Option assignment: what actually happens to your shares and cash

The short answer

Assignment means the option buyer exercised their right, and you — the seller — have to honor the contract:

• Short call assigned (covered call): your shares are automatically sold at the strike. 100 shares per contract leave your account; strike × 100 cash arrives. Done.
• Short put assigned (cash-secured put): you automatically buy 100 shares at the strike per contract. The cash you set aside as collateral pays for them.

Either way, you keep every cent of premium you collected. Assignment doesn't take the premium back — it was never conditional. And the whole thing is automatic: no action required, no way to decline.

The timeline at expiration

The random part matters: assignment isn't personal. The OCC pairs exercises with short positions by lottery, so "they came for my shares" is really "the machine drew my ticket."

Early assignment: the ex-dividend ambush

American-style options can be exercised any time, not just at expiration. For option sellers, early assignment is rare — with one famous exception:

• Calls, the day before ex-dividend. If your short call is in the money and the upcoming dividend exceeds the call's remaining time value, holders exercise early to capture the dividend. Deep ITM calls on dividend payers are the classic case. If you want to keep the shares through the ex-date, roll or close before the day prior.
• Puts, deep in the money. When a put is so far ITM that its time value is essentially zero, holders may exercise early to get cash now rather than wait. Less common than the dividend play, but it happens.

Early assignment lands the same way expiration assignment does — shares or cash move, premium stays with you — it's just on a random Tuesday instead of after expiration Friday.

The math after assignment

Assignment isn't the end of the P&L story — it's where the option premium and the stock math finally merge. Your campaign result is premium kept plus the stock leg measured against what you really paid:

Compute an assignment result

What to do after it happens

Called away? You have cash and a decision.

The instinct is to buy the stock back immediately, often higher than where you sold. Sometimes that's right — but treat it as a new decision, not a continuation. Many sellers simply sell a cash-secured put at a strike they'd happily own, and let the wheel turn: if assigned, they're back in at their price with extra premium; if not, the put premium was the consolation.

Put assigned? You have shares and a job.

You now own 100 shares per contract at the strike, with real basis lowered by every premium you collected. The standard next move is selling covered calls against the lot — the second half of the wheel. The mistake to avoid is freezing: shares you never intended to hold, with no calls sold, is a stock position wearing a strategy's clothes.

Either way, update the ledger immediately.

Assignment is where tracking usually breaks: the option disappears, the stock leg changes, and the premium has to be carried into basis by hand. In ThetaIQ, assignment folds the premium into the lot's real basis automatically and hands you the next screen — shares to cover or cash to redeploy — with the campaign math already done.