Core vocabulary
Exercise vs. assignment in options
Exercise is the holder using the option right. Assignment is the writer being selected to fulfill the obligation.
Why it matters
A long holder chooses whether to exercise subject to the contract and broker process. A short writer does not choose which holder exercises.
Example
A holder exercises a put. The assigned short put writer may have to buy shares at the strike. Each leg of a larger position still needs its own review.
Limitation
Timing, allocation, cutoffs, and account treatment vary. Use current broker documentation.
Primary reading: OIC exercise and assignment overview · SEC Investor Bulletin · FINRA assignment guide
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