What does it mean to be exercised or assigned on an option transaction?
When you buy an option you have the right to either purchase or sell stock at a predetermined price. When and if you choose to purchase or sell stock at that predetermined price you are said to be ” exercising your right”. When you sell an option you now have the obligation to sell or purchase stock. You have or may not have to fulfill that obligation. You are considered to be “assigned” if you are being required to fulfill that obligation. Typically this occurs when the option is in-the-money.
