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How dividends can increase options assignment risk

Most experienced investors are familiar with the adage that "if an investment opportunity sound too good to be true, it probably is." While this sentiment may often be associated with overly optimistic assumptions, it also applies to investors who sell options contracts without first considering the ex-dividend date for a stock or ETF.

How dividends work

A quick review of how dividends work: A dividend represents a payment of a company's revenues to shareholders, most often in the form of cash. Cash dividends are paid out on a per-share basis. For example, if you own 100 shares of a stock that pays a $0.50 quarterly dividend, you will receive $50.

Not all companies pay dividends, but if you're investing in options contracts for companies that do pay them, you need to keep several important dates in mind:

Declaration date: Date on which a company announces the per-share amount of its next dividend.
Record date: The cut-off date established by the company to determine which shareholders of its stock are eligible to receive a distribution. This is usually, but not always, 1 day after the ex-dividend date.
Ex-Dividend date: Date on which a stock's price adjusts downward to reflect its next dividend payment. For example, if a stock pays a $0.50 dividend, the stock price will drop by a half point prior to trading on the ex-dividend date. If you buy a stock on or after the ex-dividend date, you are not entitled to the next dividend.
Dividend (payment) date: Date shareholders receive cash in their account from a dividend.

See Locating dividend information for stocks for additional details.

Dividends offer an effective way to earn income from your equity investments. However, call option holders are not entitled to regular quarterly dividends, regardless of when they purchase their options. And, unlike stock or ETF prices, options contract prices are not adjusted downward on ex-dividend dates.

This can cause a problem for anyone who has sold an options contract without first considering the impact of dividends. Why? Because the risk of being assigned on an option contract is higher when the underlying security of an in-the-money option starts trading ex-dividend. To understand the risks and how dividends impact options contracts, let's explore some potential scenarios.

Avoiding or managing early assignment on covered calls

As noted above, the ex-dividend date is particularly important to anyone who writes a covered or uncovered call option. If a covered call option you have sold is in the money and the dividend exceeds the remaining time value of the option, there is a good chance an owner of those calls will exercise his options early.

If you are assigned, you must deliver your shares of the underlying security, as well as the dividend income, to the owner of the call. Let's examine a hypothetical example to illustrate how this works.

Bob owns 500 shares of ABC stock, which pays a quarterly $0.50 dividend.
The stock is trading around $25 a share on August 1 when Bob decides to sell 5 October 30 calls.
By early October, ABC stock has risen to $31 and, as a result, Bob's covered calls are in the money by $1. The calls will expire in 10 days and tomorrow the stock will start trading ex-dividend.
Because the remaining time value of the call option is less than the value of the dividends, the call owner will likely exercise his options on the day before the ex-dividend date.

See Locating option values in Active Trader Pro ® .

If Bob does not take any action to close his covered call position, there is a good chance he will be assigned on the ex-dividend date. This means he will no longer own 500 shares of the stock and he will not receive the dividend income.

To avoid this scenario, Bob has a couple of choices:

He could buy back the calls he sold to retain the stock and the dividend. However, he would have to do this prior to the ex-dividend date. If he waits until the ex-dividend date or later, he will not be entitled to the dividend income. Keep in mind that it's possible to get assigned prior to the day before the ex-dividend date, so this strategy is not foolproof.
The other option is to close out his short position and write a new covered call with a later expiration date or a higher strike price. This strategy is known as "rolling" your options contract forward.

Avoiding or managing early assignment on calls not covered by shares

Now let's consider what could happen if Bob had sold uncovered calls on ABC stock:

As in the example above, ABC stock pays a quarterly $0.50 dividend and is trading around $25 a share
Bob has a negative view on the stock and decides to sell 5 uncovered October 30 calls
By early October, ABC stock has risen to $31 and, as a result, his uncovered calls are in the money by $1

To make matters worse, Bob learns that tomorrow the stock will start trading ex-dividend. Because the remaining time value of the options is less than the value of the dividends, owners of these calls will likely exercise their options 1 day prior to the ex-dividend date.

To limit his exposure, Bob has several choices. He can buy back his uncovered calls at a loss, buy the stock to capture the dividend, or sit tight and hope to not be assigned. If his calls are assigned, however, he will have to pay the $250 in dividend income, in addition to covering the cost of delivering 500 shares of ABC stock. If Bob had initiated an option spread (buying and selling an equal number of options of the same class on the same underlying security but with different strike prices or expiration dates), he could also consider exercising his long option position to capture the dividend.

Other considerations and risks

If you are implementing a spread strategy that includes long contracts and short contracts, you need to remain particularly vigilant in regard to assignment risk. If both contracts are in the money and you are assigned on the short contracts, you will not be notified until the following business day. While you can exercise your long position on the ex-dividend date to eliminate the short stock position that was created, you will still owe the dividend because you were short the stock prior to the ex-dividend date.

Ways to avoid the risk of early assignment

If you are selling options (covered or uncovered), there is always the risk of being assigned if your trade moves against you. This risk is higher if the underlying security involved pays a dividend. However, there are ways to reduce the likelihood of being assigned early. These include:

Do your homework: Know if the stock or ETF pays a dividend and when it will start trading ex-dividend
Avoid selling options on dividend-paying stocks or ETFs when your trade includes ex-dividend
Invest in European-style options: American-style options can be assigned at any time before the option expires, European-style options can only be exercised at expiration

See Locating dividend information for ETFs for details.

If you are a Fidelity customer and you have questions about your exposure to assignment risk, you can always contact a Fidelity representative for help.

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Any trader holding a short option position should understand the risks of early assignment. An early assignment occurs when a trader is forced to buy or sell stock when the short option is exercised by the long option holder. Understanding how assignment works can help a trader take steps to reduce their potential losses.

Understanding the basics of assignment

An option gives the owner the right but not the obligation to buy or sell stock at a set price. An assignment forces the short options seller to take action. Here are the main actions that can result from an assignment notice:

Short call assignment: The option seller must sell shares of the underlying stock at the strike price.
Short put assignment: The option seller must buy shares of the underlying stock at the strike price.

For traders with long options positions, it's possible to choose to exercise the option, buying or selling according to the contract before it expires. With a long call exercise, shares of the underlying stock are bought at the strike price while a long put exercise results in selling shares of the underlying stock at the strike price.

When a trader might get assigned

There are two components to the price of an option: intrinsic 1 and extrinsic 2 value. In the case of exercising an in-the-money 3 (ITM) long call, a trader would buy the stock at the strike price, which is lower than its prevailing price. In the case of a long put that isn't being used as a hedge for a long stock position, the trader shorts the stock for a price higher than its prevailing price. A trader only captures an ITM option's intrinsic value if they sell the stock (after exercising a long call) or buy the stock (after exercising a long put) immediately upon exercise.

Without taking these actions, a trader takes on the risks associated with holding a long or short stock position. The question of whether a short option might be assigned depends on if there's a perceived benefit to a trader exercising a long option that another trader has short. One way to attempt to gauge if an option could be potentially assigned is to consider the associated dividend. An options seller might be more likely to get assigned on a short call for an upcoming ex-dividend if its time value is less than the dividend. It's more likely to get assigned holding a short put if the time value has mostly decayed or if the put is deep ITM and close to expiration with a wide bid/ask spread on the stock.

It's possible to view this information on the Trade page of the thinkorswim ® trading platform. Review past dividends, the price of the short call, and the price of the put at the call's strike price. While past performance cannot be relied upon to continue, this information can help a trader determine whether assignment is more or less likely.

Reducing the risk associated with assignment

If a trader has a covered call that's ITM and it's assigned, the trader will deliver the long stock out of their account to cover the assignment.

A trader with a call vertical spread 4 where both options are ITM and the ex-dividend date is approaching may want to exercise the long option component before the ex-dividend date to have long stock to deliver against the potential assignment of the short call. The trader could also close the ITM call vertical spread before the ex-dividend date. It might be cheaper to pay the fees to close the trade.

Another scenario is a call vertical spread where the ITM option is short and the out-of-the-money (OTM) option is long. In this case, the trader may consider closing the position or rolling it to a further expiration before the ex-dividend date. This move can possibly help the trader avoid having short stock on the ex-dividend date and being liable for the dividend.

Depending on the situation, a trader long an ITM call might decide it's better to close the trade ahead of the ex-dividend date. On the ex-dividend date, the price of the stock drops by the amount of the dividend. The drop in the stock price offsets what a trader would've earned on the dividend and there would still be fees on top of the price of the put.

Assess the risk

When an option is converted to stock through exercise or assignment, the position's risk profile changes. This change could increase the margin requirements, or subject a trader to a margin call, 5 or both. This can happen at or before expiration during early assignment. The exercise of a long option position can be more likely to trigger a margin call since naked short option trades typically carry substantial margin requirements.

Even with early exercise, a trader can still be assigned on a short option any time prior to the option's expiration.

1 The intrinsic value of an options contract is determined based on whether it's in the money if it were to be exercised immediately. It is a measure of the strike price as compared to the underlying security's market price. For a call option, the strike price should be lower than the underlying's market price to have intrinsic value. For a put option the strike price should be higher than underlying's market price to have intrinsic value.

2 The extrinsic value of an options contract is determined by factors other than the price of the underlying security, such as the dividend rate of the underlying, time remaining on the contract, and the volatility of the underlying. Sometimes it's referred to as the time value or premium value.

3 Describes an option with intrinsic value (not just time value). A call option is in the money (ITM) if the underlying asset's price is above the strike price. A put option is ITM if the underlying asset's price is below the strike price. For calls, it's any strike lower than the price of the underlying asset. For puts, it's any strike that's higher.

4 The simultaneous purchase of one call option and sale of another call option at a different strike price, in the same underlying, in the same expiration month.

5 A margin call is issued when the account value drops below the maintenance requirements on a security or securities due to a drop in the market value of a security or when buying power is exceeded. Margin calls may be met by depositing funds, selling stock, or depositing securities. A broker may forcibly liquidate all or part of the account without prior notice, regardless of intent to satisfy a margin call, in the interests of both parties.

Just getting started with options?

Weekly Trader's Outlook

Today's Options Market Update

Covered Calls: Beyond the Basics

Stock Assignment With Options

By Lucien Bechard
Updated May 12, 2023

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Are you at risk for stock assignment with options? That’s a question new options traders focus on. The thought of being assigned sounds scary, but it’s not. While rare, it’s important to be aware of how the assignment process works. You have no control on when options assignment takes place. If you don’t have the funds then your broker will automatically close the trade for you. If you are assigned shares of the stock and you don’t want them, then you can just sell them. Nothing to worry about!

Table of Contents

When Will I Get Assigned

Selling options and your risk of stock assignment, are you at risk for stock assignment when selling a naked call, two key things to be aware of, call/put spread, what are the two ways to prevent assignment, key takeaways, how trade options smarter, what is stock assignment with options.

When I talk to traders, especially those interested in options trading , one of their biggest fears is getting assigned stock. To refresh your memory, when you buy/sell an option, you control 100 shares of that option’s stock. Even more unsettling is the options traders who never think about assignment as a possibility until it happens to them. So are you at risk for stock assignment? It’s like a pop quiz at school – generally unexpected and typically jarring if you haven’t factored in the assignment.

Even more so if you’re running a multi-leg strategy like long or short spreads, and usually it’s not a good feeling!

Well, I’m hoping to help you put some of that anxiety to rest with this post. Let’s start with the 3 most common questions we get asked here at the Bullish Bears stock trading service :

In what situations would I get assigned stock?
How do I prevent being assigned stock?
If I am assigned, what do I need to do?

Are you at risk for stock assignment? As an options seller, you have no control over an assignment.

First things first, let’s tackle the most obvious question, “when will I get assigned share of stock?”. In our experience, the easiest way to be assigned stock is if you short (sell) an option that expires in the money.

On the flip side, when you buy an option -either a call or a put, you cannot be assigned stock unless you decide to exercise your option(s).

As the purchaser of an option contract, you are in control. And by control I mean you, and you alone will always have the choice to exercise the option .

Do you see how I wrote a choice? Yes, you have the choice but not the obligation to do so.

Let’s say you bought a Facebook (ticker symbol FB) option a few weeks ago and it is set to expire today. Right now, since the option is in the money – there is never a risk of assignment. Because of this, you have two choices, you can:

Let the option expire in the money to collect the profit, or…
Decide to exercise the option and collect the 100 shares of stock

That said, let’s circle back to the most common way to get assigned stock – selling options. Make sure to take our options strategies course to learn how to safely sell options.

Are you at risk for stock assignment? Put simply, you will be assigned stock if you sell an option that is in the money at expiration.

It boils down to this: as the options seller; you have no control over an assignment, or when it could happen. Typically the risk of assignment increases as the expiration date gets closer. With that said, an assignment can still occur at any time.

Let’s say you sold an AAPL ( ticker symbol for Apple) option a couple of weeks ago. Your option is set to expire today and its in the money.

If this happens, you are automatically assigned 100 shares of stock. So if you sold a call, you would be assigned, and if you sold a put, you would be assigned.

In both cases, it’s 100 shares of stock for each one contract. Check out our trade room where we talk options.

When you buy a naked call, you have control over what you do with the option. But, when you’re the seller of a naked call option, you have no control over assignment if your call expires in the money.

And, it only has to be $.01 in the money for the assignment to happen. If you find yourself in this situation, you automatically will be forced to sell 100 shares of stock to the person who bought your option.

Hypothetically, let’s say you sell a FB call option to your friend Amanda at a strike price of $525. Amanda then decides to exercise her option because it’s in the money.

You then have to turn around and sell her 100 FB shares for each option contract at $525/share. Even if you do not own FB stock, you will still have to sell Amanda the shares. Now you find a situation in which you are short 100 shares of FB stock.

Assignment and commission fees. If you do not close the trade out or roll it before expiration and have to sell the shares, you’ll have fees to pay.
Dividends. Be wary when a company has upcoming dividends because this will increase your assignment risk. You need to be on high alert if the extrinsic value on an ITM short call is LESS than the dividend amount. And why? Well, it would only make sense that the ITM call owner would want to exercise their option in order to benefit from the dividend associated with owning the stock

Once again, similar to selling a naked call, when you sell a naked put, if your option expires in the money at expiration, you do not have control over an assignment.

What does this mean for you? You will be assigned 100 shares of stock at the options strike price if your short put is in the money at expiration. And don’t forget the assignment fee and commissions.

Like the example above with your friend Amanda, if you sell her a naked put that is expiring in the money, she has options.

If Amanda chooses to exercise those options, you need to buy 100 shares of FB stock for each of her option contracts, at $525 a share – even if you don’t have the money in your account!

Our stock watch lists have options trades on there with alert setups.

Assignment risk happens when your short strike expires in the money.

If you sell a put or call spread , the assignment risk stems from your short strike expiring in the money at expiration. If this scenario happens, you will be forced to sell 100 shares to the buyer for each option contract they purchased.

Likewise, if you sell a put spread you will be assigned 100 shares of stock per contract if the short strike is in the money at expiration.

On the flip side, however, if both strikes expire in the money, they will cancel each other out. Even though the short strike is assigned, you can turn around and exercise the long strike.

Are you at risk for stock assignment? You don’t want to be hurt financially if the assignment happens. So it’s wise to avoid this situation to the best of your ability. In my opinion, you have two avenues to avoid assignment:

You close the trade before it expires which means you take any profits or losses
You can simply roll the trade to extend the days to expiration. What this does is give you more time for the trade to be profitable.

Despite your best efforts to avoid unwanted assignment, it can occasionally still happen. So if you find yourself in this situation, here’s what to do…

Don’t panic.

There are two things you can do if you sold an option that has expired in the money.

You can hold the long or short stock or buy/sell the shares back for a profit or loss. In this scenario, you will need the money in your account to pay for the shares.
If you were assigned shares and didn’t have the money to cover the shares you were assigned (a.k.a. a margin call), immediately buy/sell back the shares. Before the end of the trading day, your broker will do it for you if you don’t.
As an options seller, you have no control over the assignment or its timing
The options buyer controls when an assignment happens.
If you do not have enough money in your account to cover either your long or short stock position, be wise and immediately close your position. Your broker will do it for you if you fail to.
Spreads are one way to have protection against being assigned, but, BOTH legs need to be in the money if you are to be protected.
Additional assignment risk happens if you have a short call position that is in the money at the time of the dividend.

