Option Assignment

[johalber 10]

Hello All,

 

I have a question regarding option assignments.

 

If I'm in a covered call situation and the price of the stock goes above the strike price, does it get assigned right there and then or does it get assigned at expiration. At what point it time am I in danger of assignment?

 

I'm confused as to when I get assigned in general. In my particular situation I just want to get a little more cash and not sell my stock.

 

Similarly, If I sell a naked put with the intention of owning the stock at a particular price at what point to I assigned. I assume that I'd get assinged when the stocks price reaches the puts strike price or

goes below it.

 

Johalber

[jacoh 10]

American style options can be assigned anytime, so you're always in danger of being assigned! Usually however, this is not what happens. Options are usually assigned when they are exercised by their holder, which usually happens when the option is deep in the money, or after expiration if they are 0.75 points or more in the money.

 

Jacoh

[earsha 10]

Johalber,

 

General info on assignment from Fidelity indicates that they will automatically assign if the price is 25 cents above the strike price. This has happened to me several times- so if I want to keep the stock I usually enter an order to buy to close.

 

Earsha