What Is the Impact of Assignment on Short Options?

Assignment on short options forces you into the underlying stock trade immediately at the strike price, no matter where the market is trading at that moment: assignment on a short call requires you to sell 100 shares per contract at the strike price, and assignment on a short put requires you to buy 100 shares per contract at the strike price. Because Pluang's US Stock Options are American-style, assignment can happen at any time before expiry, not only on the expiry date itself, so a short position carries live assignment risk for the entire time it stays open. The financial impact depends on where the strike sits versus the market price at the moment of assignment: a short call assigned below the current market price forces you to sell at a loss versus selling at market, and a short put assigned above the current market price forces you to buy at a loss versus buying at market. This impact is applied to your account as soon as assignment is processed.

• If you're short a call: assignment obligates you to deliver (sell) 100 shares per contract at the strike price. If the stock is trading above the strike, you sell below the market price and absorb that gap as a loss versus a market sale — on top of extra risk if you didn't already hold the shares (a naked short call).
• If you're short a put: assignment obligates you to buy 100 shares per contract at the strike price. If the stock is trading below the strike, you pay more than the shares are currently worth on the open market.
• Timing: because Pluang's options are American-style, assignment isn't limited to the expiry date — an in-the-money short position can be assigned by the holder on the other side at any point while the contract is open, so the risk is continuous rather than a one-time event at the end.
• Account impact: the resulting stock position (bought or sold) and the associated cash movement post to your account as soon as the assignment is processed — there's no advance-warning window once the other side chooses to exercise.

Related questions:

Q: Can a short option be assigned before its expiry date?
Yes. Pluang's US Stock Options are American-style, which means the holder on the other side of your short position can exercise — and trigger your assignment — at any time before expiry, not only on the expiry date itself. This differs from European-style options, which can only be exercised at expiry. Assignment risk is highest once your short position is in-the-money, but it is present for the entire time the contract stays open, so closing an in-the-money short position early is the only way to remove that risk completely.

Q: What happens to my position if my short call is assigned?
Your short call position closes and is replaced by a short (sold) stock position: you deliver 100 shares per contract at the strike price, regardless of where the stock is trading at that moment. If you already held the underlying shares (a covered call), Pluang delivers those shares and the trade settles as a normal sale. If you did not hold the shares (a naked short call), the assignment creates a short stock obligation that must be resolved, carrying additional risk beyond the options contract itself.

Q: What happens to my position if my short put is assigned?
Your short put position closes and you are required to buy 100 shares per contract at the strike price, funded from your available balance, regardless of the stock's current market price. If the stock is trading below the strike price, you end up paying more than the shares are currently worth on the open market. The new stock position then appears in your portfolio like any other purchase, and you can hold or sell it based on your own view of the stock.

Q: Does assignment affect my account immediately or after a delay?
The financial impact applies as soon as the assignment is processed — there is no waiting period before the resulting stock purchase or sale, and the associated cash movement, appears in your account. Because assignment on American-style options can happen at any point before expiry rather than only at expiry, treat any in-the-money short position as carrying live, same-day assignment risk rather than assuming the impact only arrives on the expiry date.

Q: Can I do anything to avoid being assigned?
The only way to fully remove assignment risk on an open short option is to close the position — buy back a short call or sell back a short put — before the holder on the other side chooses to exercise. Once a short position is in-the-money, assignment can happen on any trading day before expiry, so waiting until expiry day is not a safe way to avoid it.