• 24 Question Party People
• 60 Songs That Explain the ’90s
• Against All Odds
• Bachelor Party
• The Bakari Sellers Podcast
• Beyond the Arc
• The Big Picture
• Black Girl Songbook
• Book of Basketball 2.0
• Boom/Bust: HQ Trivia
• Counter Pressed
• The Dave Chang Show
• East Coast Bias
• Every Single Album: Taylor Swift
• Extra Point Taken
• Fairway Rollin’
• Fantasy Football Show
• The Fozcast
• The Full Go
• Gambling Show
• Gene and Roger
• Higher Learning
• The Hottest Take
• Jam Session
• Just Like Us
• Larry Wilmore: Black on the Air
• Last Song Standing
• The Local Angle
• Masked Man Show
• The Mismatch
• Mint Edition
• Morally Corrupt Bravo Show
• New York, New York
• Off the Pike
• One Shining Podcast
• Philly Special
• Plain English
• The Pod Has Spoken
• The Press Box
• The Prestige TV Podcast
• Recipe Club
• The Rewatchables
• Ringer Dish
• The Ringer-Verse
• The Ripple Effect
• The Rugby Pod
• The Ryen Russillo Podcast
• Sports Cards Nonsense
• Slow News Day
• Speidi’s 16th Minute
• Somebody’s Gotta Win
• Sports Card Nonsense
• This Blew Up
• Trial by Content
• Wednesday Worldwide
• What If? The Len Bias Story
• Wrighty’s House
• Wrestling Show
• Latest Episodes
• All Podcasts

Filed under:

Early Winners and Losers of 2024

Matt and Lucas talk about Hollywood’s slow start to the year and give out some winners and losers

Share this story

• Share this on Facebook
• Share this on Twitter
• Share All sharing options

Share All sharing options for: Early Winners and Losers of 2024

Matt is joined by Bloomberg ’s Lucas Shaw to recap Hollywood’s slow start to the year and reveal their under-the-radar winners and losers of 2024 so far. Matt finishes the show by revealing the championship matchup in the Hollywood Power Bracket and predicting who will take home the trophy.

For a 20 percent discount on Matt’s Hollywood insider newsletter, What I’m Hearing ... , click here .

Email us your thoughts!

Host: Matt Belloni Guest: Lucas Shaw Producers: Craig Horlbeck and Jessie Lopez Theme Song: Devon Renaldo

Subscribe: Spotify

Next Up In The Town

• Why Documentaries Are Better and Worse Than Ever With Sheila Nevins
• A WWE Business Smackdown With Nick Khan
• The Disney Proxy War: Does Peltz Have a Shot Against Iger?
• Inside TMZ’s Cozy Relationship With Hollywood
• The Battle for Attention: Streaming Vs. Social
• How AI Is Already Transforming Moviemaking

Sign up for the The Ringer Newsletter

Thanks for signing up.

Check your inbox for a welcome email.

Oops. Something went wrong. Please enter a valid email and try again.

The State of College Hoops Post-Tourney. Plus, Surprising NBA Teams as the Season Winds Down.

There is talk of Caitlin Clark’s dominant season, men’s UConn coach Dan Hurley, Wemby’s new Nike logo, and more!

WrestleMania Weekend Recap: Big Takeaways, Why We Love Wrestling, and Why Cody Rhodes Is a Grrreat Guy. Plus, Rhea Ripley Has Beef With Troy.

And later, some mailbag!

‘Shogun’ Episode 8 Recap

Jo and Rob discuss the grand introduction of Edo, the emotionally crushing tea room exchange between Mariko and Buntaro, and Blackthorne’s unexpected revulsion toward his men

Booking Our Dream Postseason Matchups, UConn’s Dominance, and Zach Edey’s NBA Potential

Verno and KOC discuss last night’s NCAA national championship game, KOC’s updated draft stock for Donovan Clingan and Zach Edey, and more

‘Bachelor Party’ Begins Its Mediterranean Sojourn

Juliet and Callie begin their Season 2 watch of ‘Love Island’ (U.K.)

