Options mechanics
What is Option Assignment and what are the margin implications for the net contract seller?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
Assignment occurs when an option seller is obligated to fulfill the contract, meaning a short call seller must deliver 100 shares or a short put seller must purchase 100 shares.
How it works
Assignment is randomly allocated by OCC to brokers holding short positions, and sellers must maintain sufficient margin or cash to cover the resulting stock purchase or delivery obligation.
An example
A trader short one XYZ 50 put who gets assigned must buy 100 shares at $50 per share, or $5,000 total, regardless of where the stock currently trades.
Risk & limitations
Uncovered short option sellers face potentially large and fast-moving margin calls upon assignment, so confirm account buying power can absorb the obligation before selling options naked.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.