The best defense against early assignment is a good offence; so be prepared and factor it into your thinking early.

Otherwise, it can cause you to make defensive, in-the-moment decisions that are less than logical. This is because the assignment can happen pretty easily if you are not monitoring your positions regularly. Sometimes it can even happen if you are.

If you’re anything like me, you get busy during the day and don’t get a chance to check your positions. Worse yet, you’re trading options on an illiquid underlying.

You might find yourself in a position without any buyers/sellers available so you cannot close your position. So my point is this; monitor your positions closely and watch liquidity closely.

If you need more help, take our options trading course .

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You have the right to refuse unsafe assignments

July 11, 2019.

Unsafe Assignments

According to the American Nurses Association , Nurses have the "professional right to accept, reject or object in writing to any patient assignment that puts patients or themselves at serious risk for harm. Registered Nurses have the professional obligation to raise concerns regarding any patient assignment that puts patients or themselves at risk for harm." In short, Nurses are empowered to say "no" when management puts our patients at risk by violating safe staffing laws. Here are some articles that explain this right—and how to claim it.

Think your assignment violates the law? Follow this flow chart!

"Unfortunately, many nurses – and many leaders — will answer the question with some form of “suck it up and do the best you can.” And while I know that questioning an assignment, let alone refusing it, is hard, this is exactly what you must consider doing." —Nurse Guidance

When an Assignment is Unsafe (via Nurse Guidance) The scenarios described in this quick read might sound too familiar to Nurses that work in chronically understaffed hospitals. But fear not Nurse Guidance has you covered with great tips on what to do when it's time to say "I refuse."

California Code Regs Disciplinary Action for Nurses There are laws that protect Nurses so we can practice our profession ethically. Know the Codes!

Moral Resilience: Managing and Preventing Moral Distress and Moral Residue Moral resilience is defined by the author of this paper as “the ability and willingness to speak and take right and good action in the face of an adversity that is moral/ethical in nature.” Nurses that say no to unsafe assignments need plenty of this.

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What Is Early Assignment Risk In Options Trading? Who Is Affected & How To Mitigate It?

In options trading (American style), the options contract owner (or buyer) has the right to exercise the options contract anytime between the start of the contract and the expiration date. An early assignment means the options contract buyer chooses to exercise the contract before the expiration date.

However, it is usually rare as there is a time value as part of the premium that he has paid for when the options contract was established. An early assignment would mean that he would forgo some of the premium he had paid when the contract was established.

Who Is At Risk Of Early Assignment?

However, there are a few scenarios where early assignment (exercise) of a contract may happen and it is important for the options seller to take note of them, especially if he has no intention to buy ( PUT contract) or sell ( CALL contract) his shares. The risk applies to the options contract sellers because only the options buyer has the right to exercise the contract anytime before the expiration date.

The PUT options seller may just want to collect a premium through selling a PUT options contract and has no intention of owning the shares. Thus, he would hope that the PUT options contract that he sold would expire worthless instead of expiring In-The-Money (ITM) .

I am in this group when I use the SOP strategy to collect monthly income through selling OTM PUT options contracts: My Options Trading Strategy For 2023 | Introducing SOP Options Trading Strategy

In another scenario, the PUT seller may not have enough capital to purchase the shares, which means it is not a cash-secured PUT , where the seller has set aside capital to purchase the shares if he gets assigned the contract.

This is possible with a margins account: How I Use My Margins Account To Earn Extra Income (Safely)? | How My Margins Account Help In My Selling PUT Strategy?

In another group of CALL options sellers who are at risk, the seller may not wish to sell away his shares at the strike price, which he could have set much lower than his breakeven pricing. It may also be a naked short CALL, whereby the seller may not have the shares to honor the contract if it gets assigned early.

What Are The Possible Scenarios Of Early Assignment?

The risk of assignment for the CALL options contract sellers increases when the underlying stock pays dividends and when it is nearing the ex-dividend date. The CALL options contract buyers are not entitled to dividend payments, so if they wish to receive the dividend, they will have to exercise the CALL options and become stock owners.

If the upcoming dividend amount is larger than the time value remaining in the call’s price, it makes sense to exercise the option contract. But the CALL buyers will have to exercise the options contract prior to the ex-dividend date.

So for CALL options sellers who do not wish to get assigned, always be mindful if you are selling a stock that is paying dividends, and do take note if the ex-dividend date is close to the expiration date, the call options contract is in-the-money, and the dividend is relatively large. All these scenarios will significantly increase the chance of early assignment.

For PUT options contract sellers , the risk will increase in the scenario whereby the buyer is in an advantageous position and wishes to sell away his shares to collect the cash. However, he must factor the time value into the equation, before deciding if it is indeed a wise decision to exercise the PUT options early.

For PUT options contract buyers, it is usually a good idea to sell the put first and then immediately sell the stock. That way, he can capture the time value for the put along with the value of the stock. However, as expiration approaches and time value becomes negligible, early exercise seems plausible. That’s because by exercising the PUT contract, the PUT buyer can accomplish his aim of selling the shares and collecting the capital, all in one simple transaction without any further hassles or extra commission charges.

Therefore, for PUT options contract sellers, remember that the less time value there is in the price of the option as the expiration date nears, the higher the risk of an early assignment. So keep a close eye on the time value left in your short puts and have a plan in place in case you’re assigned early.

For PUT options contract sellers, an approaching ex-dividend date can be a deterrent against early exercise for PUT. By an early assignment, the options contract buyer will receive the cash now. However, this will create a short sale of stock if the PUT owner wasn’t owning the stock in the first place. So exercising the PUT options the day before an ex-dividend date means the PUT buyer will have to pay the dividend. So, this means PUT sellers may have a lower chance of being assigned early, but only until the ex-dividend date has passed.

Concluding Thoughts

To summarise, an options contract buyer (owner) will exercise early if certain conditions are met to ensure that what he receives is more than enough to cover the remaining time value in the contract (which he has already paid upfront when the contract was established).

For CALL buyers, it would be the dividends paid out, that are greater than the remaining time value. For PUT buyers, it would be the increase in premium (due to the underlying share price moving in the intended direction, i.e. stock price collapsing) being greater than the remaining time value in the contract.

In a nutshell, as the difference between the intrinsic value (the difference between the current price of a stock and the strike price of the option) and the extrinsic value (the difference between the market price of an option and its intrinsic value) increases, the risk of early assignment also increases. So, to manage the risk of early assignment, the options seller must be mindful of the increasing intrinsic value and the decreasing extrinsic value.

To mitigate against early assignment, the options contract seller can prolong the contract duration by rolling it to a later date and collecting more upfront premiums in the process. This also increases the extrinsic value of the options contract. Alternatively, he can also avoid selling CALL options on stocks that pay dividends or with an expiration date close to the ex-dividend date.

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*** MUST-READ BLOG POSTS *** After accumulating more than 600k of unrealized losses on my portfolio, I wrote this article to encourage friends and investors who are also losing a lot of money to the market. If You Are Feeling Depressed From Losing Lots Of Money In The Stock Market, Here’s An Article For You

In the 10 years of my investing journey, I have made many mistakes but also learned many lessons from these mistakes. I compiled the 10 most valuable lessons that I have learned and may they help you succeed in your investing journey. Happy 10 Years Of Investing | 348k (Realised) Profit, 635k (Unrealized) Loss & 10 Lessons Learnt

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What are my risks of early assignment?

I have started writing covered puts and calls recently. Everything I read talks about the risk of early assignment of your position, but I don't really understand how often this happens. It seems that you should only exercise an option when the extrinsic value is lower than the brokerage fees for buying/selling the stock (say about $0.10). Otherwise you could always make more money by selling the option than exercising (assuming there are no dividend payouts on the underlying stock). It seems only an irrational investor would exercise an option with time value left on it, and I assume that is exceedingly rare.

I've read that early assignment of a put is more likely than a call as the money is flowing to the exerciser rather than from, which is more likely to happen early (money in as early as possible vs money out as late as possible). But it seems to me that the contract holder would still get more money if they just sold the contract (and their stock if they're holding it). Am I doing that math right?

I am trading ETFs and will start with ETNs soon. So the detailed questions are:

At what level of extrinsic value does the possibility of assignment become likely?
Is there really a risk of early assignment if there's time value left? Or is this just some CYA verbage that everyone includes because it is technically possible?
Does that risk change when you are looking at ETN vs ETF vs Company Stock? How?
Does the risk change between a put and a call?
option-exercise
covered-call
options-assignment

Uh...Possible duplicate? money.stackexchange.com/questions/5696/… . I promise I searched first, but I didn't find anything. SE didn't suggest anything useful when I wrote it, either. I just found the other answer through the [options-assignment] tag. Please close if I haven't asked anything new. – yossarian Jan 20, 2012 at 16:48

3 Answers 3

One reason this happens is due to dividends. If the dividend amount is greater than the time value left on a call, it can make sense to exercise early to collect the dividend.

Deep in the money puts also may get exercised early. There's usually little premium on a deep in the money put and the spread on the bid-ask might erase what little premium there is. If you have stock worth $5,000 but own puts on them that will give you $50,000 upon exercise (and no spread to worry about), the interest you can gain on the $50k might be more than the little to no time value left on the position... even at several weeks to expiration.

There's no profitable arb in exercising a deep ITM call to capture the dividend (where the time premium is less than the dividend). That applies to the put, not the call. – Bob Baerker Oct 23, 2018 at 18:51

Per CBOE stats, only about 7% of options are exercised.

There are several reasons why an option might be exercised early:

The owner doesn't know any better and throws away remaining time premium, not realizing that he'd salvage that time premium by selling the option. This is rare.

The time premium is low and exit costs (commissions and B/A spread) are lower than selling the option. This is an infrequent occurrence because most firms charge for exercise, sometimes more than a simple sell commission.

An ITM option trades at a discount (the bid is less than the intrinsic value) and selling to close would be a haircut. Taking the opposing position in the underlying and exercising the option would avoid the haircut. This discount occurs regularly but even more often just before the ex-dividend date. For example:

XYZ is $40 Jan $35 call is $4.80

The intrinsic value of the call is 5 points. Buy the call for $4.80, shorts the stock at $40 and exercise the call to buy the stock at $35 (- 4.80 + 40.00 - 35.00 = + 20 cent profit)

Speaking of dividends, it's an incorrect statement that ITM calls are exercised early if the time premium remaining is less than the pending dividend. This was stated in another answer and is often found across the net. If you run the numbers, you'll see that you are just throwing away the time premium and that the arb loses money.

XYZ is $40 Jan $35 call is $5.30 Ex div is tomorrow for 50 cts

Buy call, exercise to buy stock, sell stock after ex-div

$35.00 - $5.30 + $39.50 + $.50 = - 20 cts (loser)

This assumes that you can sell the stock on ex-div morning for the adjusted close.

It is true that a dividend arbitrage is available when the time premium of an ITM put is less than the amount of the dividend. For example:

XYZ is $40 Jan $45 put is $5.30 Ex div is tomorrow for 50 cts

Buy stock/buy put, exercise after ex-div

$40.00 - $5.30 + $45.00 + $.50 = + 20 cents

The put vs call assignment risk, is actually the reverse: in-the-money calls are more likely to be exercised early than puts. Exercising a call locks in profit for the option holder because they can buy the shares at below market price, and immediately sell them at the higher market price. If there are dividends due, the risk is even higher. By contrast, exercising an in-the-money put locks in a loss for the holder, so it's less common.

This answer that "exercising an in-the-money put locks in a loss for the holder" makes no sense. It could be a profitable put that went ITM. It could be an ITM option exercised to avoid the haircut of the bid trading below intrinsic value. it could be part of a Discount Arbitrage. It could be because the holder is unloading a position in the underlying. So many reasons, some profitable some not, depending on the P&L of the option and possibly a married position in the underlying. – Bob Baerker Oct 23, 2018 at 18:50

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Nurses facing abnormally dangerous patient care assignments

March 18, 2020 • 2 minutes to read

You may have to make a decision about accepting an assignment involving abnormally dangerous conditions that pose an imminent risk to your safety and health, and could potentially cause serious injury or death. If you are a WSNA member and you accept an abnormally dangerous assignment, fill out an ADO to document that you are accepting an assignment despite objection.

If you have already accepted the assignment, your professional license may be at risk if you fail to continue that assignment, unless you have handed off the assignment and have been relieved of responsibility for the patient. If you decide to refuse the assignment, you should remain at the workplace and offer to perform other work that does not pose an imminent risk to your safety and health (e.g., an assignment for which you are provided proper safety equipment and training).

A decision to refuse an assignment could result in disciplinary action taken against you by the employer. Under collective bargaining agreements between employers and WSNA, there must be "just cause" for any discipline. If you are represented by WSNA for collective bargaining, we would defend you if you are subjected to unjust discipline, but resolution of any such discipline would likely be delayed and the outcome may be uncertain as a result of the current national and state emergency declarations.

Predicted Academic Performance: A new approach to identifying at-risk students in public schools

Subscribe to the brown center on education policy newsletter, ishtiaque fazlul , ishtiaque fazlul assistant professor, college of public health and school of public and international affairs - university of georgia @ishtiaquefazlul cory koedel , and cory koedel associate professor of economics and public policy - university of missouri eric parsons eric parsons professor - university of missouri, director of undergraduate studies, department of economics - university of missouri @esparsons.

January 17, 2024

The availability of modern education data systems has not translated into meaningful improvements in how consequential state policies use data to identify students in need of additional resources and supports.
Predicted Academic Performance (PAP) is more effective than common alternatives at identifying students who are at risk of poor academic performance and can be used to target resources toward these students more effectively than alternative risk indicators.
The status quo approach to measuring student risk is limited in two ways: (1) The use of basic risk categories is a dated technology, and (2) common indicators used to identify at-risk students are both inaccurate and subject to change based on external policy decisions.

There have been substantial advances in the development of states’ education data systems over the past 20 years, supported by large investments from the federal government. However, the availability of modern data systems has not translated into meaningful improvements in how consequential state policies, such as funding and accountability policies, use data to identify students in need of additional resources and supports. Today, as has been the case for decades, states ubiquitously rely on blunt categorical indicators associated with disadvantage to identify these students, such as free and reduced-price lunch enrollment (among others). In other words, we are still using 20th-century technology to identify at-risk students in 21st-century schools.

In a recent article published in Educational Evaluation and Policy Analysis , we develop a new measure of student risk that can be used in consequential education policies. Our new measure leverages the rich information available in state data systems to better identify at-risk students, whom we define precisely as those at risk of poor academic performance . We refer to our new measure as “Predicted Academic Performance,” or PAP.

Academic performance can mean many things—achievement on standardized tests, on-time grade progression, school attendance, high-school graduation, college attendance, etc.—and in principle, PAP can be built around any of these outcomes. In our proof-of-concept application in Missouri, we measure student performance using state standardized tests. To construct PAP, we predict student performance using data from Missouri’s State Longitudinal Data System (SLDS). Specifically, we use information about student mobility across schools, family income, English language learner status, individualized education program (IEP) status, sex, and race/ethnicity. (The precise set of predictor variables is flexible, and in our academic article, we also consider versions of PAP that use subsets of this information.)

These and related variables are typically included in emerging early warning systems (EWSs) in some states and school districts. EWS indicators are diagnostic indicators that identify students at risk of poor academic performance, with the goal of helping schools target proactive support toward these students. In fact, PAP can be viewed as a special case of an EWS indicator, with the added constraint that PAP predictors are not manipulable (course grades are an example of a manipulable predictor used in some EWSs). This added constraint makes PAP well suited for use in consequential education policies, such as funding and accountability policies. In contrast, EWS indicators are not designed for policy use and would create perverse incentives for schools and districts if used in this way.

We show that PAP is more effective than common alternatives at identifying students who are at risk of poor academic performance, as intended. Using a funding policy simulation, we further show PAP can be used to target resources toward these students more effectively than alternative risk indicators. In addition, PAP also increases the effectiveness with which resources are targeted toward students who belong to many other associated risk categories.