UConn Repeats, Zach Edey’s NBA Future, Quitting the Bucks, the Kentucky Job, and Rookie QB Situations

And later, Ceruti joins the show for another Alliance pick and Life Advice!

• U.S. Department of Health & Human Services
• Administration for Children & Families
• Upcoming Events

School Readiness

• Open an Email-sharing interface
• Open to Share on Facebook
• Open to Share on Twitter
• Open to Share on Pinterest
• Open to Share on LinkedIn

Prefill your email content below, and then select your email client to send the message.

Recipient e-mail address:

Send your message using:

Mirroring the Early Parent-Child Bond for Infants and Toddlers

Learn about the importance of supporting early bonding and attachment child-parent relationships and child-caregiver relationships. Explore strategies useful for Head Start center-based, home-based, and family child care program options.

Introduction

An infant coos and smiles as an adult speaks softly to him. A toddler makes eye contact and reaches for the adult, who gently nuzzles the toddler’s ear and whispers to her. An adult rubs a crying infant’s back to help soothe him, lulling him to sleep. These images illustrate the intimate and often intricate bonding and attachment experiences that happen between very young children and their adult caregivers in the earliest stages of development. Most people working in the early childhood community agree on one thing: early bonding and attachment between infants and caregivers is one of the most important elements of early childhood development. What the field has not always agreed upon is how to provide this secure base for infants and toddlers as they grow and develop. Early Head Start (EHS) promotes the bonding between infants and their parents, but it also values building deep and meaningful relationships between staff and parents and caregivers and babies. These relationships between EHS staff and families mirror, and maybe model, the parent-infant relationship.

Studies of child care outside of EHS sometimes pose questions that assume children are either with their parents or in child care. In a longitudinal study conducted in London, England by Penelope Leach and colleagues (2006), researchers found that young children ages birth to 3 who were cared for by their mothers fared better on developmental tests than those placed in group care, child care centers, or with relatives. The study showed that children placed in the care of someone other than their mothers were more aggressive, or more withdrawn, compliant, and sad. It is important to note that this study was conducted on a population of families and children living in very different socio-economic, cultural, and societal contexts than the families served in Head Start programs. While studies such as this one can be distressing, they fail to address potential benefits from programs such as EHS which can provide child care and be dedicated to supporting early relationships and social and emotional development.

There is a belief among many caregivers and parents of very young children that “mommy and daddy” care is best. However, this belief can cause added stress for parents who make the decision to place their young children in child care. Researchers often frame the question of child care as an either/or decision when, in fact, the issue for many parents in the United States is finding the child care situation that best nurtures their infant’s or toddler’s development, while simultaneously supporting the parent-child bond. The reality in the United States is that half of the children born in 2001 were in some form of regular nonparental child care by 9 months of age. Kreader, Ferguson and Lawrence (2005) found that 26 percent of these children were in relative care, 15 percent in nonrelative care, and 9 percent in center-based care.

EHS and National Institute of Child Health and Human Development (NICHD) research reveals that there can be other caregivers who are also important in the lives of infants and toddlers. The results of the EHS Research and Evaluation Project (2006) show that children enrolled in the EHS program have better outcomes than children in similar situations, not enrolled in EHS . The research shows that by 3 years of age, EHS children performed better on cognitive, language, and social-emotional functioning than non-EHS children. EHS children also received more parental support for learning and experienced mothers with better mental health. The research shows that EHS programs that follow the Head Start Program Performance Standards (1996) provide the important, early attachment experiences necessary to support a child’s healthy growth and development. The NICHD longitudinal Study of Early Child Care (1989) shows that children at 36 months had better school readiness and language comprehension scores, as well as fewer behavioral problems when recommended child/staff ratios and levels of caregiver training and education were followed (1999). The EHS and NICHD studies both reinforce the notion that well-trained caregivers working in quality early childhood programs actually provide additional support to parents of young children. When secure early bonding and attachment experiences can happen for infants and toddlers with more than one caregiver, very young children feel supported and cared for in all of the places they go. They also begin forming meaningful relationships with others as part of the natural process of development. For many years, EHS and Migrant and Seasonal Head Start programs serving infants and toddlers have provided an answer for parents struggling with this child care dilemma.

