Short options
How do I use dividend risk evaluation to predict when my short call will be assigned early?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
Dividend risk evaluation for short calls involves comparing the option's remaining extrinsic value to the upcoming dividend amount, since call holders are more likely to exercise early when that extrinsic value is smaller than the dividend they would receive by owning shares.
How it works
Traders typically check the ex-dividend date and dividend amount relative to the option's time value in the days before the record date to estimate the likelihood of early assignment.
An example
If a call has only 5 cents of extrinsic value remaining before a 40-cent dividend, early assignment becomes much more likely than if the call still holds $1.00 of extrinsic value.
Risk & limitations
OCC disclosures note assignment decisions are made by option holders and cannot be predicted with certainty by the seller, even with careful dividend analysis.
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.