Why we need to think differently about risk measurement

The status quo approach to measuring student risk is limited in two ways. First, the use of basic risk categories is a dated technology. It made sense when states’ data systems were underdeveloped and it was difficult to assemble detailed information about students. But today, we have a plethora of information, most of which is ignored. For instance, many states allocate funding to school districts based on the number of students from low-income families. However, we are not aware of any state policy that acknowledges the difference between students identified as low-income for one year versus those who are persistently identified as low-income. This is despite clear evidence that the persistence of student circumstances matters and readily available data that allow us to measure it.

The second limitation of the current approach is that common indicators used to identify at-risk students are both inaccurate and subject to change based on external policy decisions. The inaccuracy of common risk indicators has been shown most conclusively for free and reduced-price lunch (FRL) enrollment, which research shows is greatly oversubscribed (an outcome that is not surprising given program incentives for families and schools to increase enrollment but not to verify enrollment accuracy). For other risk indicators—e.g., indicators for English language learner status or special education status—much less is known about their accuracy, although there is cause for concern . Compounding this issue, policy changes outside the control of the education system can significantly alter the informational content of some risk indicators. This occurred, for example, for FRL enrollment with the implementation of the Community Eligibility Provision in the National School Lunch Program.

It is instructive to juxtapose the investments we make to measure student risk with the investments we make to measure student achievement. We view these two measures as the most important measures for informing education policies at all levels of government. States spend 1.7 billion dollars annually to administer standardized tests alone, and this does not count the many other tests administered locally by school districts. Furthermore, an entire subfield of education scholarship is devoted to understanding test-measurement issues. In contrast, it is hard to identify any meaningful investments in the development of risk measures that are suitable for use in consequential education policies. Rather, it seems we have done the bare minimum, using convenient and readily available indicators that often have a different purpose (e.g., to allocate free or subsidized school meals to students) with no substantive efforts to verify the accuracy of the data.

How PAP could improve identification

The limitations of existing measurement practices motivate our development of PAP. PAP is a singular indicator of student risk that draws on numerous data elements available in state systems. In essence, PAP is a weighted average of many student attributes, where the weights are higher for attributes that are more strongly associated with how students perform in school.

The PAP framework is flexible and can incorporate a variety of types of information into students’ total risk scores. It can also incorporate this information contemporarily (e.g., income and mobility status this year) and accounting for individual persistence (e.g., income and mobility status over the past three years) and schooling context (e.g., average income and mobility status at the student’s school). PAP is limited by the same fundamental challenges as current categorical systems in that some of the underlying data elements are inaccurate and may be subject to change. However, by using a large number of predictors of student risk—rather than just one or two variables as is the current policy norm—the influence of inaccuracies in the individual variables is reduced, as is the impact of policy-induced changes to the variables’ meanings.

In our proof-of-concept application of PAP using Missouri data—the details of which can be found in our academic article —we show that PAP is more effective than common alternatives at identifying students at risk of poor academic performance. This is not surprising because PAP is designed precisely to identify these students. Still, we believe this basic finding is important: It shows that states can do a better job of identifying these students—arguably those most in need of additional supports—than is currently the case. We further show that in the context of a school funding policy, PAP can be used to target resources toward these students more effectively.

In addition, we show that PAP is more effective than common alternatives at identifying—and targeting resources toward—other at-risk student groups. Examples include English language learners, special education students, and underrepresented minority students.

Moving forward

State longitudinal data systems contain rich information about students and permit the construction of risk indicators that are much more informative than in the past. However, earnest efforts to improve risk measurement in state education policies have largely failed to materialize. PAP is a step toward the development of more informative, modernized measures of student risk that put the information in states’ longitudinal data systems to work. PAP can be readily used for diagnostic purposes now—for instance, to help policymakers better understand the allocation of resources under current funding formulas and how effectively those resources reach students at risk of poor academic performance. In addition, with further testing and development, we are optimistic that PAP, or something like it, can be incorporated directly into consequential education policies.

PAP has limitations and is not a panacea. Given the inherent difficulty of measuring student risk, no measure will be. However, it is important to remember that while we wait for the perfect solution to arrive, we continue to use the same decades-old status quo approach to measuring student risk. And we can surely do better than that.

Assignment Risk: Finance Explained

Feb 6, 2024 — Sarah Saves

Understanding assignment risk is crucial for any investor in the financial markets. Assignment risk refers to the risk that the writer (seller) of an option contract will be required to fulfill their obligation to buy or sell the underlying asset (such as stocks) if the option is exercised by the buyer. This risk applies to both call options, where the writer may be forced to sell the asset, and put options, where the writer may be forced to buy the asset.

When selling options, especially naked options (options not hedged by an offsetting position), assignment risk becomes a significant consideration. If an option you wrote is assigned, you must either buy or sell the underlying asset at the contract's strike price, regardless of the current market price. This can lead to unexpected losses if the market moves against your position.

To manage assignment risk, option writers can take several precautions. One common strategy is to monitor options positions closely, especially as they near expiration. Rolling options, which involves closing out current positions and opening new ones with different expiration dates, can help delay or avoid assignment. Additionally, utilizing risk management techniques such as stop-loss orders can limit potential losses from assigned positions.

Investors should also be aware of ex-dividend dates when holding short option positions. If a short call option is in the money (the stock price is above the strike price) as it approaches the ex-dividend date, there is a higher likelihood of assignment as the option buyer may exercise the option to capture the dividend. Being mindful of corporate actions and market events can help investors navigate assignment risk more effectively.

Overall, understanding assignment risk is essential for option writers and investors using options strategies. By being aware of the potential outcomes and implementing risk management techniques, investors can mitigate the impact of assignment risk on their portfolios.

Looking to enhance your options trading skills? Join Tiblio today and explore our platform to elevate your trading experience. Join Tiblio

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Managing Global Assignment Risk for Expatriates

EXPATRIATES | May 13, 2021

During the past year, the uncertainty that came with the COVID-19 pandemic combined with travel bans caused many companies to put a hold on new expatriate assignments. However, the increased rate of vaccination, especially within the US, is now creating opportunities for companies to consider re-starting international assignments. At the same time, the combination of increased spending by governments to fight the pandemic along with reduced tax revenue due to pandemic-induced economic slowdowns, are creating an environment ripe for tightening regulatory compliance for cross-border assignments and business travelers.

The coming increase in global relocation in the face of increased scrutiny will result in heightened risk for those managing mobility programs. Below, we look at some of the key risk areas related to your expatriate employees and four steps companies should consider implementing to help manage the global assignment risk for their expatriate employees.

Key global assignment risks for expatriates

Given the importance of mobility to many companies’ growth and talent management, it is critical that key risk areas for both the company and employee are understood and managed.

Regulatory and compliance risk

Compliance risk due to increased regulations is on the rise. As an example, Canadian tax authorities continue to audit companies for adherence to withholding tax requirements for business travelers who may otherwise be exempt from income tax under a treaty. The authorities typically look back five years to assess withholding tax, with those companies potentially incurring significant costs relating to compliance and difficulties in filing individual income tax returns to receive refunds.

This example reflects the need to fully understand compliance and regulatory requirements for locations where employees travel on business. In this case, the withholding would have applied after even a single workday in Canada but could have been avoided if proper waivers had been received in advance. Cross-border business travel can result in work streams for many functions within a company, including HR, tax, payroll, legal, finance, and relocation departments.

Financial and budgetary risk

As illustrated above, failure to comply can lead to unexpected costs and potentially significant penalties and interest. Equally important, however, is the need to understand the costs of proposed expatriate assignments in advance. Through proper review, planning may be possible to lower costs, allowing business units to properly bid on new work and appropriately accrue assignment costs . Preparation of tax cost projections prior to the start of the expatriate assignment allows companies to book an accrual for the full estimated tax cost of the expatriate assignment. The accrual process helps to minimize surprise hits to the business unit’s bottom line.

Prosecution

The risk of prosecution is not just a scare tactic! For example, there have been numerous cases where individuals have been convicted of federal tax charges for failure to appropriately report bank accounts maintained outside the United States. In some countries, tax evasion can be considered a capital offense. Representatives of the company can be held accountable for failure to meet regulatory and reporting requirements, thus, understanding and meeting regulatory requirements is critical.

Legal and employment law

Failure to properly comply with immigration laws can lead to unexpected costs, project delays, legal challenges, or deportation for the employee. Failure to consider local employment law can also be costly, potentially opening the company up to lawsuits, delays in client deliverables, and unhappy employees. In a recent webinar we hosted, we examined the risks, strategies, and approaches employers can take to help alleviate some of the legal concerns.

Reputational risk

Companies that fail to understand and comply with local requirements risk being portrayed as bad corporate citizens in the local media. It won’t help the mobility department’s reputation if an expatriate ends up in the local news due to a failure to file individual income tax returns or have proper immigration clearance. This kind of negative publicity can be extremely damaging when entering new markets.

Employee satisfaction and retention

The global mobility program can be extremely important to many companies’ talent management and development strategies. While it is obvious that prosecution or negative publicity will lead to issues with employee satisfaction and retention, other more mundane factors, such as ineffective policies, lack of repatriation strategy, and poor communication can be just as damaging. Expatriate assignments are a significant investment for a company, making it even more important to retain and effectively deploy the employee within the organization when the assignment ends.

Permanent establishment

The interaction between the mobility program and the company’s corporate tax position is an area that is often overlooked. Expatriates working outside of their Home country can result in their Home country employer having a permanent establishment (PE) in the Host country. An employer with a PE may have additional corporate administration and tax costs. The PE may also prevent the company from utilizing an income tax treaty to shield business travelers from Host country taxation. It is important to note that factors such as employee duties and project duration can result in a deemed PE for a company.

Steps you can take to minimize global assignment risks for your expatriate employees

Although daunting, there are basic steps that can be taken to help companies manage risk for their mobility programs.

1. Communicate and coordinate

As reflected in the risk areas above, the mobility program can touch multiple departments within an organization. Given that decisions made by one functional group can impact the requirements for another group, it is critical that a coordinated, cross-functional process be established to share information.

To assist in this process, companies should consider a centralized database to aid in expatriate program management and day-to-day regulatory and compliance requirements. Processes should be set up to track and manage both international expatriate assignments and business travelers. Employee and business unit education can be very important to allow for upfront planning and ongoing compliance.

2. Consider the corporate tax position

The corporate tax position can impact the expatriate and the expatriate can impact the corporate tax position. For that reason, it is very important to have good communication between the tax and mobility departments . Some questions that may need consideration (especially for a new location):

Will a new entity be required to meet local legal, immigration, or tax requirements?
As noted above, does the Home employer already have a PE in the Host location or is there a danger that the employee will create a PE by their presence or duties?
Which entity should bear the costs for the employee’s remuneration and other costs?

3. Documentation is critical

Proper documentation can be very important in mitigating risk. For example, a properly executed secondment agreement between the Home and Host entity can assist in reducing PE risk by restricting expatriate employee activities in the Host location and identifying Home and Host entity responsibilities and limitations.

Other critical documentation to consider:

Forms to reduce or eliminate withholding requirements, as applicable
Expatriate assignment and tax equalization policies that are appropriate from legal, market, and company risk perspectives
Assignment letters that reflect the agreement between the company and expatriate
Certificates of coverage as applicable and obtained from the pertinent social security administration
Employment contracts, as required under local employment law and to support available planning

Consider a program risk review

A program risk review can be an effective way for companies to identify gaps and risks for high impact areas of the global mobility program. Companies can review their internal processes and ability to meet regulatory or other program requirements. Both process-focused (e.g., compensation accumulation, talent management, vendor management) and compliance focused (e.g., tax, immigration, equity) areas can be considered in a risk review.

In short, the current economic, regulatory, and legal environment has increased the scrutiny and diligence needed when managing global relocations and expatriate assignments. However, through communication, coordination, and documentation, your organization can manage their global assignment risk.

GTN’s Mobile Workforce Management solution helps clients track and manage the tax risks and compliance requirements related to their entire workforce, including expatriate assignees, global and domestic business travelers, remote workers, and work anywhere employees. Schedule a call with our team to talk through your specific situation and ask any additional questions you may have.

Author: Mark Tirpak

Mark is Managing Director for GTN's South region. He has over 20 years of professional experience in advising multinational companies on global mobility related issues, including expatriate taxation, payroll, equity compensation planning, international assignment policy review, and program administration. Having been an expat himself enhanced his desire to assist and help simplify the process for assignees who are overseas. +1.713.244.5020 | [email protected]

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1.Monitoring and Exiting Positions to Minimize Assignment Risk [Original Blog]

Monitoring and exiting positions is a crucial aspect of option writing that can help minimize assignment risk . As an option writer, it is important to stay vigilant and actively manage your positions to avoid being assigned on your options. By closely monitoring the market conditions and the underlying stock's movement, you can make informed decisions about when to exit a position to mitigate assignment risk .

1. Regularly monitor the market: Keeping a close eye on the market is essential for option writers. By staying updated with the latest news, earnings reports, and economic indicators, you can anticipate potential changes in stock prices that may impact your options. For example, if you have written covered calls on a stock and there is an upcoming earnings announcement , it might be wise to monitor the stock closely as volatility could increase, potentially leading to early assignment.

2. Set price targets : Establishing price targets for your options can help you determine when to exit a position. If the underlying stock reaches your target price before expiration, it may be prudent to close out the position to avoid assignment. For instance, if you have sold put options with a strike price of $50 and the stock drops significantly, approaching $45, you might consider buying back the options to prevent being assigned shares at a higher price.

3. Utilize stop-loss orders: stop-loss orders can be useful tools for managing assignment risk. By placing a stop-loss order on your options , you can automatically trigger a sale if the underlying stock reaches a certain price level. This allows you to limit potential losses and exit positions before they become risky. For instance, if you have written call options and the stock starts rallying unexpectedly, triggering your stop-loss order can help protect against further upside risk .

4. Consider rolling options: Rolling options involves closing out existing positions and simultaneously opening new ones with different strike prices or expiration dates. This strategy can be employed when you believe there is still potential for profit but want to reduce assignment risk. For example, if you have sold put options and the stock price has moved against you, rolling the options to a later expiration date or a lower strike price can give you more time for the stock to recover while reducing the likelihood of being assigned.

5. Be aware of dividend dates: Dividends can significantly impact option prices and assignment risk. If you have written call options on a stock that is about to go ex-dividend, there is a higher chance of early assignment as option holders may exercise their rights to capture the dividend. Being mindful of upcoming dividend

Monitoring and Exiting Positions to Minimize Assignment Risk - Assignment risk: Mitigating Assignment Risk: Strategies for Option Writers

2.Monitoring and Exiting the Assigned Risk Pool [Original Blog]

High-risk drivers often find themselves in a precarious situation when it comes to securing auto insurance coverage . In these cases, insurance companies might be reluctant to provide the necessary coverage due to a driver's less-than-ideal track record. That's where the Assigned Risk Pool comes into play. It serves as a safety net, ensuring that high-risk individuals can still obtain the coverage they need, even if it's not the most ideal scenario. But what happens when a driver wants to monitor their progress and ultimately exit this risk pool? This section delves into the intricacies of monitoring and exiting the Assigned Risk Pool , shedding light on the processes and factors involved.

From the perspective of a high-risk driver, being in the Assigned Risk Pool can be seen as a temporary setback. It's a necessary stopgap measure, but the ultimate goal is to secure traditional auto insurance at more competitive rates . To achieve this, drivers should consider the following steps:

1. Improve Driving Record: The most effective way to exit the Assigned Risk Pool is by improving your driving record. This means avoiding accidents, traffic violations , and maintaining a clean record. Over time, insurance companies may be more willing to underwrite your policy at standard rates .

2. Completion of Defensive Driving Courses: Enrolling in defensive driving courses can not only help you become a safer driver but can also be viewed favorably by insurers. Successfully completing such a course may lead to discounts or a better chance of moving out of the risk pool .

3. Continuous Coverage: Maintaining continuous insurance coverage is crucial. Even if you're in the Assigned Risk Pool, having uninterrupted coverage history can improve your eligibility for traditional insurance .