An Answer for the Early Child Care Dilemma

Head Start program options meet parents where they are.  HS and EHS program options are designed to meet the needs of the families in the particular communities served by programs. Regardless of the option, Head Start parents can be assured of a commitment to supporting parents and children in developing early attachment and bonding. Parents who use the Home-Based option have the unique opportunity of partnering with a home-visitor in the child’s natural environment. Staff support families in building bonds with their children, helping them take advantage of rich relationship-building experiences through the major routines of the day, and offering opportunities to enhance these experiences through developmentally appropriate learning tools, materials, and toys. Socialization experiences give Home-Based parents occasions for interacting with their young children in groups, and forming informal networks with other parents of young children.

For working parents, Head Start Center-Based or Family Child Care options also support early relationship-building with both parents and caregivers while introducing the little ones to individual and group learning experiences. Center-based Head Start programs promote bonding and attachment between caregivers and very young children in many ways. Strong family partnerships, small teacher/child ratios, individualized care, and a safe and appropriate physical environment are all hallmarks of EHS programs and provide the atmosphere for healthy early care giving relationships to happen. Each independent element is crucial to overall infant/toddler development. Taken together, these aspects of the Head Start experience provide comprehensive support for infants and toddlers to thrive. Most importantly, these elements encourage and support early relationships between parents and their very young children.

Strategies That Work

• Strong family partnerships support the bond between parents, infants, and toddlers. Strong partnerships between Head Start staff and parents are important to promoting the bond between parents and their young children in two ways. A solid partnership between Head Start staff and parents allows for trust and sharing to occur related to the infant’s or toddler’s strengths and challenges at home and in the daycare setting. This ongoing exchange of information promotes individualized care and consistency in care giving routines in both settings, and this further supports the infant or toddler. Infants and toddlers who know what to expect in both settings are more likely to feel more connected to the Head Start staff person and the parent. In addition, parents who have a trusting relationship with the staff person will be more likely to share home experiences and cultural practices, as well as link to other community partners (e.g., work, school opportunities for parents, services for very young children) who can help the family meet their goals and support the young child when and where needed. When parents are able to work towards meeting family goals their self-esteem is increased and they are strengthened as the primary nurturers of their families.
• A mother demonstrates to a teacher how her baby likes to be held while drinking from a bottle
• A home visitor provides information and support for breast feeding
• A caregiver asks a father to observe the EHS protocol for diapering and asks if they should discuss how to make it more similar to what happens at home
• Individualized care allows caregivers and very young children to be in-tune with one another.  Small teacher/child ratios allow teachers and very young children to be in-tune with one another and, in turn, for individualized care to happen. By interacting daily with the same four infants and toddlers, teachers, learn to accurately read cues and are able to predict the baby’s interests and timing of routine needs. Infants and toddlers begin to anticipate responses to their needs, and learn what to expect from caregivers and the daily Head Start experience. At any given moment, some very young infants might be sleeping, while mobile infants eat, and toddlers play individually or in groups. By knowing and understanding each of the children and families, teachers are better able to provide meaningful and appropriate experiences for each of the children throughout the day. The partnership process with parents helps everyone know what to expect, and in turn enables parents, teachers, and very young children to develop feelings of safety and security in the process. Parents are confident that their young children are being cared for as they would be if they were home, teachers feel competent and knowledgeable about the young children entrusted to their care, and infants and toddlers know that their needs will be met whether at home or in the group care setting.
• Physical environment promotes infant and toddler exploration.  Mobile infants and toddlers who feel secure in their primary relationships and in their environment are more likely to explore their surroundings and learn about their world. The physical environment of the infant/toddler group care setting is conducive to learning and reflects the different developmental stages of each child. Group care settings are organized into recognizable areas by infants and toddlers, allowing for individual activities and social interaction when and where appropriate. Very young infants have quiet places to play and be held. Mobile infants and toddlers have floor coverings and cushions to sit on, and an open area on the floor for movement. Additionally, the block, creative writing, art and housekeeping areas are designed to accommodate young children who choose to play alone or in groups.

