Options

Assignment Risk

The risk that an Option seller will be obligated to fulfil their contract if the buyer exercises — meaningfully reduced when a position is covered by owned shares.

Assignment risk is the risk that an Option seller will be obligated to fulfil their side of the contract if the buyer exercises. For a covered Call, this risk is meaningfully reduced — assignment simply means delivering shares already owned, rather than needing to buy them at a potentially unfavorable market price.

See how a Covered Call manages assignment risk with a worked example in Covered Call Strategy Explained With Example.