Assignment
The obligation handed to an option writer when the holder exercises.
Definition
Assignment is the obligation placed on an option writer (seller) to fulfil a contract that the holder has chosen to exercise. If you sell a call and it is assigned, you must deliver the underlying (or cash-settle) at the strike price; if you sell a put, you must buy at the strike. Assignment is the mirror image of exercise — the holder exercises, the writer is assigned.
Why it matters
Assignment is the core risk that option sellers manage. With American-style NSE stock options, assignment can occur early — most often on deep in-the-money calls before an ex-dividend date. European-style index options can only be assigned at expiry. Knowing your assignment exposure is essential for margin planning and avoiding surprise delivery obligations.
Example
You write a NIFTY 24,000 put and NIFTY settles at 23,850 on expiry. The put is in the money, the holder's position is auto-exercised, and you are assigned: you must cash-settle the 150-point difference times the lot size, less the premium you originally collected.
See it live
Monitor which short strikes are drifting in the money on TradePulse's live option chain.