Options

Assignment

When an Option buyer exercises their right, obligating the seller to fulfil their side of the contract (buy or sell the underlying at the strike price).

Assignment means the Option buyer has exercised their right, and the seller is now obligated to fulfil their side of the contract — for a Put, this means buying the underlying at the strike price; for a Call, selling it at the strike price, even if the current market price is less favorable.

See how assignment risk plays out in a full worked example in How to Sell (Write) a Put Option: Risks and Rewards.