Parents and families are faced with many dilemmas when it comes to the care of their very young children. Difficult choices often must be made. However, Head Start programs continue to create conditions through which healthy early bonding and attachment experiences between infants, toddlers, and caregivers can occur. In this sense, EHS programs do mirror the parent-child bond for infants and toddlers, and for many working parents and those in school, this is the “next best thing to being there.”

« Go to News You Can Use

Resource Type: Article

National Centers: Early Childhood Development, Teaching and Learning

Age Group: Infants and Toddlers

Series: News You Can Use

Last Updated: April 4, 2024

• Privacy Policy
• Freedom of Information Act
• Accessibility
• Disclaimers
• Vulnerability Disclosure Policy
• Viewers & Players

Cookie banner

We use cookies and other tracking technologies to improve your browsing experience on our site, show personalized content and targeted ads, analyze site traffic, and understand where our audiences come from. To learn more or opt-out, read our Cookie Policy . Please also read our Privacy Notice and Terms of Use , which became effective December 20, 2019.

By choosing I Accept , you consent to our use of cookies and other tracking technologies.

Follow Blogging The Boys online:

• Follow Blogging The Boys on Twitter
• Follow Blogging The Boys on Facebook
• Follow Blogging The Boys on Instagram

Site search

• DraftKings Sportsbook
• DraftKings Daily Fantasy Sports
• Dallas Cowboys News
• Full Archive
• 2023 Draft Picks
• 2023 Cowboys Schedule
• 2023 Preseason Schedule
• 2023 Training Camp Schedule
• Cowboys Blogroll
• Community Guidelines
• Fantasy Football
• Cowboys NFL picks center

Filed under:

• Dallas Cowboys Draft

Cowboys draft: 2 running back options in the 2nd-round for Dallas in the 2024 NFL Draft

If the Cowboys go after a running back early, here are the two players who are prime candidates.

Share this story

• Share this on Facebook
• Share this on Twitter
• Share this on Reddit
• Share All sharing options

Share All sharing options for: Cowboys draft: 2 running back options in the 2nd-round for Dallas in the 2024 NFL Draft

The Dallas Cowboys need a new running back. The running back position group is a little thin after letting Tony Pollard walk in free agency and not signing any outside free agent to replace him. Don’t fret though, they did re-sign Rico Dowdle to a cheap one-year deal last month. Dowdle, combined with 2022 undrafted free agent Malik Davis and last year’s sixth-round selection, Deuce Vaughn, make up the team’s running back depth chart. However, many expect the Cowboys will select a new rookie in April’s draft. What’s not clear is when the Cowboys make that selection. Will they go early or wait things out?

If you looked at the Cowboys’ list of 30 visits , you’ll find eight running backs on the list. They appear to be open to taking one as early as the second round but are also preparing a contingency play for taking one later.

Complicating matters is their “dead zone” of not having a pick between 87 and 177 due to trading them away last year, so unless they plan on moving around, they’ll have to adjust their plan accordingly. It’ll either be early or late for the Cowboys. We’ll look at all eight visitors, kicking things off with the top dogs. Here are the two running backs the Cowboys could go after early in the draft.

