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How to avoid assignment, and when you shouldn't

To avoid assignment, close the option or roll it before it's exercised, which usually means before the close on expiration Friday, or earlier if it's deep in the money or a dividend is near. The harder question is whether avoiding it is actually better than taking it.

Options guide · 8-minute read · Updated 2026-10-26

The two ways to avoid it

1. Buy to close. You buy back the option you sold. The obligation ends the moment the order fills. See buy to close explained.
2. Roll. You buy to close and, in the same order, sell a new option at a different strike or date. The obligation moves; it doesn't end. See rolling options explained.

Both must happen before the buyer exercises. For most options that means before 4 pm ET on expiration Friday. For a deep-in-the-money option, or a call the day before an ex-dividend date, it means today.

Timing that actually matters

A worked example (an illustration, not a trade idea)

You sold a $45 put on a made-up stock, XYZ, for $1.00 ($100). With three days left, XYZ is at $43. The put trades at $2.20.

Option A: take assignment. You buy 100 shares at $45. True cost $44. Shares worth $43.

Option B: buy to close. You pay $220. Net −$120, no shares.

Option C: roll down and out. Buy back at $2.20, sell a $42 put 30 days out for $1.90. Net so far −$30 plus the original $100 = +$70 net, and a new promise at $42.

Then XYZ keeps sliding to $38.

Now say XYZ bounced to $48 instead:

When avoiding assignment is the right call

• You no longer want the stock. It fell on real company news, not a market wobble. Close the put and take the small loss rather than owning a business you've stopped believing in.
• You want to keep the shares. Your covered call is in the money, you bought low, and you'd rather hold through. Roll up and out, or buy the call back if the cost is bearable.
• Assignment would take your account negative or trigger a margin call. Close it. See assignment risk explained.
• A dividend you want is tomorrow and your call is in the money. Roll it before the close.

When taking assignment is the right call

• The put strike is a price you'd pay today. That's the first half of the wheel strategy doing its job. Take the shares and sell a call.
• The call strike is above your cost and you'd planned to sell. Let the shares go. Keep the premium and the gain.
• Closing costs more than the position is worth to you. If buying back the call costs $800 to keep $300 of upside, let it be assigned.
• You've already rolled once. A second roll is usually hope, not a plan.

The full decision rule, as three questions, is in roll or take assignment.

The mistake to avoid

Avoiding assignment at any cost. Sellers who roll every losing put and buy back every winning call end up paying for the obligations they were paid to take. If the strike was right when you sold it, it's usually still right at expiry.

Questions