Comments

Examples 1 and 2 suggest that an early assignment is not going to occur when there is $1 (or more) of time value, whereas Examples 3 and 4 suggest that you should be prepared for an early assignment when the time value is $.10 (or less). As a general guideline, the dividing point between these two outcomes is about $.15 to $.20 of time value. If the bid price of the option includes at least $.20 of time value, an early assignment is rather unlikely. If the bid price of the option includes no more than $.15 of time value, the possibility of an early assignment is more likely.

In comparing the scenarios of Examples 5 and 6, the early assignment of the put option happens more often than the early assignment of the call option. Someone who ...

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