SECOND ROUND, pick 56

Jonathon Brooks, TEXAS (draft projection = 54)

Brooks played third fiddle to Bijan Robinson and Roschon Johnson in 2022, but after both of those guys graduated to the NFL, Brooks took over as the Longhorn’s top running back. With a heavier workload, Brooks compiled over 1,100 yards to a tune of 6.1 yards per carry before missing the end of the year with a torn ACL. Here are my film study notes on Brooks:

• Speed/quickness - good overall athleticism, gets started quickly and has good cutting ability and goes, can make defenders miss on his own, good acceleration - good speed - good footwork - no wasted movements, change of direction isn’t fluid, not overly shifty, more of a straight line runner
• Vision - diagnoses well at the line of scrimmage
• Toughness - physical, welcomes contact but not a punisher, could take a beating at the next level, excellent pass catcher with great hands
• Receiving game - solid pass protector, physical chipper, can pick up blitzes
• Best fit - a three-down back that is effective in outside zone or gap schemes

My favorite thing about Jonathon Brooks is how quickly he reads his blocks and fires through the holes. There's no wasted movement with this guy. pic.twitter.com/HqFWPbNjRw — Dan Rogers (@DannyPhantom24) April 7, 2024

Trey Benson, FLORIDA STATE (draft projection = 63)

A two-year starter at Florida State, Benson has put up over 900 yards in each of the last two seasons. He’s averaged 6.1 yards per carry in that span. He’s a dynamic runner that can beat you in a lot of different ways. Here are my film study notes on Benson:

• Speed/quickness - excellent cutting ability, makes defenders miss, can create on his own, accelerates well, home run speed 4.39
• Vision - smart player, reads his blockers well, makes good inside/out cutting decisions, shows great patience, allows holes to develop
• Toughness - decent physicality, will run through arm tackles, plays a little upright, not a powerful short-yardage back
• Receiving game - nothing special as a receiver, pass protection needs work
• Best fit - very versatile, good in both zone and gap schemes

My favorite thing about Trey Benson is his great open-field speed, but he has a lot of wiggle to create things on his own to get himself in the open field. pic.twitter.com/TqqgMvCmXB — Dan Rogers (@DannyPhantom24) April 7, 2024

If the Cowboys drafted a running back in the second round, which one of these guys would you prefer?

Jonathon brooks, texas, trey benson, florida state, more from blogging the boys.

• Cowboys draft: 2 running back options in the 3rd-round for Dallas in the 2024 NFL Draft
• Trey Lance could command a lot of second-team quarterback snaps at training camp
• Don’t forget about TE John Stephens Jr. for Cowboys 2024 roster
• Draft rumor: Bruce Feldman claims Cowboys "really like" NC State LB Payton Wilson
• Cowboys news: Dallas needs to learn from past draft mistakes to capitalize in 2024
• How drafting TE Luke Schoonmaker last year is hurting the Cowboys now

Loading comments...

Sign up for the newsletter sign up for the blogging the boys daily roundup newsletter, thanks for signing up.

Check your inbox for a welcome email.

Oops. Something went wrong. Please enter a valid email and try again.

• CBSSports.com
• Fanatics Sportsbook
• CBS Sports Home
• Masters Live
• Champions League
• Motor Sports
• High School
• Horse Racing 

Men's Brackets

Women's Brackets

Fantasy Baseball

Fantasy football, football pick'em, college pick'em, fantasy basketball, fantasy hockey, franchise games, 24/7 sports news network.

• CBS Sports Golazo Network
• PGA Tour on CBS
• UEFA Champions League
• UEFA Europa League
• Italian Serie A
• Watch CBS Sports Network
• TV Shows & Listings

The Early Edge

A Daily SportsLine Betting Podcast

With the First Pick

NFL Draft is coming up!

• Podcasts Home
• Eye On College Basketball
• The First Cut Golf
• NFL Pick Six
• Cover 3 College Football
• Fantasy Football Today
• My Teams Organize / See All Teams Help Account Settings Log Out

Top three 2024 NFL free agents at every offensive position: Tyler Boyd, J.K. Dobbins among best options left

These are the best players still on the market.

NFL free agency has passed its second wave as the top players have already signed , and the next crop of free agents have found a home for 2024. There are still some good players available, but the market has significantly dried up over the past few weeks. 

Teams are focusing on the draft before free agency ramps up in its third wave, when compensatory picks no longer factor into the equation. Players who should be rostered are still available for the taking, if any team can't wait until after the draft. 

These are the top three free agents available at every position. 