4. Regular Review of Your Policy: Periodically, you should review your insurance policy to understand how your rates are changing. As your risk profile improves, you may notice that your premiums start to decrease.

5. Shopping for Quotes: Don't be afraid to shop around for auto insurance quotes from various companies. Some may be more lenient and willing to offer standard coverage to high-risk drivers.

From the perspective of insurance companies, monitoring and exiting the Assigned Risk Pool is a careful balancing act . They must ensure that drivers are no longer high-risk before allowing them to leave the pool. Here's how insurers typically approach this:

1. Risk Assessment: Insurance companies regularly assess the risk profile of the drivers in the Assigned Risk Pool . This involves evaluating accident history, traffic violations , and any improvements in a driver's record.

2. Wait for Stability: Insurers typically require a period of stability in a driver's record before considering them for standard coverage . This could be a year or more, depending on the circumstances.

3. Underwriting Review: Once a driver's record stabilizes, they can request a review by the underwriting department. This review will determine if they are eligible to leave the Assigned Risk Pool and secure a standard policy .

4. Market Conditions: Economic conditions and the insurance market can also influence the exit process. In some cases, insurers may be more willing to allow exits due to increased competition in the insurance market .

Monitoring and exiting the Assigned Risk Pool is a multi-faceted process that requires effort from both drivers and insurers. It's a journey that high-risk drivers embark upon with the goal of securing more affordable auto insurance . By taking steps to improve their driving records and understanding the insurer's perspective, drivers can work towards exiting the pool and entering a more favorable insurance market .

Monitoring and Exiting the Assigned Risk Pool - Decoding the Assigned Risk Underwriting Process for High Risk Drivers update

3.Monitoring and exiting new investments [Original Blog]

As a business development professional , one of your key responsibilities is to monitor new investments and ensure that they are meeting expectations. This can be a challenging task, as there are often many moving parts and stakeholders involved. However, it is important to stay on top of things and keep a close eye on the performance of new investments.

One way to do this is to establish key performance indicators (KPIs) for each investment. KPIs can help you track progress and identify any early warning signs that something is off track. They can also be helpful in evaluating the success of an investment after the fact.

It is also important to stay in close communication with the management team of each company in which you have invested. They should keep you up to date on how the business is doing and any major changes or challenges that they are facing . This communication should flow both ways, and you should feel comfortable raising any concerns you have about the investment.

Finally, you need to have a plan for exiting each investment. This plan should be developed before you even make the investment, as it will help you manage risk and ensure that you are able to realize your desired return. The exit strategy will also be a key factor in how you monitor an investment, as you will need to track progress against the plan.

Monitoring new investments can be a challenging but important task for business development professionals. By establishing KPIs, staying in close communication with management, and having a well-defined exit strategy , you can better manage risk and ensure that your investments are successful.

4.Monitoring and Exiting Investments [Original Blog]

As a venture capitalist, you will be constantly monitoring your portfolio companies to ensure they are on track to meet their milestones and achieve their goals . You will also be working with them to help them navigate through challenges and providing advice and guidance when needed.

One of the most important aspects of monitoring your portfolio companies is understanding when to exit an investment. Exiting an investment is not always easy, but it is something that you need to be prepared for.

There are a few different ways to exit an investment:

1. Sell the company: This is the most common way to exit an investment. You can sell the company to another company or to a private equity firm .

2. Take the company public: This is a less common way to exit an investment, but it can be very profitable. If you take the company public, you will sell shares of the company to the public.

3. Sell the assets of the company: This is a less common way to exit an investment, but it can be done if the company is not doing well. You can sell the assets of the company, such as the patents or the customer list , to another company.

4. Shut down the company: This is the least desirable way to exit an investment, but it may be necessary if the company is not doing well. You can shut down the company and liquidate its assets.

When you are monitoring your portfolio companies , you need to be aware of the different ways to exit an investment. You also need to be prepared for when you need to exit an investment. If you are not prepared, you could lose a lot of money.

Monitoring and Exiting Investments - Simple Steps to Building a Successful Venture Capital Fund

5.Return On Investment (ROI):Monitoring and Exiting Angel Investments [Original Blog]

There are a few things you need to do when monitoring and exiting angel investments :

1. Calculate your Angel Round Exit Point

2. Track your progress

3. Be prepared to exit early if necessary

1. Calculate your Angel Round Exit Point :

When calculating your angel round exit point, it is important to remember that the earlier you exit, the more money you'll make. The sooner you can sell your shares, the sooner you can cash out and move on to your next investment opportunity . However, there are also risks associated with exiting too soon. If you exit too early, you may not receive the full value of your shares, which could result in a loss. You should also be aware that if the company fails, you may also lose money. It is important to weigh these risks and decide what is best for you.

2. Track your progress:

It is important to track your progress as an angel investor. This will allow you to see how the investment is doing and whether there are any potential opportunities for future growth . You can use a variety of tools to track your investment, such as a portfolio tracker or a fiscal tracker .

3. Be prepared to exit early if necessary:

If at any time you feel that the investment is not viable or not growing as hoped, it is important to be prepared to exit quickly. You should have a plan in place for exiting the investment and be ready to execute it quickly. This will help protect you from any potential losses and keep your portfolio growth goals in mind.

Return On Investment $ROI$:Monitoring and Exiting Angel Investments - Startup Angel Investing: Return On Investment (ROI)

6.Managing Risk, Adjusting Trades, and Exiting Positions [Original Blog]

One of the most appealing aspects of trading mini-sized Dow options is that they offer a lot of flexibility and versatility for different trading strategies. Whether you are bullish, bearish, neutral, or uncertain about the market direction, you can use mini-sized Dow options to express your view and profit from various scenarios. However, trading options also involves a lot of risk and complexity, and you need to be aware of some tips and tricks to manage your trades effectively. In this section, we will cover some of the best practices for trading mini-sized Dow options, such as how to manage your risk, how to adjust your trades, and how to exit your positions. These tips and tricks can help you improve your trading performance and avoid some common pitfalls .

Here are some of the tips and tricks for trading mini-sized Dow options :

1. Manage your risk with position sizing and stop-loss orders . One of the most important aspects of trading options is to manage your risk properly. You should never risk more than you can afford to lose, and you should always have a plan for how much you are willing to lose on each trade. A good way to manage your risk is to use position sizing and stop-loss orders. Position sizing means that you adjust the number of contracts you trade based on your risk tolerance and account size. For example, if you have a $10,000 account and you want to risk 2% of your account on each trade, you should not trade more than 20 contracts of mini-sized Dow options at a time. Stop-loss orders are orders that automatically close your position when the price reaches a certain level. For example, if you buy a call option for $5 and you want to limit your loss to $1 per contract, you can place a stop-loss order at $4. This way, you can protect your capital and avoid losing more than you planned.

2. Adjust your trades with rolling, hedging, and scaling. Another important aspect of trading options is to adjust your trades according to the changing market conditions . You should not be stubborn or emotional about your trades, and you should be flexible and adaptable to the market. There are several ways to adjust your trades, such as rolling, hedging, and scaling. Rolling means that you close your current position and open a new one with a different expiration date or strike price. For example, if you buy a call option that expires in 30 days and the price goes against you, you can roll your position to a longer expiration date or a lower strike price. This way, you can give yourself more time or a better chance for the price to move in your favor. Hedging means that you open a new position that offsets or reduces the risk of your current position. For example, if you buy a call option and the price goes down, you can hedge your position by selling a put option. This way, you can reduce your loss or even profit from the downward movement. Scaling means that you add or reduce the number of contracts you trade based on the market direction and your confidence. For example, if you buy a call option and the price goes up, you can scale up your position by buying more contracts. This way, you can increase your profit potential and ride the trend. However, you should also be careful not to overtrade or overexpose yourself to the market.

3. Exit your positions with profit targets and time decay. The final aspect of trading options is to exit your positions at the right time and lock in your profits or cut your losses . You should not be greedy or fearful about your trades, and you should have a clear exit strategy. There are two main factors that affect your exit decision: profit targets and time decay. Profit targets are the levels that you set for taking profits or losses on your trades. For example, if you buy a call option for $5 and you want to make a 50% return, you can set your profit target at $7.5. This way, you can secure your profit and avoid giving it back to the market. Time decay is the phenomenon that the value of an option decreases as it approaches its expiration date. For example, if you buy a call option that expires in 30 days and the price does not move, your option will lose value every day due to time decay. This way, you can lose money even if the price does not go against you. Therefore, you should be aware of the time decay factor and exit your positions before they lose too much value.

7.Exiting Positions and Realizing Profits [Original Blog]

Exiting positions and realizing profits is one of the most crucial aspects of merger arbitrage . It is the final step in the process of investing in M&A deals, and it requires careful consideration and planning. In this section, we will discuss the different options available for exiting positions and realizing profits, along with their advantages and disadvantages.

1. Hold until the deal closes

One option for exiting positions is to hold the position until the deal closes. This means that the investor waits until the merger or acquisition is completed, and then sells the position. This option is relatively low-risk and straightforward, as the investor does not have to make any additional decisions or take any additional actions . However, it also means that the investor may have to wait for several months, or even years, before realizing any profits.

2. Sell before the deal closes

Another option is to sell the position before the deal closes. This means that the investor sells the position at a profit or loss, depending on the current market conditions and the progress of the deal. This option requires more active management and monitoring of the position, as the investor must stay up-to-date on the latest news and developments regarding the deal. However, it also allows the investor to realize profits more quickly, and to avoid any potential losses if the deal falls through.

3. Partially sell the position

A third option is to partially sell the position. This means that the investor sells a portion of the position, while keeping the rest of the position to potentially benefit from further upside. This option allows the investor to realize some profits while still maintaining exposure to the deal. However, it also requires careful consideration of the size of the position and the potential risks and rewards.

4. Use options or derivatives

Finally, some investors may choose to use options or derivatives to exit their positions and realize profits. This can include buying or selling call or put options , or using other types of financial instruments. This option can be more complex and risky, as it requires a deeper understanding of options and derivatives. However, it can also provide greater flexibility and potential profits .

There are several options available for exiting positions and realizing profits in merger arbitrage. Each option has its advantages and disadvantages, and the best option will depend on the specific circumstances of the deal and the investor's risk tolerance and investment goals . By carefully considering these options and staying up-to-date on the latest news and developments, investors can successfully navigate M&A deals and realize profits.

Exiting Positions and Realizing Profits - Mastering Merger Arbitrage: A Guide to Navigating M A Deals

8.Strategies for Exiting Short-Term Positions [Original Blog]

When it comes to short-term investments , it's essential to have an exit strategy in place beforehand. Exiting a position too early or too late can significantly impact your overall returns. Therefore, it's crucial to prepare for the long-term and devise a strategy that can help you exit short-term positions effectively. There are numerous strategies that you can use to exit short-term positions , and each strategy has its own set of advantages and disadvantages. Some of the most commonly used strategies are discussed below:

1. Set a Target Price: One of the most straightforward strategies to exit a short-term position is to set a target price . This means that you decide on a specific price at which you're willing to sell your position. For example, if you bought a stock at $50 and set a target price of $60, you'll sell the stock as soon as it reaches that price. Setting a target price helps you lock in profits and ensures that you don't hold onto a position for too long.

2. Use Technical Analysis: Technical analysis is a popular method of analyzing the market that uses past data to predict future price movements. By looking at charts and indicators, you can identify trends and patterns that can help you make informed decisions about when to enter or exit a position. For example, if you notice that a stock is forming a head and shoulders pattern , it might be an indication that the price is about to drop. By using technical analysis, you can exit a short-term position before the price starts to decline.

3. Watch for News and Events: News and events can significantly impact the stock market , and it's essential to keep an eye on them if you're trading short-term . For example, if a company announces that it's going to release its earnings report, it might be a good idea to exit your position beforehand. Similarly, if there's news of a merger or acquisition, it might be an indication that the stock price is about to rise. Keeping an eye on news and events can help you make informed decisions about when to exit a short-term position .

Exiting short-term positions requires careful planning and execution. By using the strategies outlined above, you can ensure that you're making informed decisions about when to sell your positions. Remember that there's always a risk involved when investing in the stock market , and it's essential to do your research and be prepared for any potential outcomes .

Strategies for Exiting Short Term Positions - Navigating Market Volatility for Short Term Gains

9.Entering and Exiting Positions for Maximum Effect [Original Blog]

In futures trading , executing trades is one of the most critical aspects of achieving success. Entering and exiting positions at the right time can have a significant impact on profit and loss. It's important to understand the different strategies that can be used to maximize the effectiveness of trades. Taking a position can be challenging, but with the right approach, it can lead to substantial rewards .

When entering a position, it's essential to have a clear understanding of the market and the asset being traded. Conducting thorough research, analyzing market trends , and monitoring news and events can provide valuable insights that can help inform trading decisions. Additionally, it's essential to have a solid trading plan in place that includes entry and exit points, stop-loss orders, and profit targets .

Exiting a position is just as critical as entering one. Knowing when to exit a trade can be challenging, but it can prevent substantial losses. setting stop-loss orders can help mitigate risk and protect against sudden market movements . It's also essential to have a clear profit target in mind and take profits when they are achieved.

Here are some strategies for executing trades effectively:

1. Scalping: This strategy involves taking advantage of small price movements by entering and exiting positions quickly. Scalping can be a high-risk, high-reward strategy that requires quick decision-making .

2. Trend following: This strategy involves following market trends and entering positions in the direction of the trend. Trend following can be a lower-risk, lower-reward strategy that requires patience and discipline.

3. Breakout trading: This strategy involves entering positions when the price breaks out of a specific range or level. Breakout trading can be a high-risk, high-reward strategy that requires careful analysis of market trends .

4. News trading: This strategy involves entering positions based on news and events that can impact the market. News trading can be a high-risk, high-reward strategy that requires quick decision-making and careful analysis of market trends .

Executing trades effectively is critical to achieving success in futures trading. By understanding different strategies and having a solid trading plan in place, traders can take advantage of market movements and maximize profits. It's also essential to be disciplined, patient, and informed when entering and exiting positions. By following these strategies, traders can increase their chances of success in futures trading .

Entering and Exiting Positions for Maximum Effect - Position: Taking a Position: Strategies for Success in Futures Trading

10.Strategies for Entering and Exiting Positions [Original Blog]

One of the most challenging aspects of value investing is knowing when to buy and sell a stock. Timing your investments can make a significant difference in your returns, especially in the short term. However, there is no definitive answer to the question of when to enter and exit a position. Different value investors may have different strategies, preferences, and criteria for making their decisions. In this section, we will explore some of the common factors and methods that value investors use to time their investments, as well as some of the advantages and disadvantages of each approach.

Some of the factors and methods that value investors consider when timing their investments are:

1. Margin of safety : This is the difference between the intrinsic value of a stock and its market price . Value investors seek to buy stocks that are trading at a significant discount to their intrinsic value, which provides a margin of safety in case of errors in valuation or adverse market conditions . The margin of safety can also be used as a guide for selling a stock, when the market price approaches or exceeds the intrinsic value. For example, if a value investor buys a stock for $50 that has an intrinsic value of $100, they may decide to sell it when it reaches $90 or $95, leaving a small margin of safety for the next buyer.

2. Catalysts : These are events or factors that can trigger a change in the market perception of a stock, and thus its price. Value investors look for catalysts that can unlock the hidden value of a stock, such as a change in management, a restructuring, a merger or acquisition, a dividend increase, a share buyback, or a positive earnings surprise. Catalysts can also be negative, such as a lawsuit, a regulatory action, a competitive threat, or a negative earnings surprise. Value investors may use catalysts as signals for buying or selling a stock, depending on whether they are positive or negative, and how they affect the intrinsic value of the stock. For example, if a value investor owns a stock that has a positive catalyst , they may decide to hold it until the catalyst materializes , or sell it if the catalyst is already priced in by the market.

