Options
Options Assignment Definition
Options assignment definition for Series 7 candidates, with short-option obligation examples, common traps, and options practice links.
Definition
Exam relevance
Practice links
Definition
Options assignment is the process by which an option writer is selected to fulfill the obligation created by a short option contract.
Why it matters on the Series 7
The exam tests whether you know what the short call or short put writer must do if assigned. Calls create an obligation to sell stock; puts create an obligation to buy stock.
Example
A customer short one XYZ 40 call may be assigned and required to sell 100 shares at 40, even if the market price is higher.
Common mistakes
- Applying the option holder's rights to the option writer.
- Forgetting that assignment risk belongs to short options.
- Confusing exercise, which is initiated by the holder, with assignment, which affects the writer.
Related concepts
- Series 7 options
Review option rights and obligations.
- Options practice questions
Practice assignment and exercise scenarios.
- Options formulas
Connect assignment to payoff logic.
- Back to the Series 7 glossary
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