Quarterback

The best of the free agent quarterbacks remaining, Tannehill is likely awaiting an opportunity compete for a starting job given his resume. Tannehill has 151 career starts in his 12-year career (81-70 record), throwing for 34,881 yards and 216 touchdowns with a 91.2 rating. 

The 35-year-old Tannehill likely will have to wait until after the draft to sign with a team, as his veteran presence as a starter and a backup makes a quarterback room better. Tannehill can still compete for a starting job, even after his benching in Tennessee last season. 

Hoyer actually made a start with the  Las Vegas Raiders  last season, as the 38-year-old quarterback has 41 starts to his resume. A prototypical backup quarterback at this stage of his career, it remains to be seen if Hoyer wants to continue playing after 15 seasons. 

Las Vegas released Hoyer last month. If Hoyer wants to continue playing, he'll likely end up as quarterback depth somewhere. 

Gabbert's days in Kansas City appear over after Carson Wentz signed in Kansas City, so the former first-round pick is likely looking for a new team. The 34-year old Gabbert has started 49 games in his career, but only one over the last four seasons (Week 18 game last season in which he completed 50% of his passes and threw three interceptions). 

A veteran of 13 seasons, Gabbert is one of the most experienced backup quarterbacks remaining. 

Running back

Injuries have certainly limited Dobbins, or else he would have been signed by now.  Prior to tearing his Achilles in Week 1, Dobbins averaged 5.7 yards per carry the previous season (92 carries, 520 yards, two touchdowns), this after a brutal knee injury that cost him the 2021 season. 

Dobbins was dominant in his rookie season (2020), leading all  NFL  running backs in yards per carry (6.0) while setting a Ravens ' rookie record with nine rushing touchdowns (third amongst all NFL rookies). His 805 rushing yards were also third among rookie running backs as Dobbins finished with a Ravens' franchise-record seven consecutive games with a rushing touchdown. 

If healthy, Dobbins is tremendous value for the team that signs him. 

His best days may be behind him, yet Elliott is still a threat in the end zone. Elliott rushed for 642 yards and three touchdowns last season, averaging a career-low 3.5 yards per carry. A No. 2 running back at this stage, Elliott is an excellent fit in red zone packages -- even if he's turning 29 in July. 

Hunt was a red zone force as a No. 2 running back in Cleveland last season, scoring nine touchdowns in 15 games. He rushed for 411 yards and averaged just 3.0 yards per carry, but still adds value to a running back room in short-yardage situations. 

Wide receiver 

A two-time 1,000-yard receiver in Cincinnati, Boyd was a valuable third option next to Ja'Marr Chase and Tee Higgins . He finished with 67 catches for 667 yards and two touchdowns (10.0 yards per catch), but the 29-year-old wideout would be more productive with more targets. 

Boyd has 6,000 career receiving yards and 31 touchdowns. He'll find a slot on a receiver-needy team. 

One of the top options on a bad Carolina team last season, Chark had 35 catches for 525 yards and five touchdowns (15.0 yards per catch). The former Pro Bowl and 1,000-yard receiver can still stretch a defense and open things up for other wideouts. 

Beckham wasn't worth the salary he received in Baltimore last season. He still was productive in an offense that spread the ball around, having 35 catches for 565 yards and three touchdowns (16.1 yards per catch). 

Still productive as a deep-ball receiver, Beckham should have suitors amongst the contending teams. 

A poor Washington offensive limited Thomas to 55 catches for 496 yards and four touchdowns (9.0 yards per catch). Thomas isn't a good separator, but the 32-year-old Thomas is a reliable pass catcher as a No. 2 tight end.

Tonyan had 11 touchdown catches in 2020, but has just four touchdowns since (including zero last year). He played in every game for Chicago, but had 11 catches for 112 yards last season. In Tonyan's last season with Green Bay (2022), he had 53 catches for 470 yards and two touchdowns. 

Tonyan isn't a good blocker, but is a good pass-catching tight end in the right offense. 

