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