3. Market cycles : These are the fluctuations in the overall market conditions, such as bull and bear markets , recessions and expansions, and periods of high and low volatility. Value investors may use market cycles as indicators of the general sentiment and behavior of the market, and adjust their timing accordingly. For example, value investors may find more opportunities to buy undervalued stocks during bear markets, when the market is pessimistic and fearful, and sell overvalued stocks during bull markets, when the market is optimistic and greedy. Value investors may also use market cycles to diversify their portfolio, by allocating more or less capital to different sectors or industries, depending on their relative performance and prospects.

4. Personal goals and circumstances : These are the individual factors that affect the investor's financial situation, risk tolerance, time horizon, and investment objectives. Value investors may use these factors to determine their optimal timing for entering and exiting a position, based on their personal needs and preferences. For example, a value investor who is nearing retirement may have a shorter time horizon and a lower risk tolerance than a younger investor, and may therefore prefer to sell a stock sooner rather than later, or buy a stock with a lower margin of safety but a higher dividend yield. A value investor who has a specific goal, such as saving for a house or a college fund, may also have a different timing strategy than a value investor who is investing for general wealth accumulation .

Strategies for Entering and Exiting Positions - Value Investing: How to Invest in Undervalued Companies and Profit from Their Recovery

11.Introduction to Assignment Risk in Short Put Positions [Original Blog]

When trading options, investors often use the short put position as a way to generate income. However, there is a significant amount of risk involved in this strategy, and one of the most significant risks is assignment risk. Assignment risk can occur when the option seller is required to sell the underlying asset at the strike price, regardless of the current market price. In this section, we will introduce assignment risk in short put positions and discuss how investors can mitigate this risk.

1. Assignment Risk in Short Put Positions

When an investor sells a put option, they are essentially agreeing to buy the underlying asset at a specific price if the buyer exercises the option. If the price of the underlying asset falls below the strike price, the buyer may exercise the option, and the seller will be assigned the asset. This can result in significant losses for the seller if the market price of the asset continues to fall.

2. mitigating Assignment risk

There are several ways investors can mitigate assignment risk in short put positions . One option is to only sell options on assets they are willing to own. This means that if the option is assigned, the investor is comfortable holding the underlying asset. Another option is to use a stop-loss order to limit losses if the price of the underlying asset falls below a certain price.

3. Rolling the Option

Another way to mitigate assignment risk is to roll the option. Rolling the option involves buying back the current option and selling a new option with a later expiration date and a lower strike price . This allows the investor to collect more premium and potentially avoid assignment.

4. Using Protective Puts

Investors can also use protective puts to mitigate assignment risk . A protective put involves buying a put option on the same underlying asset as the short put position . If the price of the underlying asset falls, the protective put will increase in value, offsetting some or all of the losses from the short put position .

5. Comparison of Options

While there are several options for mitigating assignment risk in short put positions , the best option will depend on an investor's individual risk tolerance and trading strategy. Some investors may prefer to only sell options on assets they are willing to own, while others may prefer to use a combination of rolling options and using protective puts.

Assignment risk is a significant risk in short put positions, but there are several options for mitigating this risk. Investors should carefully consider their trading strategy and risk tolerance when deciding on the best way to manage assignment risk .

Introduction to Assignment Risk in Short Put Positions - Assignment Risk: Mitigating Assignment Risk in Short Put Positions

12.Factors that Increase Assignment Risk in Short Put Positions [Original Blog]

Short put positions are a popular options trading strategy that can help investors generate income. However, these positions also come with a certain level of risk, particularly the risk of assignment. Assignment risk occurs when the owner of the option exercises their right to sell the underlying asset at the strike price, forcing the option seller to buy the asset at that price. This can result in significant losses if the asset's market price has dropped below the strike price. In this section, we will explore the factors that increase assignment risk in short put positions .

1. Volatility

Volatility refers to the amount of price movement in the underlying asset. High volatility increases the likelihood that the option will be exercised, as it makes it more likely that the asset's price will fall below the strike price. When volatility is high, there is a greater chance that the option seller will be assigned, which can result in significant losses. To mitigate this risk, traders may want to avoid short put positions on highly volatile assets .

2. Time to Expiration

The time to expiration of an option contract can also impact assignment risk . As the contract nears expiration, the likelihood of assignment increases. This is because the option buyer will exercise their right to sell the underlying asset if it is profitable to do so. To reduce assignment risk , traders may want to avoid short put positions with a short time to expiration.

3. Strike Price

The strike price of an option contract can also impact assignment risk . Options with lower strike prices are more likely to be exercised, as they are closer to the current market price of the underlying asset. This means that traders who sell put options with lower strike prices may be at greater risk of assignment. To mitigate this risk, traders may want to consider selling put options with higher strike prices .

4. Dividends

Dividends can also impact assignment risk in short put positions . When a company pays a dividend, the price of its stock typically drops by the amount of the dividend. This means that if an option seller has sold a put option on a stock that pays a dividend, they may be at greater risk of assignment. To reduce this risk, traders may want to avoid short put positions on stocks that pay high dividends.

5. Market Conditions

market conditions can also impact assignment risk in short put positions . In a bear market, where stock prices are falling, the likelihood of assignment increases. This is because the option buyer may exercise their right to sell the underlying asset at the strike price, locking in a profit. To mitigate this risk, traders may want to avoid short put positions in bear markets .

There are several factors that can increase assignment risk in short put positions, including volatility, time to expiration, strike price, dividends, and market conditions. To reduce this risk, traders may want to consider avoiding short put positions on highly volatile assets, those with short time to expiration, low strike prices, stocks with high dividends, and in bear markets. By being aware of these factors and taking steps to mitigate assignment risk, traders can improve their chances of success in the options market .

Factors that Increase Assignment Risk in Short Put Positions - Assignment Risk: Mitigating Assignment Risk in Short Put Positions

13.The Importance of Monitoring Assignment Risk [Original Blog]

When trading short put positions, it is crucial to monitor assignment risk regularly. Assignment risk refers to the possibility of being assigned the obligation to buy the underlying asset at the strike price. This can happen when the option buyer exercises their right to sell the asset to the option seller. If the price of the underlying asset drops significantly, the option seller may be forced to buy the asset at a higher price than the market value. This can result in a significant loss for the option seller .

1. Understanding Assignment Risk

To mitigate assignment risk , you need to understand how it works. When you sell a put option, you are essentially selling the right to sell an asset to you at a specific price . If the option buyer exercises this right, you will be assigned the obligation to buy the asset at the strike price. This can happen at any time before the option expires, and you need to be prepared for it.

2. Monitoring the Underlying Asset

One way to mitigate assignment risk is to monitor the underlying asset regularly. Keep an eye on its price movements and any news or events that may affect its value. If you notice a significant drop in the asset price , you may want to consider closing your position or adjusting it to reduce your risk.

3. setting Stop Loss orders

Another way to mitigate assignment risk is to set stop loss orders. This is an order that automatically closes your position if the price of the underlying asset drops to a certain level. This can help you limit your losses if the market moves against you.

4. Rolling Over Your Position

Rolling over your position is another option to consider when managing assignment risk . This involves closing your current position and opening a new one with a later expiration date and a lower strike price. This can help you reduce your risk while still maintaining your exposure to the underlying asset .

5. choosing the Right Strike price

Choosing the right strike price is also important when managing assignment risk . A higher strike price will give you a higher premium but also increase your risk of being assigned the obligation to buy the asset. A lower strike price will give you a lower premium but also reduce your risk of being assigned.

Monitoring assignment risk is crucial when trading short put positions. Understanding how assignment risk works, monitoring the underlying asset, setting stop loss orders , rolling over your position, and choosing the right strike price are all ways to mitigate this risk . By implementing these strategies, you can reduce your risk and increase your chances of success in trading short put positions .

The Importance of Monitoring Assignment Risk - Assignment Risk: Mitigating Assignment Risk in Short Put Positions

14.Mitigating Assignment Risk through Strike Price Selection [Original Blog]

One of the most significant risks that short put positions face is assignment risk. The risk of being assigned the underlying asset at the strike price can result in significant losses for the investor. To mitigate this risk, investors need to choose the right strike price. In this section, we will discuss how strike price selection can help mitigate assignment risk .

1. Strike Price Selection

The strike price of an option is the price at which the underlying asset can be bought or sold. The strike price is a crucial factor in determining the option's value and the potential for assignment risk . The higher the strike price, the lower the premium, and the higher the assignment risk . Conversely, the lower the strike price, the higher the premium, and the lower the assignment risk .

2. In-the-Money (ITM) vs. Out-of-the-Money (OTM) Options

When selecting a strike price, investors have two options: in-the-money (ITM) and out-of-the-money (OTM) options. ITM options have a strike price that is below the current market price of the underlying asset, while OTM options have a strike price that is above the current market price of the underlying asset .

ITM options have a higher premium and a lower assignment risk than OTM options. However, they also have a lower potential profit. On the other hand, OTM options have a lower premium, a higher potential profit, and a higher assignment risk .

3. Time to Expiration

The time to expiration of an option is another critical factor to consider when selecting a strike price. The longer the time to expiration, the higher the premium and the lower the assignment risk. short-term options have a lower premium and a higher assignment risk .

4. Implied Volatility

Implied volatility is the market's expectation of how volatile the underlying asset will be in the future. It is a crucial factor in determining the option's premium and potential assignment risk . Higher implied volatility results in a higher premium and a higher assignment risk . Conversely, lower implied volatility results in a lower premium and a lower assignment risk .

5. Best Option

The best strike price selection depends on the investor's risk tolerance, investment goals, and market outlook. Investors who are risk-averse and want to mitigate assignment risk should choose ITM options with a longer time to expiration. Investors who are willing to take on more risk for a higher potential profit should choose OTM options with a shorter time to expiration.

Selecting the right strike price is crucial for mitigating assignment risk in short put positions. Investors should consider the strike price's relation to the current market price of the underlying asset, the time to expiration, and the implied volatility. Ultimately, the best strike price selection depends on the investor's risk tolerance and investment goals .

Mitigating Assignment Risk through Strike Price Selection - Assignment Risk: Mitigating Assignment Risk in Short Put Positions

15.Mitigating Assignment Risk through Expiration Date Selection [Original Blog]

When selling a put option, there is always a risk of assignment, which means the option buyer exercises their right to sell the underlying asset at the strike price. This can result in the seller being obligated to purchase the asset at a potentially unfavorable price . However, selecting the right expiration date can help mitigate this risk.

1. Choosing a longer expiration date can reduce assignment risk . This is because the longer the expiration, the more time the option buyer has to decide whether or not to exercise their right to sell the asset. If the asset price increases, the option buyer may choose not to exercise their option, reducing the likelihood of assignment.

2. On the other hand, choosing a shorter expiration date can increase assignment risk . This is because the option buyer has less time to decide whether or not to exercise their option, which could result in last-minute exercises .

3. Strike price selection can also impact assignment risk . If the strike price is far out of the money, the option buyer is less likely to exercise their option, reducing the likelihood of assignment. However, selecting a strike price too far out of the money may result in lower premiums, reducing potential profits .

4. market volatility can also impact assignment risk . Higher volatility can increase the likelihood of assignment, as the option buyer may be more likely to exercise their option if the market is moving rapidly.

5. Finally, it is important to consider the underlying asset when selecting an expiration date. Some assets may have more stable prices and less likelihood of rapid movements, reducing assignment risk . Others may be more volatile and require a longer expiration date to mitigate assignment risk .

For example, let's say an investor sells a put option on stock XYZ with a strike price of $50 and an expiration date of one month. If the stock price suddenly drops to $45, the option buyer may choose to exercise their option, forcing the investor to purchase the stock at $50. However, if the expiration date was three months instead of one, the option buyer may have waited to see if the stock price would recover before deciding whether or not to exercise their option.

Selecting the right expiration date is crucial when selling put options to mitigate assignment risk. A longer expiration date can reduce risk, while a shorter expiration date can increase risk. Strike price selection, market volatility, and the underlying asset should also be considered when making expiration date decisions .

Mitigating Assignment Risk through Expiration Date Selection - Assignment Risk: Mitigating Assignment Risk in Short Put Positions

16.Mitigating Assignment Risk through Position Sizing [Original Blog]

When it comes to short put positions , assignment risk is always a concern. However, one way to mitigate this risk is through position sizing . Position sizing refers to the amount of capital allocated to a particular investment. By managing the size of the position, traders can limit their exposure to potential losses in the event of an assignment.

1. determine Risk tolerance

Before entering any trade, it's important to understand your risk tolerance. This is the level of risk you're comfortable taking on based on your financial situation, investment goals, and personal preferences. By knowing your risk tolerance, you can determine the appropriate position size for your short put trade .

For example, if you have a low risk tolerance, you may want to limit your position size to a smaller percentage of your overall portfolio. On the other hand, if you have a higher risk tolerance, you may be comfortable taking on a larger position size .

2. Consider the Underlying Asset

Another factor to consider when determining position size is the underlying asset. Some assets are more volatile than others, which can increase the risk of assignment. For example, a short put position on a highly volatile stock may carry a higher risk of assignment than a short put position on a more stable stock .

When considering the underlying asset, it's important to analyze its historical volatility and any upcoming events that may impact its price . This information can help you make an informed decision about the appropriate position size for your short put trade .

3. Use Options Strategies

Options strategies can also be used to manage assignment risk through position sizing. For example, a trader may use a credit spread strategy to limit their exposure to potential losses in the event of an assignment.

In a credit spread, the trader sells a put option at a lower strike price and buys a put option at a higher strike price . The premium received from selling the put option can offset the cost of buying the put option, reducing the overall risk of the trade.

4. Monitor the Position

Once you've determined the appropriate position size for your short put trade , it's important to monitor the position regularly. This includes monitoring the underlying asset and any news or events that may impact its price, as well as any changes in your risk tolerance.

By monitoring the position, you can make adjustments if necessary to ensure that you're managing your assignment risk effectively.

Mitigating assignment risk through position sizing is an effective way to manage risk in short put positions. By understanding your risk tolerance , considering the underlying asset, using options strategies , and monitoring the position, traders can limit their exposure to potential losses in the event of an assignment.

Mitigating Assignment Risk through Position Sizing - Assignment Risk: Mitigating Assignment Risk in Short Put Positions

17.Strategies for Handling Assignment Risk [Original Blog]

Assignment risk is a significant concern for traders who engage in short put positions. It is essential to have a well-thought-out strategy in place to mitigate the risk and ensure that the trade is profitable. In this section, we will discuss some strategies that traders can use to handle assignment risk .

1. Early Management

One of the best ways to mitigate assignment risk is to manage the trade early. Traders can buy back the short put position when the price is still high, thereby reducing the risk of assignment. This strategy is particularly useful when the stock price is close to the strike price. By managing the trade early, traders can avoid the risk of assignment altogether.

2. Rolling the Position

Another strategy that traders can use to handle assignment risk is to roll the position. Rolling the position involves closing the existing short put position and opening a new one with a later expiration date and a lower strike price . This strategy can be useful when the stock price is close to the strike price, and there is a high risk of assignment. By rolling the position, traders can reduce the risk of assignment and extend the trade's duration.

Hedging is another strategy that traders can use to handle assignment risk. Traders can hedge their short put position by buying a long put option with the same expiration date and a lower strike price . This strategy can be useful when the stock price is volatile, and there is a high risk of assignment. By hedging the position, traders can limit their losses and protect their profits.

4. Margin Requirements

Traders can also handle assignment risk by understanding the margin requirements . When a short put position is assigned, traders must have enough margin to purchase the stock at the strike price. By understanding the margin requirements , traders can ensure that they have enough funds to cover the purchase. This strategy is particularly useful when trading with a margin account .

5. Diversification

Finally, traders can handle assignment risk by diversifying their portfolio. By diversifying their portfolio, traders can spread their risk across different stocks and reduce the impact of assignment on their overall portfolio. This strategy is particularly useful for long-term investors who do not want to be exposed to excessive risk .

Assignment risk is a significant concern for traders who engage in short put positions. However, there are several strategies that traders can use to handle assignment risk . Early management, rolling the position, hedging, understanding margin requirements, and diversification are all effective strategies that traders can use to mitigate assignment risk . Traders should carefully consider each strategy and choose the one that best suits their trading style and risk tolerance.

