What Is Assignment in Options?

Assignment is what happens when you, as the seller of an options contract, are required to fulfil your obligation because the buyer on the other side chose to exercise. When you are assigned you must buy or sell the underlying asset on the terms written into the contract: a short call obliges you to sell the underlying at the strike price, and a short put obliges you to buy it at the strike price — regardless of where the market price sits at that moment. Assignment only ever affects the short side of a contract; if you bought the option, you hold the right to exercise and can never be assigned yourself. The timing matters on Pluang: because Pluang's options are American-style, the buyer can exercise at any point before the expiry date, so assignment is not confined to expiry day and early assignment is a genuine risk for anyone holding a short position. The one reliable way to remove that exposure is to close the position — Buy to Close — before the buyer acts.

What you need to know about assignment:

• Only sellers get assigned: assignment applies to short positions. Holding a long call or long put gives you the right to exercise, not an obligation, so you cannot be assigned.
• What you're obliged to do: a short call means selling the underlying at the strike price; a short put means buying the underlying at the strike price — at the strike, not the current market price.
• It can happen before expiry: Pluang's options are American-style, so the buyer may exercise at any time before the expiry date. Early assignment is a real risk, not a theoretical one.
• Assignment is more likely when the contract is in-the-money: a contract that is profitable for the buyer to exercise is the one most likely to be exercised, particularly as expiry approaches.
• The premium is still yours: the premium you collected when you opened the short position is never returned, even if you are later assigned. It offsets, but does not necessarily cover, the cost of fulfilling the contract.
• How to avoid it: close the short position with a Buy to Close order before the buyer exercises. Once closed, the position can no longer be assigned.

Related questions:

Q: Can I be assigned if I only bought options, never sold them?
No. Assignment applies exclusively to the short side of a contract. When you buy a call or a put you are paying a premium for a right — the right to exercise if it suits you — and a right carries no obligation. The person who sold you that contract is the one who can be assigned. If your entire options activity consists of buying contracts, assignment is not a risk you carry at all.

Q: Can I be assigned before the expiry date?
Yes. Pluang's options are American-style, which means the buyer holding the contract can exercise at any point up to expiry rather than only on the expiry date. That makes early assignment a genuine possibility for any open short position, and it is the main reason short options require more active monitoring than long ones. Do not assume you are safe from assignment simply because expiry is still weeks away.

Q: Do I keep the premium if I get assigned?
Yes. The premium you received when you opened the short position is credited to you at that moment and is never clawed back, whatever happens afterwards. What assignment changes is that you now also have to fulfil the contract — buying or selling the underlying at the strike price — and the cost of doing so can easily exceed the premium you collected. So keeping the premium does not mean the overall trade was profitable.

Q: What happens immediately after I'm assigned?
The contract is fulfilled on its stated terms: if you were short a call, the underlying is sold from your position at the strike price; if you were short a put, the underlying is bought into your position at the strike price. The options contract itself is then closed, since the obligation has been discharged. You can see the resulting change in your holdings and the associated transaction in your portfolio and transaction history in the app.