Assignment(redirected from assignments)
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Assignment occurs when someone who has written, or sold, a listed option receives a notice that the option has been exercised and he or she must fulfill the terms of the contract by buying the underlying instrument if the option was a put or selling the underlying instrument if the option was a call.
Making the assignment is a two-step process. When an option listed on a US exchange is exercised, the Options Clearing Corporation (OCC) notifies a member broker-dealer firm with clients who have sold options in that series that one of those clients must meet the obligation to buy or sell. The firm, in turn, selects an individual client following its particular methodology, such as chronological order of sale or random choice.
As the writer of an in-the-money option, you should expect assignment, unless you close out your position with an offsetting contract. However, there is no guarantee that you will realize a profit or avoid a loss.
Assignment also means transferring property you own, such as stock and real estate, to someone else by using the document that's appropriate to the type of property. Similarly, property of a financially troubled entity can be assigned, or transferred, to a creditor and sold to offset losses.
The transfer of ownership, rights, or interests in property by one person, the assignor, to another, the assignee.