Assignment

How do you nullify the obligations of a short call or put?
Any investor with an open short position in a call or put option may nullify the obligations inherent in that short (or written) contract by making an offsetting closing purchase transaction of a similar option (same series) in the marketplace. This transaction must be made before assignment is received, regardless of whether you have been notified by your brokerage firm to this effect or not.

When can you be assigned on a short equity option position?
As an equity call or put option holder may exercise the contract at any time before it expires, an equity option writer may be assigned an exercise notice at anytime before expiration.

When will notice of assignment on a short contract be received?
Generally, brokerage firms will deliver notice of assignment on short option positions on the business day following an option owner’s exercise of a similar option. Check with your brokerage firm about its procedures and timing for such notification.

Will you be assigned on an equity option contract that expires exactly at-the-money?
Some professional traders will exercise an expiring call or put that is exactly at-the-money, therefore assignment on such a short contract is possible.

What happens to my short option if I am never assigned?
After its expiration date a call or put will cease to exist. If you have written an option and are not assigned an exercise notice before it expires, you no longer have any of the obligations inherent in that contract and you keep the premium you received for it, less any commissions and fees you incurred at its initial sale. You are free to close out a short call or put before expiration by purchasing a like contract in the marketplace.