Option assignment cheat sheet: what to watch, when to act, and how to respond

This article is the final entry in our four-part series on option assignment. It condenses key lessons from the previous articles into one practical reference. Whether you're an investor using covered calls and puts or a trader managing spreads and multi-leg strategies, this article helps you recognize risk, avoid surprises, and make assignment work for you.

This is part 4: Option assignment cheat sheet.

• New to assignment? Start with
  Part 1: Assignment explained – what every options trader and investor should know.
• Want to prevent it? See 
  Part 2: How to avoid assignment in options trading.
• Ready to use it strategically? Read
  Part 3: How to use option assignment to your advantage.

What is assignment?

Assignment occurs when the buyer of an option exercises it. If you’ve sold that option, you may be required to deliver (calls) or buy (puts) 100 shares per contract. Assignment can happen any time an option is in the money, but it’s most common when there is little or no time value (extrinsic value) remaining.

Assignment does not happen during the trading session. It’s processed after the market closes and is reflected in your account the next morning. This is explained in detail in Part 1.

When is assignment likely?

Assignment risk rises when:

• The option is in the money
• There’s very little extrinsic (time) value left (typically under €0.10)
• For calls: there’s an upcoming dividend and time value is less than the dividend
• It’s the final day or two before expiration

There is no assignment risk if the option is out of the money. Exercising in that case would lose the buyer money.

To estimate extrinsic value:

• For calls: Intrinsic value = max(0, underlying – strike)
• For puts: Intrinsic value = max(0, strike – underlying)
• Extrinsic value = Option price – Intrinsic value

What to watch before expiry

• A call you’ve sold is trading for nearly the dividend amount or less
• A short put is trading for just a few cents of time value
• A short leg of a spread is deep in the money and expiry is near

These are often signs that assignment may happen that evening. Consider closing or rolling the position before the close.

How to avoid assignment

• Close or roll early when extrinsic value drops below €0.10
• Track dividends if you're short calls—close or roll before the ex-dividend date
• Check all short options one to two days before expiry
• Don’t worry about intraday moves—assignment only happens after the close

How to handle assignment when it happens

When you are assigned, these follow-up strategies apply:

• Short put assigned → you now hold shares. You can sell covered calls, hedge with a long put, or continue to hold the shares.
• Short call assigned (in a covered call) → your shares are sold at the strike. Profit is locked in.
• Short leg of a vertical spread assigned → use the long leg to flatten the position, or restructure it.
• In spreads like condors or butterflies → assess whether to close the remaining legs or use them to reposition.
• Synthetic long position (short put and long call) → if the put is assigned, you now own shares. You still hold the long call. Nothing changes in your directional exposure.

Summary flow

1. Are you short an option? If yes:
2. Is it in the money? If yes:
3. Does it have less than €0.10 of extrinsic value? If yes: → Assignment is likely. → Close, roll, or prepare to manage the assigned position.

If the answer is no to any of the above, assignment risk is low.

For deeper context, explore:

• Part 1: Assignment explained – what every options trader and investor should know
• Part 2: How to avoid assignment in options trading
• Part 3: How to use option assignment to your advantage