Strategies for Handling Assignment Risk - Assignment Risk: Mitigating Assignment Risk in Short Put Positions

18.The Importance of Managing Assignment Risk in Short Put Positions [Original Blog]

The importance of managing assignment risk in short put positions cannot be overstated. As an options trader, you need to be aware of the potential risks associated with short put positions and take necessary steps to mitigate them. In this section, we will discuss the key takeaways from our previous discussions and why it is crucial to manage assignment risk .

1. Avoiding Assignment Risk

One way to avoid assignment risk is to avoid writing short put options altogether. However, this may not be a feasible option as short puts can be a profitable trading strategy in certain market conditions. Another way to avoid assignment risk is to only sell put options on stocks that you are willing to own at the strike price . This way, if the option is assigned, you will be acquiring the stock at a price that you are comfortable with.

2. Understanding Assignment Risk

It is essential to understand the concept of assignment risk and how it can impact your trading strategy. When you sell a put option, you are obligated to buy the underlying stock at the strike price if the option is assigned. This means that you need to have enough cash in your account to cover the cost of buying the stock. If you do not have sufficient funds, you may be forced to sell other positions or borrow money to buy the stock, which can have significant financial consequences .

3. Managing Assignment Risk

To manage assignment risk , you can implement several strategies, including rolling the option forward, buying back the option, or adjusting the strike price. Rolling the option forward involves closing the current position and opening a new one with a later expiration date. Buying back the option involves buying the put option back to close the position. Adjusting the strike price involves changing the strike price of the option to a level that is more favorable to your trading strategy .

4. Monitoring Your Positions

It is crucial to monitor your short put positions regularly and be prepared to take action if necessary. You should keep an eye on the stock price, volatility, and any news that may impact the underlying stock. If the stock price moves against your position, you may need to adjust your strategy to avoid assignment risk .

5. Using risk Management tools

There are several risk management tools that you can use to manage assignment risk, including stop-loss orders, trailing stops, and position sizing. stop-loss orders can help you limit your losses by automatically closing your position if the stock price reaches a certain level. Trailing stops can help you lock in profits by automatically adjusting the stop-loss order as the stock price moves in your favor. Position sizing can help you manage your risk by limiting the amount of capital you allocate to each trade.

Managing assignment risk is a critical aspect of trading short put positions. By understanding the risks and implementing appropriate risk management strategies, you can minimize your potential losses and increase your chances of success . Remember to monitor your positions regularly and be prepared to take action if necessary. With the right approach, short put options can be a profitable trading strategy that can help you achieve your financial goals.

The Importance of Managing Assignment Risk in Short Put Positions - Assignment Risk: Mitigating Assignment Risk in Short Put Positions

19.Understanding Assignment Risk in Options Trading [Original Blog]

Understanding assignment risk is crucial for options traders , especially for those who write options. Assignment risk refers to the possibility of being assigned an exercise notice by the option buyer, requiring the option writer to fulfill their obligation. This can happen at any time before the expiration date of the option contract , and it is important to be prepared for such scenarios.

From the perspective of an option writer, assignment risk can be both a blessing and a curse. On one hand, if the option writer has sold a call option and the stock price remains below the strike price, they will not be assigned and can keep the premium received as profit. On the other hand, if the stock price rises above the strike price, they may be assigned and forced to sell their shares at a lower price than the current market value .

1. Understanding Exercise and Assignment: It is essential to grasp the concept of exercise and assignment in options trading. Exercise refers to the act of an option buyer utilizing their right to buy or sell the underlying asset at the predetermined strike price. Assignment occurs when an option writer is obligated to fulfill their side of the contract due to exercise by the option buyer.

2. Factors Influencing Assignment Risk: Several factors can influence assignment risk, including time remaining until expiration, dividend payments, interest rates, and volatility. For example, as expiration approaches, assignment risk tends to increase as option buyers are more likely to exercise their options.

3. In-the-Money vs. Out-of- the-Money Options : The likelihood of assignment depends on whether an option is in-the-money or out-of-the-money. In-the-money options have intrinsic value and are more likely to be exercised by buyers. Out-of-the-money options have no intrinsic value and are less likely to be exercised.

For instance, consider an option writer who has sold a put option with a strike price of $50 on a stock currently trading at $45 per share. If the stock price remains below $50, the put option will expire worthless, and the option writer keeps the premium received. However, if the stock price falls below $50, the option buyer may exercise their right to sell the shares at $50, forcing the option writer to buy them at a potentially higher price.

4. Strategies to Mitigate Assignment Risk: Option writers can employ various strategies to mitigate assignment risk. These include rolling options forward or closing positions before expiration, selecting strike prices further out-of-the-money, and diversifying positions across different stocks or indices.

Understanding assignment

Understanding Assignment Risk in Options Trading - Assignment risk: Mitigating Assignment Risk: Strategies for Option Writers

20.Common Scenarios Leading to Assignment Risk [Original Blog]

When it comes to options trading, assignment risk is an important factor that option writers need to consider. Assignment risk refers to the possibility of being assigned an exercise notice by the option holder, requiring the writer to fulfill their obligation to buy or sell the underlying asset at the predetermined price (strike price). Understanding the common scenarios that can lead to assignment risk is crucial for option writers in order to effectively mitigate this risk and make informed decisions .

From the perspective of option holders , there are several situations where they may choose to exercise their options early, leading to assignment risk for the writers. These scenarios include:

1. In-the-Money Options: When an option is in-the-money (the current market price of the underlying asset is higher than the strike price for call options or lower for put options), holders may exercise their options early to take advantage of potential profits. For example, if an investor holds a call option with a strike price of $50 on a stock currently trading at $60, they may choose to exercise the option and buy the stock at $50, then immediately sell it at the market price of $60, pocketing a $10 profit per share.

2. Dividend Payments: For stocks that pay dividends, option holders may exercise their call options just before the ex-dividend date in order to capture the dividend payment. This can be particularly attractive when the dividend amount exceeds any remaining time value in the option premium . By exercising early, holders secure ownership of the stock and become eligible for dividend payments .

3. Near Expiration: As options approach expiration, holders may decide to exercise them rather than let them expire worthless. This is especially true for options that are slightly in-the-money or close to being at-the-money. By exercising these options, holders can avoid losing their entire investment and potentially salvage some value.

On the other hand, from the perspective of option writers, there are certain scenarios that increase the likelihood of assignment risk . These include:

1. High Implied Volatility: When the implied volatility of an underlying asset is high, option writers face a greater chance of being assigned. This is because higher volatility increases the potential for large price swings , making it more likely for options to move into the money and be exercised by holders.

2. Near Expiration and Low Time Value: As options approach expiration, their time value diminishes rapidly. If the remaining time value is relatively low compared to the cost of closing out the position, option

Common Scenarios Leading to Assignment Risk - Assignment risk: Mitigating Assignment Risk: Strategies for Option Writers

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GEOG 871
Geospatial Technology Project Management

Geography Department Penn State

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Assignment #7 - Risk Identification and Analysis

Assignment #7 Overview

Timing : See Canvas Calendar Target Word Count : 1800-3000 words (this is just a target to provide a general idea on level of detail) Total Points: 70 points - see rubric for details

Assignment #7 will also be completed as a team assignment. Teams for Assignment #7 will be the same as those assigned for Assignment #6 . At the beginning of or prior to Week 8, the team should assign a different team leader to coordinate the team's work on Assignment #7. This Assignment follows work that you have already carried out in planning and preparing for the City of Metropolis Geodatabase Development Project in past assignments. Assignment #7 is to identify project risks, prepare a risk probability matrix, and carry out an analysis of selected risks and risk responses (one for each team member). As described in Assignment #6, you may use any appropriate communication and group collaboration tools to support your work on this Assignment.

Your team represents the City’s contractor selected by the City to carry out the City of Metropolis Geodatabase Design and Development Project. Your company's senior management and the City's Project Manager have requested that you prepare a risk management plan that identifies potential risks and identifies risk management strategies. From the course content and readings, you know that the overall purpose of risk planning is to anticipate possible risk events and be ready to take appropriate action when risk events occur—to eliminate or reduce negative impacts on the project.

Your Submittal for Assignment #7

You may wish to begin this exercise with a brainstorming session about potential risks to get candidate risks “on the table” for consideration by the team, and then identify and refine that wording for risks that have some realistic chance of occurring in this project. For example, potential weather problems present a real obstacle to completing field data collection by the planned completion date. It is also an issue that the project manager will ultimately have to plan for, as opposed to other issues that may more align with company policy, such as employee retention policies. Also, a major disaster (e.g., your office burning down), is not a high-enough probability event that requires much time in planning. As described below, you will select several of the identified risks and carry out a risk analysis.

Your team will use the distilled list of risks to make a risk matrix (see Figure 8-1 for an example). The matrix will have at least three classes (high/medium/low) for probability and impact, but you may include more classes if you like. All team members should contribute to identifying risks and organizing them into the matrix. Remember that it is important to name risks effectively—use words that describe the risk event and point to the impact on the project (e.g., “injury of field technician disrupts data collection work”) After completion of the risk matrix, each team member should then select one of the identified risks which the team finds critical to the project. The team members will carry out and document a risk analysis for their selected risk.

In summary, the Risk Management Plan you submit should cover the following main parts:

Cover page with prominent title and all necessary information identifying the course, assignment, author, and date. The main title of the document should be "RISK MANAGEMENT PLAN". The Cover Page should also reference "City of Metropolis" and the full project name and the name of your company. At the bottom of the Cover Page (right side is best), include the course name and number, assignment number, Team number and team members, and date.
Table of Contents.
Summary of the project and its deliverables so the reader can understand the context for risk management in this project. Gie a reasonable amount of detail about the deliverables and scope: a) discssion of the field data collection, QC, and creation of new geodatabase feature classes, b) explanaiton of the 2 MD4 custom GIS applications including software platforms (e.g., ArcGIS Pro, ArcGIS Online Field Maps)
Explanation of risk management with a description of key terms (e.g., risk, risk event, risk response strategy, etc.). Make reference to the PMI PMBoK.
Risk identification register which includes a comprehensive set of risks (for all aspects and deliverables of the project) organized into risk categories (e.g., "Technical/Operational"). This list should show, at a minimum, the risk ID number, a descriptive name* of the risk, and a short description. You can decide on your own risk categories. You should use an alphanumeric risk numbering scheme where the alpha code represents the risk category and sequential numbering within each category (e.g., TO1, TO2, etc.). You can decide on your own categories but the categories should be described. A table format works best for this. That description can be one or two sentences that explain the risk event, condition, or circumstance and how it could impact the project.
Risk matrix similar to that shown in Figure 8-1 with classification for Impact and Probability. Be sure to include and introduction on what the purpose of the matrix is and how it suports project planning and provides a basis for managing the project. It is importnt to includes a description of what "Probability" and "Impact" mean in the context of the project. The classes (e.g., Low, Medium, High) should be described. If you want to add a "Very High" category that is OK. While these categories (H, M, L) are qualitative in nature, your description of them should give a picture of what they mean relative to the project. For instance, "High Impact" could be defined as, "Occurrence of this risk will cause major disruption of the project schedule, qualty, or budget and response sction should be taken immediately to eliminate or reduce the level of disruption". It is a good idea to describe the Probability categories as a projected likelihood of occurrence--e.g., "High Probability" means that there is an approximately 85% likelihood or greater of occurrence.
Risk analysis (one selected risk for each person on the team). This is a detailed evaluation of each selected risk that should include: a) description of the risk, b) triggers/indicators, and c) description of appropriate risk response strategies--making reference to the PMI's response strategy types** (main ones are: Avoidance, Mitigation, Transference). It is a good idea to structure this section into subsections coorespnding to each of the parts. Bullet point lists are an effective format to list and describe triggers/indicators and risk response strategies. Also, begin this Section with an introduction of what risk analysis and risk response is and mention the PMI PMBoK risk response types**.

*The risk name should be descriptive with enough words that a reader can understand the basic nature of the risk without the need the look at a more detailed explanation. Make sure to avoid the trap of defining a risk as the result of the risk. Focus on the actual condition or event that impacts the project. For example, "delay in field data collection" is not a risk--this is the potential result of one or more risk events.

**PMI Risk Response Strategies include: Acceptance, Avoidance, Mitigation, and Transference. It is OK not to focus on "Acceptance" since this is bacially a "do nothing" response.

Important Notes:

Remember that this assignment relates to the project as a whole--not just specific deliverables as in Assignment #6 . So step back and consider risk events, conditions, and circumstances that could impact any aspect of the project and understand that a single risk could impact work on one or more deliverables.

You may have discovered that the Project Management Institute (PMI) identifies both “negative” and “positive” risk. To simplify your work on this Assignment, deal only with negative risk —those potential risks that could have a negative impact on the project schedule, cost, quality, etc.

The team leader will have the main responsibility for assembling contributions from team members into a final deliverable and submit the assignment for the team.

The risk probability/impact matrix and the risk analysis write-ups on selected risks should be about 1800 to 3000 words in length. As is the case for all written assignments, the word count is a target to give you an idea about the level of detail expected. As a general rule, it is best to keep it concise and as brief as possible while still covering the necessary topics. No points will be deducted for submittals if they exceed the maximum word count by a small amount.

Refer to the grading rubric below for guidelines about the expected format and content of this Assignment.

As in all written assignments, you should include a cover page which includes the following information: a) course number and name, b) assignment number and name, c) your name, d) submittal date. The cover page should also have the full project name and document title ("Risk Management Plan"). Your submitted assignment should be formatted as specified in the Format Quality of this assignment’s rubric below to earn maximum points. As you prepare this assignment, START WITH AN OUTLINE, with sections and subsections that cover the topics above. We recommend that you use the Outline/Heading feature of your word processing software in document preparation. It is expected that you will organize the document into numbered and named sections. It is best practice today, for technical and management documents to use a "decimal" outline numbering scheme (1., 1.1, etc.) as opposed to the older Roman Numeral numbering approach.

Assignment Submittal and Grading

View specific directions for submitting Assignment #7. See Canvas Calendar for due date. Grading information and rubric is below.

This Assignment #7 is worth 70 points. The points awarded from the Instructor’s grading of this Assignment will be given to all members of the team.

The instructor may deduct points if the Assignment is turned in late, unless a late submittal has been approved by the Instructor prior to the Assignment submittal date.


Grading Category	Basis for Scoring	Total Possible Points
A. Inclusion of Required Content		22
B. Overall Document Organization		16
C. Quality/Clarity of Writing	Writing quality and clarity refers to how well and effectively words and sentences to convey meaning to the reader including the following:	20
D. Format Quality	Well-formatted document helps convey content and meaning to the reading. Important format parameters include:	12

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Understanding assignment risk in Level 3 and 4 options strategies

E*TRADE from Morgan Stanley

With all options strategies that contain a short option position, an investor or trader needs to keep in mind the consequences of having that option assigned , either at expiration or early (i.e., prior to expiration). Remember that, in principle, with American-style options a short position can be assigned to you at any time. On this page, we’ll run through the results and possible responses for various scenarios where a trader may be left with a short position following an assignment.

Before we look at specifics, here’s an important note about risk related to out-of-the-money options: Normally, you would not receive an assignment on an option that expires out of the money. However, even if a short position appears to be out of the money, it might still be assigned to you if the stock were to move against you just prior to expiration or in extended aftermarket or weekend trading hours. The only way to eliminate this risk is to buy-to-close the short option.

Short (naked) calls

Credit call spreads

Credit put spreads, debit call spreads, debit put spreads.

When all legs are in-the-money or all are out-of-the-money at expiration

Another important note : In any case where you close out an options position, the standard contract fee (commission) will be charged unless the trade qualifies for the E*TRADE Dime Buyback Program . There is no contract fee or commission when an option is assigned to you.

Short (naked) call

If it's at expiration	If it's at expiration
This means your account must be able to deliver shares of the underlying—i.e., sell them at the strike price. If your account doesn't have the buying power to cover the sale of shares, you may receive a margin call. Actions you can take: If you don’t want to sell your shares or you don’t own any, you can buy the call option before it expires, closing out the position and eliminating the risk of assignment.

