Assignment
Also called: option assignment
The requirement on an option seller to fulfil the contract when the buyer exercises.
An assigned call seller must deliver the underlying at the strike; an assigned put seller must buy it. Under physical settlement, assignment can create obligations for the full contract value, far larger than the premium received.
Learn more in these lessons
- Expiry, gap and settlement risksWhat can go wrong with a derivative position around expiry and overnight?
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