Assignment: Your Obligation to Sell
Many beginners are confused by assignment, which is why I wrote this chapter. With each option strategy in which an option is sold, there is a possibility that you will receive an assignment notice, so it’s important to learn how it works.
Because assignment has caused so much unnecessary anxiety and confusion, the term “assignment anxiety” explains the phenomenon. To help ease any concerns (and because I remember my own confusion when I first learned about options), I go into more detail about this procedure. (Some of the main points will seem like a review.)
When you sell covered calls (or uncovered calls, which we’ll discuss later), before the stock can be called away (i.e., assigned), the call buyer must ...