If it's at expiration

This means your account must be able to deliver shares of the underlying—i.e., sell them at the strike price. If your account doesn't have the buying power to cover the sale of shares, you may receive a margin call.

Actions you can take: If you don’t want to sell your shares or you don’t own any, you can buy the call option before it expires, closing out the position and eliminating the risk of assignment.

If you experience an early assignment

An early assignment is most likely to happen if the call option is deep in the money and the stock’s ex-dividend date is close to the option expiration date.

If your account does not hold the shares needed to cover the obligation, an early assignment would create a short stock position in your account. This may incur borrowing fees and make you responsible for any dividend payments.

Also note that if you hold a short call on a stock that has a dividend payment coming in the near future, you may be responsible for paying the dividend even if you close the position before it expires.

If it's at expiration	If it's at expiration
This means your account must have enough money to buy the shares of the underlying at the strike price or you may incur a margin call. Actions you can take: If you don’t have the money to pay for the shares, you can buy the put option before it expires, closing out the position and eliminating the risk of assignment and the risk of a margin call.

An early assignment generally happens when the put option is deep in the money and the underlying stock does not have an ex-dividend date between the current time and the expiration of the option.

Short call + long call

(The same principles apply to both two-leg and four-leg strategies)

If the and the at expiration
This means your account will deliver shares of the underlying—i.e., sell them at the strike price. Actions you can take: If you don’t have the shares to sell, or don’t want to establish a short stock position, you can buy the short call before expiration, closing out the position. If the short leg is closed before expiration, the long leg may also be closed, but it will likely not have any value and can expire worthless.

If the and the at expiration

This means your account will deliver shares of the underlying—i.e., sell them at the strike price.

Actions you can take:

If you don’t have the shares to sell, or don’t want to establish a short stock position, you can buy the short call before expiration, closing out the position.

If the short leg is closed before expiration, the long leg may also be closed, but it will likely not have any value and can expire worthless.

This would leave your account short the shares you’ve been assigned, but the risk of the position would not change . The long call still functions to cover the short share position. Typically, you would buy shares to cover the short and simultaneously sell the long leg of the spread.

Pay attention to short in-the-money call legs on the day prior to the stock’s ex-dividend date, because an assignment that evening would put you in a short stock position where you are responsible for paying the dividend. If there’s a risk of early assignment, consider closing the spread.

Short put + long put

If the and the at expiration
This means your account will buy shares of the underlying at the strike price. Actions you can take: If you don’t have the money to pay for the shares, or don’t want to, you can buy the put option before it expires, closing out the position and eliminating the risk of assignment. Once the short leg is closed, you can try to sell the long leg if it has any value, or let it expire worthless if it doesn’t.

If the and the at expiration

This means your account will buy shares of the underlying at the strike price.

Actions you can take:

If you don’t have the money to pay for the shares, or don’t want to, you can buy the put option before it expires, closing out the position and eliminating the risk of assignment.

Once the short leg is closed, you can try to sell the long leg if it has any value, or let it expire worthless if it doesn’t.

Early assignment would leave your account long the shares you’ve been assigned. If your account does not have enough buying power to purchase the shares when they are assigned, this may create a Fed call in your account.

However, the long put still functions to cover the position because it gives you the right to sell shares at the long put strike price. Typically, you would sell the shares in the market and close out the long put simultaneously.

Here's a call example

Let’s say that you’re short a 100 call and long a 110 call on XYZ stock; both legs are in-the-money.
You receive an assignment notification on your short 100 call, meaning you sell 100 shares of XYZ stock at 100. Now, you have $10,000 in short stock proceeds, your account is short 100 shares of stock, and you still hold the long 110 call.
Exercise your long 110 call, which would cover the short stock position in your account.
Or, buy 100 shares of XYZ stock (to cover your short stock position) and sell to close the long 110 call.

Here's a put example:

Let’s say that you’re short a 105 put and long a 95 put on XYZ stock; the short leg is in-the-money.
You receive an assignment notification on your short 105 put, meaning you buy 100 shares of XYZ stock at 105. Now, your account has been debited $10,500 for the stock purchase, you hold 100 shares of stock, and you still hold the long 95 put.
The debit in your account may be subject to margin charges or even a Fed call, but your risk profile has not changed.
You can sell to close 100 shares of stock and sell to close the long 95 put.

Long call + short call

If the and the at expiration
This means your account will buy shares at the long call’s strike price. Actions you can take: If you don’t have enough money in your account to pay for the shares, or you don’t want to, you can simply sell the long call option before it expires, closing out the position. However, unless you are approved for Level 4 options trading, you must close out the short leg first (or simultaneously). The easiest way to do this is to use the spread order ticket to buy to close the short leg and sell to close the long leg. Assuming the short leg is worth less than $0.10, the E*TRADE Dime Buyback program would apply, and you’ll pay no commission to close that leg.

If the and the at expiration

This means your account will buy shares at the long call’s strike price.

Actions you can take:

If you don’t have enough money in your account to pay for the shares, or you don’t want to, you can simply sell the long call option before it expires, closing out the position.

However, unless you are approved for Level 4 options trading, you must close out the short leg first (or simultaneously). The easiest way to do this is to use the spread order ticket to buy to close the short leg and sell to close the long leg.

Assuming the short leg is worth less than $0.10, the E*TRADE Dime Buyback program would apply, and you’ll pay no commission to close that leg.

Debit spreads have the same early assignment risk as credit spreads only if the short leg is in-the-money.

An early assignment would leave your account short the shares you’ve been assigned, but the risk of the position would not change . The long call still functions to cover the short share position. Typically, you would buy shares to cover the short share position and simultaneously sell the remaining long leg of the spread.

Long put + short put

If the and the at expiration
This means your account will buy shares at the long call’s strike price. Actions you can take: If you don’t have the shares, the automatic exercise would create a short position in your account. To avoid this, you can simply sell the put option before it expires, closing out the position. However, you may not have the buying power to close out the long leg unless you close out the short leg first (or simultaneously). The easiest way to do this is to use the spread order ticket to buy to close the short leg and sell to close the long leg. Assuming the short leg is worth less than $0.10, the E*TRADE Dime Buyback program would apply, and you’ll pay no commission to close that leg.

If the and the at expiration

This means your account will buy shares at the long call’s strike price.

Actions you can take:

If you don’t have the shares, the automatic exercise would create a short position in your account. To avoid this, you can simply sell the put option before it expires, closing out the position.

However, you may not have the buying power to close out the long leg unless you close out the short leg first (or simultaneously). The easiest way to do this is to use the spread order ticket to buy to close the short leg and sell to close the long leg.

Assuming the short leg is worth less than $0.10, the E*TRADE Dime Buyback program would apply, and you’ll pay no commission to close that leg.

An early assignment would leave your account long the shares you’ve been assigned. If your account does not have enough buying power to purchase the shares when they are assigned, this may create a Fed call in your account.

All spreads that have a short leg

(when all legs are in-the-money or all are out-of-the-money)

If all legs are at expiration	If all legs are at expiration
For call spreads, this will buy shares at the long call’s strike price and sell shares at the short call’s strike price. For put spreads, this will sell shares at the long put strike price and buy shares at the short put strike price. In either case, this will happen in the account after expiration, usually overnight, and is called . Your account does not need to have money available to buy shares for the long call or short put because the sale of shares from the short call or long put will cover the cost. There will be no Fed call or margin call.

If all legs are at expiration

For call spreads, this will buy shares at the long call’s strike price and sell shares at the short call’s strike price.

For put spreads, this will sell shares at the long put strike price and buy shares at the short put strike price.

In either case, this will happen in the account after expiration, usually overnight, and is called .

Your account does not need to have money available to buy shares for the long call or short put because the sale of shares from the short call or long put will cover the cost. There will be no Fed call or margin call.

Pay attention to short in-the-money call legs on the day prior to the stock’s ex-dividend date because an assignment that evening would put you in a short stock position where you are responsible for paying the dividend. If there’s a risk of early assignment, consider closing the spread.

However, the long put still functions to cover the long stock position because it gives you the right to sell shares at the long put strike price. Typically, you would sell the shares in the market and close out the long put simultaneously.

What to read next...

How to buy call options, how to buy put options, potentially protect a stock position against a market drop, looking to expand your financial knowledge.

Assignment Bias: Definition, Avoidance

Bias in Statistics > Assignment Bias

What is Assignment Bias?

Assignment bias happens when experimental groups have significantly different characteristics due to a faulty assignment process. For example, if you’re performing a set of intelligence tests, one group might have more people who are significantly smarter. Although this type of bias is usually associated with non-random sampling and assignment, it can occasionally be an issue with random techniques.

Controlling Assignment Bias

Random assignment can help to control assignment bias by ensuring that treatment groups and control groups have an equal spread of characteristics. That said, random assignment is not always possible, especially in the medical fields where it may be unethical to assign patients to control groups. If you are unable to use random sampling and random assignment methods to select participants, alternative methods include:

Instrumental Variables : A third variable used in regression that helps you to uncover “hidden” variables (other than the independent variables ) that cause results.
Propensity Score Matching : a matching technique that accounts for covariates in the experiment.
Purposive Sampling : Selecting samples based on your knowledge about the population and the study.
Randomization Tests : an approach that considers all of the possible ways experimental values could be assigned to all groups.
Sequential Assignment (assigning the first patient to the first group, the second patient to the second group, the third to the fist group…and so on), followed by Treatment-as-Usual (accepted protocols for treatment).
Sequential Sampling .

Threats to Validity

Assignment bias can be a threat to internal validity , because it allows two different explanations for differences in treatment results. For example, if you find that a weight loss procedure results in weight loss of more than 50 lbs, it could be that the treatment is actually effective, or it could be that the differences are because people in the experimental group weigh more at the outset (and therefore, have more to lose). In more technical terms, unmeasured extraneous variables (e.g. extra weight) might be interfering with the relationship between the independent variable and dependent variable .

Assignment bias can also be a threat to external validity “…if it affects study results, leading to inaccurate estimates of the relationships between variables in a population” (Dattalo, 2010). In other words, if you take your questionable experimental results and apply them to the broader population, this results in issues with external validity.

References: Dattalo, P. (201). Strategies to Approximate Random Sampling and Assignment. Oxford University Press, USA.

High School

Who is at risk of assignment? 1) Market maker 2) Option seller 3) Option buyer 4) Broker

Aliciabags6843 is waiting for your help., ai-generated answer.

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157.1K people helped

Final answer:

The option seller is the one who is at risk of assignment, as they have the obligation to fulfill the contract if the option is exercised. Market makers, brokers, and option buyers do not face this assignment risk in the same way.The correct option is (2) option seller

Explanation:

Among the options provided, the option seller is at risk of assignment. This is because the option seller has the obligation to fulfill the terms of the option contract if the option buyer chooses to exercise it. The market maker and broker facilitate transactions and are not typically at risk of assignment for the options they trade on behalf of clients or maintain liquidity. The option buyer holds the right, but not the obligation, to exercise the option, so they are not at risk of having to fulfill an assignment. In the financial market, risks are inherent, and investors should be aware of the mechanics and potential consequences of the financial instruments they engage with. Sellers must consider their positions carefully, as the sale of options can lead to an obligation to buy or sell the underlying asset if the option is exercised. Stock brokerages and agents play a role in executing these transactions but do not bear the assignment risk once the trade is complete. Analyses of market conditions and a solid understanding of these conditions are crucial for both buyers and sellers to make informed decisions and anticipate gains from their trades.

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Suspended Counterparty Program

FHFA established the Suspended Counterparty Program to help address the risk to Fannie Mae, Freddie Mac, and the Federal Home Loan Banks (“the regulated entities”) presented by individuals and entities with a history of fraud or other financial misconduct. Under this program, FHFA may issue orders suspending an individual or entity from doing business with the regulated entities.

FHFA maintains a list at this page of each person that is currently suspended under the Suspended Counterparty Program.


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Everything You Need to Know About Options Assignment Risk

By Pat Crawley

The fear of being assigned early on a short option position is enough to cripple many would-be options traders into sticking by their tried-and-true habit of simply buying puts or calls. After all, theoretically, the counterparty to your short options trade could exercise the option at any time, potentially triggering a Margin Call on your account if you’re undercapitalized.

But in this article, we're going to show you why early assignment is a vastly overblown fear, why it's not the end of the world, and what to do if it does occur.

What is Assignment in Options Trading?

Do you remember reading beginner options books or articles that said, "an option gives the buyer the right, but not the obligation, to buy/sell a stock at a specified price and date?" Well, it's accurate, but only for the buy side of the contract.

The seller of an option is actually obligated to buy or sell should the buyer choose to exercise their contract. So when options, assignment is when you, the lucky seller of an options contract, get chosen to make good on your obligation to buy or sell the underlying asset.

Let's say you sold a call option on a stock with a strike price of $50, which you held until expiration. At expiration, the stock trades at $55, meaning it's automatically exercised by the buyer. In this case, you are forced to sell the buyer 100 shares at $50 per share.

So when selling options, assignment is when you, the lucky seller of an options contract, get chosen to make good on your obligation to buy or sell the underlying asset.

What is Early Assignment in Options Trading?

Early assignment is when the buyer of an options contract that you're short decides to exercise the option before the expiration and begins the assignment process.

Many beginning traders count early assignments as one of their biggest trading fears. Many traders' fear of early assignment stems from their lack of understanding of the process. Still, it's typically not something to worry about, and we'll show you why in this article. But first, let's look at an example of how the process works.

For instance, say we collect $1 in premium to short a 30-day put option on XYZ with a strike price of $45 while the underlying is trading at $50. Fast forward, and it's the morning of expiration day. Options will expire at the close of trading in a few hours. The underlying stock is hovering around $44.85. Our plan pretty much worked as planned until, for some reason, the holder of the option exercises the option. We're confused and don't know what's going on.

It works exactly the same way as ordinary options settlement . You fulfill your end of the bargain. As the seller of a put option, you sold the right to sell XYZ at $45. The option buyer exercised that right and sold his shares to you at $45 per share.

And now, let's break down what happened in this transaction:

You collected $1 in premium when opening the contract
The buyer of the option exercises his right to sell at $45 per share.
You’re now long 100 shares of XYZ that you paid $45 for, and you sell them at the market price of $44.80 per share, realizing a $0.20 per share loss.
Your profit on the transaction is $0.80 because you pocketed $1 from the initial sale of the option but lost $0.20 from selling the 100 shares from assignment at a loss.

Why Early Assignment is Nothing to Fear

Many beginning traders count early assignments as one of their biggest trading fears; on some level, it makes sense. As the seller of an option, you're accepting the burden of a legitimate obligation to your counterparty in exchange for a premium. You're giving up control, and the early assignment shoe can, on paper, drop at any time.

Exercising Options Early Burns Money

People rarely exercise options early because it simply doesn't make financial sense. By exercising an option, you're only capturing the option's intrinsic value and entirely forfeiting the extrinsic value to the option seller. There's seldom a reason to do this.

Let's put ourselves in the buyer's shoes. For instance, we pay $5 for a 30-day call with a strike price of $100 while the underlying is trading at $102. The call has $2 in intrinsic value, meaning our call is in-the-money by $2, which would be our profit if the option expired today.

The other $3 of the option price is extrinsic value. This is the value of time, volatility, and convexity. By exercising early, the buyer of an option is burning that $3 of extrinsic value just to lock in the $2 profit.

A much better alternative would be to sell the option and go and buy 100 shares of the stock in the open market.

Viewed in this light, an option seller can’t be blamed for looking at early assignment as a good thing, as they get to lock in their premium as profit.

Your Risk Doesn’t Change

One of the biggest worries about early assignment is that being assigned will somehow open the trader up to additional risk. For instance, if you’re assigned on a short call position, you’ll end up holding a short position in the underlying stock.

However, let me prove that the maximum risk in your positions stays the same due to early assignment.

How Early Assignment Doesn’t Change Your Position’s Maximum Risk

Perhaps you collect $2.00 in premium for shorting an ABC $50/$55 bear call spread. In other words, we're short the $50 call for a credit of $2.50 and long the $55 call, paying a debit of $0.50.

