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What is assignment risk?

In one line: Assignment risk is the chance that the holder of an option you sold exercises it, so you must buy or sell 100 shares at the strike price.

Trading glossary · Updated 2026-10-26

How it works

When you sell an option, you take on a promise. Assignment is when you're asked to keep it. On a put, you buy 100 shares at the strike. On a call, you sell 100 shares at the strike.

Assignment risk is how likely that is. A few things move it:

• Price vs strike. An option in the money at expiry is usually exercised. One in the money by a penny or more is exercised automatically, unless the holder says otherwise.
• Time left. Early exercise mostly happens when little time value is left, often close to expiry.
• Dividends. An in-the-money call is more likely to be exercised the day before the Ex-dividend date.
• Style. US stock options are American-style options, so assignment can come on any business day.

Traders use Delta as a rough guide. A put with a 0.30 delta is often read as about a 30% chance of ending in the money. It's an estimate from market prices, not a promise.

An example (hypothetical)

XYZ trades at $50 (an illustration, not a trade idea). Three puts expire in 30 days. Then XYZ falls to $42.

The bigger premium came with the bigger chance of buying the shares, and the bigger loss when the stock fell. That's the trade-off on every strike. A math example, not a promise.

Why it matters for sellers

In the wheel strategy, assignment isn't a failure. It's half the plan. A put that's assigned gives you shares to sell calls on. A call that's assigned turns the shares back into cash.

So the real question isn't "how do I avoid it?" It's "am I ready for it?" Before you sell, check that you'd want the shares at the put strike, or be happy selling at the call strike. Keep the cash or the shares in place. And know the dates that raise the odds: expiry week, earnings and ex-dividend dates.

Questions