Slim pickings for the rest of the free agent tight end pool, as the former playoff standout for Cincinnati had just eight catches for 58 yards for New York last season. At this stage of his career, Uzomah is good tight end depth. 

One of the best tackles in the game when healthy, Bakhtiari has missed 38 games over the last three seasons. A First Team All-Pro in 2020, Bakhtiari made five straight All-Pro teams prior to injuries catching up to him. He allowed just one sack and 10 pressures in 11 games in 2022.

The former first-round pick badly needs a change of scenery, allowing 12 sacks and 47 pressures in 613 pass-blocking snaps last season. Becton isn't even 25 yet (his birthday is this month), and last season was his first one back after missing 33 straight games due to right knee issues. If Becton has the knee issues beside him, he's worth taking a flyer with the right coach to develop him. 

A veteran starter in the league, Smith allowed two sacks and 36 pressures in 476 pass-blocking snaps last season (7.6% pressure rate). Smith has started all 136 games he's played in the league, all at left tackle. 

Peat can play left tackle, but his best position is guard. He allowed three sacks and 11 pressures with a 4.2% pressure rate in 310 pass-blocking snaps in his last season as guard (2022). Peat started 12 games and allowed two sacks and 30 pressures (6.5% pressure rate) at left tackle in 2023. Peat's versatility is valuable. 

Risner didn't allow a sack in 459 pass-blocking snaps last season, but allowed a 6.3% pressure rate and started 11 games for Minnesota. Perhaps a better situation would salvage Risner's career as a starter, as he's started 73 games in the league.

Perhaps not having Zack Wilson under center will help the 32-year-old Tomlinson, who allowed seven sacks and 47 pressures in 695 pass-blocking snaps at left guard last season (6.8% pressure rate). Tomlinson allowed just one sack the previous season, so 2023 may be the outlier instead of the norm. 

Another interior lineman who can play guard and center, Williams is arguably the best center left in free agency. The 26-year-old Williams allowed just one sack and six pressures in nine games last season with a 2.9% pressure rate. 

A center for Chicago last season, Patrick allowed zero sacks and 23 pressures in 539 pass-blocking snaps last season (4.3% pressure rate). Patrick has also played left guard, having versatility on the interior of the offensive line. Patrick is still primarily a center and a better player there, evidenced by his 3.3% pressure rate allowed in Green Bay in 2021. 

The former starting center for Los Angeles hasn't been right since knee and thumb injuries limited him to five games in 2022. Coleman Shelton beat out Allen for the starting center job in 2023, and Allen was relegated to backup duties. 

Allen started in 32 of 50 regular-season games with Los Angeles, but allowed nine sacks in his last 23 games started. There are still starting jobs available for Allen. 

Our Latest NFL Stories

Top three NFL free agents at every defensive position

Jeff kerr • 4 min read.

Henry says Ravens were 'always my No. 1 option'

Garrett podell • 1 min read.

Why Diggs should return to superstar form with Texans

Douglas clawson • 3 min read.

NFL position-specific helmet options increase in 2024

Shanna mccarriston • 2 min read.

Pats' Gonzalez changes number never worn before by team

Tyler sullivan • 1 min read.

With the First Pick: NFC East goes offense in mock

Chris trapasso • 4 min read, share video.

Top three offensive FAs remaining at each position

Mock: Penix in Round 1; NFC East goes offense

Top defensive FAs remaining by position

Five AFC teams that must ace NFL Draft

Five NFC teams that must ace NFL Draft

Lamb talks Cowboys future amid holdout speculation

Jets owner addresses Aaron Rodgers' VP interest

How sportsbooks see the 2024 NFL Draft playing out

Two-time Patriots Super Bowl champion retiring

Follow Polygon online:

• Follow Polygon on Facebook
• Follow Polygon on Youtube
• Follow Polygon on Instagram

Site search

• What to Watch
• What to Play
• PlayStation
• All Entertainment
• Dragon’s Dogma 2
• FF7 Rebirth
• Zelda: Tears of the Kingdom
• Baldur’s Gate 3
• Buyer’s Guides
• Galaxy Brains
• All Podcasts

Filed under:

Star Wars Outlaws pre-order guide

Make the jump to lightspeed in Ubisoft’s big adventure on Aug. 30

If you buy something from a Polygon link, Vox Media may earn a commission. See our ethics statement .

