unwelcome assignment

Unwelcome Assignment

A situation in which an option writer (that is, the one who sells the option and has no control over its exercise) is required to fulfill the terms of the contract when doing so results in a loss or is otherwise detrimental to his/her investment strategy. For example, one may write a call with an exercise price of $30. If the price of the underlying asset is $40, the exercise of the contract is an unwelcome assignment because the writer must sell the underlying asset for $10 below its market price. One can avoid an unwelcome assignment by taking an offsetting position.

unwelcome assignment

The assignment of an option to a writer when the writer does not yet wish to fulfill the terms of the contract. For example, for tax reasons, an option writer may want assignment to occur near the expiration. Unwelcome assignment is a possibility for calls when the underlying asset sells at or above the strike price, and it is a possibility for puts when the underlying asset sells at or below the strike price. Unwelcome assignment can be avoided by purchasing an offsetting contract and closing out a position. See also assign.
References in periodicals archive ?
The river's more accessible now than it's been for 150 years - and an awful lot cleaner than when a visit to the old coroner's court on the Swing Bridge was an unwelcome assignment for a cub reporter for the simple reason that the then poisonous Tyne stank to high heaven.
Incorporating elements of brain-based learning theory can help put a more positive spin on a task and help place what may be an unwelcome assignment in a more inviting, less threatening context.
All effective supervisors must sometimes make unpopular decisions and give unwelcome assignments.