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How to Use Bots to Manage Assignment Risk

You no longer need to stress about challenged positions as expiration approaches. Learn how to use decision recipes inside a monitor automation to manage potential assignment risk.
Kirk Du Plessis
Oct 19, 2021

Assignment. The very thought strikes fear into many options sellers. Before automated trading, it was difficult to manage a portfolio of expiring options positions. You had to track expiration dates and in-the-money options contracts. Now you can manage assignment risk with simple decision recipes.

You can use automation to check if a position expires in less than a defined number of days. If the answer is yes, you can use the automation editor to instruct the bot to take additional action.

For example, you can check if a short options contract is in-the-money. If the option is at risk of assignment and close to expiration, you can send an order to your broker to close the position immediately.

If the position is out-of-the-money and unchallenged, no worries, you can choose not to take any action and let the option expire worthless.

There are numerous ways to define if a position is challenged. You can also use a decision recipe to reference the option’s greeks, such as delta. For example, you can check if the short put’s delta is less than -0.50.

Remember, assignment risk is subjective, and it is impossible to predict if or when a position will be assigned. Still, it is nice to know your bots can keep an eye on positions for you and take appropriate action as expiration nears. You can even receive notifications for assignment risk. 

Assignment. The very thought strikes fear into many options sellers. Before automated trading, it was difficult to manage a portfolio of expiring options positions. You had to track expiration dates and in-the-money options contracts. Now you can manage assignment risk with simple decision recipes.

You can use automation to check if a position expires in less than a defined number of days. If the answer is yes, you can use the automation editor to instruct the bot to take additional action.

For example, you can check if a short options contract is in-the-money. If the option is at risk of assignment and close to expiration, you can send an order to your broker to close the position immediately.

If the position is out-of-the-money and unchallenged, no worries, you can choose not to take any action and let the option expire worthless.

There are numerous ways to define if a position is challenged. You can also use a decision recipe to reference the option’s greeks, such as delta. For example, you can check if the short put’s delta is less than -0.50.

Remember, assignment risk is subjective, and it is impossible to predict if or when a position will be assigned. Still, it is nice to know your bots can keep an eye on positions for you and take appropriate action as expiration nears. You can even receive notifications for assignment risk. 

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