Options
Options Assignment Definition
Options assignment definition for Series 7 candidates, with short-option obligation examples, common traps, and options practice links.
Know the term before it appears in a question.
Terms connect to examples, common mistakes, and the practice page where the rule gets tested.
Definition snapshot
Exam trap notes
Practice links
Definition snapshot
Options Assignment
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
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
See the rule in a prompt.
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
What candidates confuse
- 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.
Exam depth
How to study this page
What the exam is testing
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.Why candidates miss it
Applying the option holder's rights to the option writer.Exam trap
Forgetting that assignment risk belongs to short options.Memory trick
Before answering, say the tested rule in one sentence, then point to the exact clue in the stem. For options assignment, the clue usually appears before the answer choices start to look tempting.Related concepts
Concept map
Use this map to move from the definition into the related rule, chapter, or practice page where the term changes an answer.