What Is Assignment in Options Trading?

Assignment in options trading is the obligation placed on the seller (writer) of an options contract when the buyer (holder) on the other side of that contract chooses to exercise it. If you're short a call, assignment requires you to sell 100 shares of the underlying stock per contract at the strike price; if you're short a put, assignment requires you to buy 100 shares per contract at the strike price — regardless of where the stock is actually trading at that moment. Assignment only ever applies to sellers, never to buyers: the buyer decides whether to exercise, and the seller has no say once assignment is triggered on their position. Because Pluang's US Stock Options are American-style, assignment can happen on any trading day before expiry, not only on the expiry date itself, so any open short position carries live assignment risk for as long as the contract stays open.

• Who it affects: only sellers (writers) of options are exposed to assignment. Buyers never get assigned — they choose whether to exercise their own contract, and that choice is what triggers assignment on the seller's side.
• Assignment vs. exercise: these are two sides of the same event. Exercise is the action the buyer takes to use their right under the contract; assignment is the resulting obligation that lands on the seller. You can't be assigned unless someone holding the opposite contract exercises it.
• By position type: a short call assigned means you must deliver (sell) 100 shares per contract at the strike price. A short put assigned means you must buy 100 shares per contract at the strike price. Both happen at the strike, not at the current market price.
• Timing on Pluang: because contracts are American-style, exercise — and therefore assignment — isn't confined to expiry day. On expiry day itself, Pluang force-closes any options position that's still open roughly 1 hour before market close, so a position generally doesn't reach automatic expiration; the assignment risk that matters most is the early-assignment risk that exists on any trading day the short position stays open and in-the-money.

Related questions:

Q: What's the difference between assignment and exercise?
Exercise is the action the option buyer (holder) takes to use their contractual right — to sell shares if they hold a put, or buy shares if they hold a call, at the strike price. Assignment is the mirror-image obligation this creates for whoever is short that same contract: the seller must fulfill the trade the buyer just exercised. Exercise is something a buyer does; assignment is something that happens to a seller as a result — you'll never see "exercise" applied to your own short position, only "assignment."

Q: Does assignment happen automatically, or do I need to do something?
Assignment is processed automatically once the buyer on the other side of your contract exercises — you don't take any action, and you can't opt out of an assignment notice once it's issued. The resulting stock trade (buying or selling 100 shares per contract at the strike price) and the associated cash movement post to your account as soon as the assignment is processed, without any advance-warning window. The only control you have is on the front end: closing your short position before it gets assigned.

Q: Can my 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 — on any trading day before expiry, not only on the expiry date itself. This is different from European-style options, which restrict exercise to expiry only. Assignment risk rises the deeper your short position moves in-the-money, but some risk exists for as long as the contract remains open.

Q: Do I face assignment risk if I only buy options instead of selling them?
No. Assignment only applies to the seller (writer) side of a contract — as a buyer, you hold the right to exercise, not the obligation to fulfill someone else's exercise. Buying a call or a put means your maximum risk is limited to the premium you paid, and you decide independently whether to exercise, let the contract expire, or close the position by selling it back. Assignment risk is specific to short call and short put positions, not to long positions.

Q: What happens if my short option is still open on expiry day?
Pluang force-closes any options position that remains open roughly 1 hour before market close on expiry day, rather than letting it run to a passive, automatic cash settlement. In practice, this means expiry-day assignment isn't the main risk to plan around — the more relevant risk is early assignment, which can happen on any trading day beforehand once your short position is in-the-money.