Assignment
When the option you sold is exercised and you must honor it.
Assignment is your promise coming due. If you sold a put, you buy 100 shares at the strike. If you sold a call, you sell 100 shares at the strike. It happens automatically when an option finishes in the money at expiration, and occasionally early. On the wheel, assignment is a planned step, not a failure, as long as you wanted the stock.
For example
You sold a $20 put and the stock closes expiration Friday at $19.50. You wake up owning 100 shares at $20. You keep the premium you were paid.
Related terms
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