Share this story

• Share this on Facebook
• Share this on Reddit
• Share All sharing options

Share All sharing options for: Star Wars Outlaws pre-order guide

Star Wars Outlaws , the open-world adventure from Ubisoft and Massive Entertainment, launches Aug. 30 for PlayStation, Xbox, and PC. Players will take on the role of smuggler Kay Vess as they attempt to seek their fortune across a variety of new and classic locations in the Star Wars universe.

While Respawn Entertainment’s open-world Star Wars Jedi: Survivor puts forth an unforgiving melee combat system akin to Dark Souls , Outlaws seems to channel gameplay elements from the Uncharted franchise. This includes sneaking around, quickly resorting to shooting first if things go sideways, and of course, an ample supply of left hooks.

There are a three versions of Star Wars Outlaws that are available for pre-order. In this post, we’ll dig into:

• Every pre-order option available, how much they cost, and where you can buy them
• What bonuses each edition of Star Wars Outlaws includes

Star Wars Outlaws pre-order editions

Star wars outlaws standard edition.

Pre-ordering the $69.99 standard edition of the game will get you access to the Kessel Runner Bonus Pack which grants exclusive cosmetics for your ship and speeder. The standard version of Star Wars Outlaws is available to pre-order through Ubisoft , PlayStation , Xbox , the Epic Games Store , and Best Buy . Like most recent Ubisoft launches, there’s no Steam version in sight.

If you intend to play the game on PC via the Ubisoft Connect store, digital retailer Gamesplanet is offering a small discount on pre-orders. Normally $69.99, you can get Star Wars Outlaws for $62.99 .

• $70 at Ubisoft
• $70 at PlayStation
• $70 at Best Buy

Star Wars Outlaws Gold Edition

If you want three days of early access to Star Wars Outlaws , you’ll need to pre-order the $109.99 Gold Edition. This version of the game also gets you access to the season pass, which is currently slated to include at least two pieces of post-launch DLC, in addition to the “Jabba’s Gambit” mission at launch. You can currently reserve this version of Star Wars Outlaws from Ubisoft , PlayStat ion, Xbox , the Epic Games Store , and Best Buy .

• $110 at Ubisoft
• $110 at PlayStation
• $110 at Best Buy

Star Wars Outlaws Ultimate Edition

The digital-exclusive Ultimate Edition costs $129.99 and comes packaged with everything included in the cheaper versions. Additionally, this premium version includes additional cosmetics in the form of the Rogue Infiltrator and Sabacc Shark bundles, as well as a digital art book with concepts and storyboards from the game. Currently, you can reserve this version of the game from Ubisoft , P layS tation , Xbox , and the Epic Games Store .

Alternatively, if you want everything included with the Ultimate Edition but don’t want to pay the full price, you can subscribe to Ubisoft Plus for $17.99 a month. This plan grants you all the same benefits, including three-day early access, and is available on PC and consoles.

• $130 at Ubisoft
• $130 at PlayStation
• $130 at Xbox

The next level of puzzles.

Take a break from your day by playing a puzzle or two! We’ve got SpellTower, Typeshift, crosswords, and more.

Sign up for the newsletter Patch Notes

A weekly roundup of the best things from Polygon

Just one more thing!

Please check your email to find a confirmation email, and follow the steps to confirm your humanity.

Oops. Something went wrong. Please enter a valid email and try again.

How to finish ‘The Whisper’ and get Whisper of the Worm in Destiny 2

EA enlists Dead Space remake team to work on next Battlefield game

Helldivers 2 fans are shaken by the sudden return of Automatons

What you should spend Tomestones of Poetics on in FFXIV

Former Destiny leads have a new studio and a new game

Destiny 2’s Into the Light update adds 12 all-timer weapons back to the game