Before considering early assignment, let's determine our maximum risk on this call spread. The maximum risk for a bear call spread is the difference between the strike minus the net credit you receive. In this case, the difference between the strikes is $5, and we collect a net credit of $2, making our maximum risk on the position $3 or $300.

You wake up one morning with the underlying trading at $58 to find that the counterparty of your short $50 call has exercised its option, giving them the right to buy the underlying stock at $50 per share.

You'd end up short due to being forced to sell the buyer shares at $50. So you're short 100 shares of ABC with a cost basis of $50 per share. On that position, your P&L is -$800, the P&L on a $55 long call is +$250, on account of you paying $0.50, and the call being $3.00 in-the-money. And finally, because the option holder exercised early, you get to keep the entire credit you collected to sell the $50 call, so you've collected +$250.

So your P&L is $300. You've reached your max loss. Let's get extreme here. Suppose the price of the underlying runs to $100. Here are the P&Ls for each leg of the trade:

Short stock: -$5,000
Long call: +$4,450
Net credit received from exercised short option: +$250
5,000 - (4,450 + 250) = $300

While dealing with early assignments might be a hassle, it doesn’t open a trader up to additional risk they didn’t sign up for.

Margin Calls Usually Aren’t The End of the World

Getting a margin call due to early assignment isn't the end of the world. Believe it or not, stock brokerages have been around for a long time. They have seen early assignments many times before, and they have protocols for it.

Think about it intuitively, your broker allowed you to open the short option position knowing that the capital in your account could not cover an early assignment. Still, they let you make the trade anyways.

So what happens when you get an early assignment that you can’t cover? Your broker issues you a margin call. Once you’re in violation of their margin rules, they pretty much have carte blanche to handle the situation as they wish, including liquidating the assigned stock position at their will.

However, most brokers will give you some time to react to the situation and either decide to deposit more capital, liquidate the position on your own, or exercise offsetting options to fulfill the margin call in the case of an option spread.

Even though a margin call isn't fun, remember that the overall risk of your position doesn't change due to an early assignment, and it's typically not a momentous event to deal with. You probably just have to liquidate the trade.

When Early Assignment Might Occur?

Dividend Capture

One of the few times it might make sense for a trader to exercise an option early is when he's holding a call that is deep in-the-money, and there's an upcoming ex-dividend date.

Because deep ITM calls have very little extrinsic value (because their deltas are so high), any negligible extrinsic value is often outweighed by the value of an upcoming dividend payment , so it makes sense to exercise and collect the dividend.

Deep In-The-Money Options Near Expiration

While it's important to emphasize that the risk of early assignment is very low in most cases, the likelihood does rise when you're dealing with options with very little extrinsic value, like deep-in-the-money options. Although, even in those cases, the probabilities are pretty low.

However, an options trader that is trading to exploit market anomalies like the volatility risk premium, in which implied volatility tends to be overpriced, shouldn't even be trading deep-in-the-money options anyhow. Profitable option sellers tend to sell options with very little intrinsic value and tons of extrinsic value.

Bottom Line

Don't let the fear of early assignment discourage you from selling options. Far worse things when shorting options! While it's true that early assignment can occur, it's typically not a big deal. Related articles

Can Options Assignment Cause Margin Call?
Assignment Risks To Avoid
The Right To Exercise An Option?
Options Expiration: 6 Things To Know
Early Exercise: Call Options
Expiration Surprises To Avoid
Assignment And Exercise: The Mental Block
Should You Close Short Options On Expiration Friday?
Fear Of Options Assignment
Day Before Expiration Trading
Accurate Expiration Counting

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October 14, 2023

Long Put Option Strategy

A long put option strategy is the purchase of a put option in the expectation of the underlying stock falling. It is Delta negative, Vega positive and Theta negative strategy. A long put is a single-leg, risk-defined, bearish options strategy. Buying a put option is a levered alternative to selling shares of stock short.

By Chris Young, October 11, 2023

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October 11, 2023

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assignments basic law

Assignments: The Basic Law

The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.

As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.

The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.

Basic Definitions and Concepts:

An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).

An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.

Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.

No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.

Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)

The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)

The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.

More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.

And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.

Novation Compared to Assignment:

Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.

Equitable Assignments:

An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.

In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.

An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.

Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .

But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.

Enforceability of Assignments:

Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.

In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.

After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.

Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.

Assignment of Contractual Rights:

Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.

If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.

In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).

On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.

The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.

Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.

A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.

Noncompete Clauses and Assignments:

Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.

A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.

Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.

Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.

A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.

Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.

A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.

Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.

It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)

It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.

Conclusion:

In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.

As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.

One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.

Founded in 1939, our law firm combines the ability to represent clients in domestic or international matters with the personal interaction with clients that is traditional to a long established law firm.

Programme Associate - Gender, Climate Change & Disaster Risk Reduction, (Local post for Nationals of Philippines and applicants with a valid work permit)

Advertised on behalf of.

Manila, PHILIPPINES

Type of Contract :

Service Contract

Starting Date :

01-Jul-2024

Application Deadline :

13-Jun-24 (Midnight New York, USA)

Post Level :

Duration of initial contract :, time left :, languages required :.

English

Expected Duration of Assignment :

UNDP is committed to achieving workforce diversity in terms of gender, nationality and culture. Individuals from minority groups, indigenous groups and persons with disabilities are equally encouraged to apply. All applications will be treated with the strictest confidence. UNDP does not tolerate sexual exploitation and abuse, any kind of harassment, including sexual harassment, and discrimination. All selected candidates will, therefore, undergo rigorous reference and background checks.

UN Women, grounded in the vision of equality enshrined in the Charter of the United Nations, works for the elimination of discrimination against women and girls; the empowerment of women; and the achievement of equality between women and men as partners and beneficiaries of development, human rights, humanitarian action and peace and security.

UN Women Philippines office is implementing its Country Programme Strategy 2024 – 2025 derived from the newly signed United Nations Philippines Sustainable Development Cooperation Framework 2024 - 2028. The vision is to achieve gender equality and the empowerment of all women and girls and the full enjoyment of their human rights in the Philippines, aligned to the aspirations of the Philippine Development Plan and the UNSDCF. To accomplish this, we work with our partners across the Philippines to implement targeted programmes that support women, peace and security, women’s economic empowerment, women’s leadership and participation, ending violence against women, humanitarian/DRR and climate change issues.

Philippines remains to be the highest at risk countries to disasters and climate change in the world. With socio-economic factors often determining the vulnerability of women and girls, they are disproportionally affected by disasters and climate change impacts due to gender inequality. Women often experience higher mortality from disasters than men, but they also face secondary impacts such as human trafficking and heightened risk of sexual and gender based violence when displaced or have lost the care of their partners and parents. Their high dependence on agriculture, compounded by the high sensitivity of the sector to climate change, particularly make Filipino women highly vulnerable to the impacts of climate change. Furthermore, women, due to their gender roles, are responsible for food security and food production. The impacts of climate change on agriculture, water resources, health and other sectors, therefore, puts an enormous burden on women. Their lack of access and control over resources such as land, information, finances, also means that they face higher constraints in adapting to climate change. Closing the gender gap through climate informed investments and opportunities that remove these barriers provides pathways for women’s empowerment, economic development and societal resilience.

Building on UN Women Philippines’ experience in providing technical support on women’s economic empowerment, gender mainstreaming, support in generating of gender statistics, as well as gender responsive budgeting, there is demand for expanding knowledge and skills on gender and climate change.

With a regional programme to be implemented in the Philippines focused on increasing action on gender responsive climate change adaptation and mitigation, ensuring women’s representation as key environmental actors in climate and DRR decision-making and promoting as well as securing climate-resilient livelihoods. The Philippine Programme Office will require a Programme Associate to support effective delivery and visibility of the project.

Reporting to National Project Officer for Gender and Climate Change with dotted management to Operations Associate, the Programme Associate works with and provides support to the members of the Programme Team in the development and implementation of effective programmes consistent with UN Women rules and regulations. The Programme Associate contributes to research, financial management, and programme implementation including providing necessary operational, administrative and programmatic support. The Programme Associate works in close collaboration with the operations, programme and projects’ staff in the RO and UN Women HQs as required for resolving complex finance-related issues and exchange of information.

Duties and Responsibilities

1. Provide advanced administrative and logistical support to the formulation and management of programmes:

Provide advanced administrative support and inputs in the preparation of programme work plans, budgets, and proposals on programme implementation arrangements;
Provide technical guidance to the country offices and executing agencies on routine delivery and reporting of programme supported activities and finances;
Coordinate the collection of information for the audit of programmes/ projects and support implementation of audit recommendations;
Contribute to the development or update of standard operating procedures, guidelines, checklists, templates and business processes in programme and project management;
Review programme data from programmes/ projects for Philippines Project Office website;
Identify sources, and gather and compile data and information for documents, guidelines, speeches and position papers.

2. Provide advanced administrative support to the financial management of the Programme Unit:

Create projects in Quantum system, prepare budget revisions, revise project awards and status; and determine unutilized funds and the operational and financial close of a project;
Monitor budget preparation and the finances of programmes/projects; prepare periodic reports; finalize FACE forms;
Review financial reports; prepare non-PO vouchers for development projects;
Maintain internal expenditures control system; post transactions in Quantum system;
Create requisitions in Quantum system for development projects; register good receipts in Quantum system;
Prepare and follow up of cost-recovery bills in Quantum system.

3. Provide administrative support to the Programme Unit:

Undertake all logistical, administrative and financial arrangements for organization for meetings, workshops, events, and missions;
Make travel arrangements for the Programme Team, including travel requisitions and claims;
Prepare public information materials and briefing packets;
Liaise with high level officials on administrative issues;
Prepare and assemble briefing materials and prepare power-point and other presentations
Provide guidance and training to Programme Assistants when necessary.

4. Provide administrative support to Resource Mobilization:

Prepare cost-sharing and other agreements; follow up on contributions within the Philippines Project Office/ Multi Country Office/ Regional Office resource mobilization efforts;
Organize, compile and process information from donors, Philippines Project Office/ Multi Country Office/ Regional Office, and programme team, as inputs to various databases and documents.

5. Support communications, visibility, and programme results distribution through facilitation of knowledge building and knowledge sharing in the CO, focusing on achievement of the following results:

Support synthesis of lessons learnt, and best practices related to programme management and finance;
Coordinate the organization of training for the office staff and partners on programme and operations related issues.
Documentation and support generation of impactful stories and cases studies
Support generation of marketing and communication materials to broaden project engagement and visibility
Participation in the training and knowledge exchanges;
Sound contributions to knowledge networks and communities of practice.

6. The incumbent performs other duties within their functional profile as deemed necessary for the efficient functioning of the Office and the Organization.

Competencies

Core Values:

Respect for Diversity
Professionalism

Core Competencies:

Awareness and Sensitivity Regarding Gender Issues
Accountability
Creative Problem Solving
Effective Communication
Inclusive Collaboration
Stakeholder Engagement
Leading by Example

Please visit this link for more information on UN Women’s Core Values and Competencies:? https://www.unwomen.org/en/about-us/employment/application-process#_Values

FUNCTIONAL COMPETENCIES:

Strong knowledge of programme management.
Ability to create, edit, synthesize and present information in clear and presentable formats.
Ability to administer and execute administrative processes and transactions.
Ability to provide input to business process re-engineering, elaboration and implementation of new data management systems.
Ability to manage data, documents, correspondence and reports information and workflow.
Excellent financial and budgeting skills.
Excellent IT skills.

Required Skills and Experience

Education and certification:

Completion of secondary education is required.
Bachelor’s degree in business or public Administration is an asset.

Experience:

At least 6 years of progressively responsible experience in administration or programme management/support;
Experience in working in a computer environment using multiple office software packages is required;
Experience in supporting a team is required;
Experience in the use of a modern web-based ERP System, preferably Oracle Cloud, is desirable.

Language Requirements:

Fluency in English and Filipino is required;
Knowledge of the other UN official working language is an asset.

Application:

All applications must include (as an attachment) the completed UN Women Personal History form (P-11) which can be downloaded from: https://www.unwomen.org/sites/default/files/2022-07/UN-Women-P11-Personal-History-Form-en.doc . Kindly note that the system will only allow one attachment. Applications without the completed UN Women P-11 form will be treated as incomplete and will not be considered for further assessment.

In July 2010, the United Nations General Assembly created UN Women, the United Nations Entity for Gender Equality, and the Empowerment of Women. The creation of UN Women came about as part of the UN reform agenda, bringing together resources and mandates for greater impact. It merges and builds on the important work of four previously distinct parts of the UN system (DAW, OSAGI, INSTRAW, and UNIFEM), which focused exclusively on gender equality and women's empowerment.

Inclusion Statement:

At UN Women, we are committed to creating a diverse and inclusive environment of mutual respect. UN Women recruits employ, trains, compensates and promotes regardless of race, religion, color, sex, gender identity, sexual orientation, age, ability, national origin, or any other basis covered by appropriate law. All employment is decided on the basis of qualifications, competence, integrity, and organizational need.

If you need any reasonable accommodation to support your participation in the recruitment and selection process, please include this information in your application.

UN Women has a zero-tolerance policy on conduct that is incompatible with the aims and objectives of the United Nations and UN Women, including sexual exploitation and abuse, sexual harassment, abuse of authority, and discrimination. All selected candidates will be expected to adhere to UN Women’s policies and procedures and the standards of conduct expected of UN Women personnel and will therefore undergo rigorous reference and background checks. (Background checks will include the verification of academic credential(s) and employment history. Selected candidates may be required to provide additional information to conduct a background check.)

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COMMENTS

Dividends and Options Assignment Risk
Ways to avoid the risk of early assignment. If you are selling options (covered or uncovered), there is always the risk of being assigned if your trade moves against you. This risk is higher if the underlying security involved pays a dividend. However, there are ways to reduce the likelihood of being assigned early. These include:
How Option Assignment Works: Understanding Options Assignment
What is the Risk of Assignment? The risks associated with options assignment are primarily centered around the obligations of the seller of the options contract.
The Risks of Options Assignment
The Risks of Options Assignment. October 23, 2023. Before entering an options trade, traders should consider the possibility of early assignment. Learn more about assignment and how to help reduce the risks associated with it. Any trader holding a short option position should understand the risks of early assignment.
Dividend Assignment Risk: Short Call Options
Either way, they've secured a risk-free profit of at least $28. The short call option seller is required to pay the $72 dividend on the payment date since they were short shares on the ex-dividend date. Remember, option assignment is random and can happen at any time for options with any moneyness. Out-of-the-money calls can also be assigned.
ASSIGNMENT RISK IN OPTIONS TRADING (HOW IT WORKS & HOW TO ...
In today's video I want to talk about assignment risk in options trading. Any time you sell to open an option, there is risk of assignment, even if it doesn'...
Understanding the Risks of Early Assignment
Early assignment is a risk that all options traders should be aware of and prepared to manage. As you navigate the dynamic landscape of the financial markets, a mastery of these Greeks opens the ...
Are You at Risk for Stock Assignment With Options?
Assignment risk happens when your short strike expires in the money. If you sell a put or call spread, the assignment risk stems from your short strike expiring in the money at expiration. If this scenario happens, you will be forced to sell 100 shares to the buyer for each option contract they purchased.
You have the right to refuse unsafe assignments
Unsafe Assignments. According to the American Nurses Association, Nurses have the "professional right to accept, reject or object in writing to any patient assignment that puts patients or themselves at serious risk for harm. Registered Nurses have the professional obligation to raise concerns regarding any patient assignment that puts patients ...
Eliminate Assignment and Exercise Risk with Index Options
Eliminating a low probability but potentially severe risk of assignment and exercise risk can lead investors to a shorter learning curve and more consistent results. Additionally, with the launch ...
What Is Early Assignment Risk In Options Trading? Who Is Affected & How
The risk of assignment for the CALL options contract sellers increases when the underlying stock pays dividends and when it is nearing the ex-dividend date. The CALL options contract buyers are not entitled to dividend payments, so if they wish to receive the dividend, they will have to exercise the CALL options and become stock owners. ...
options
The put vs call assignment risk, is actually the reverse: in-the-money calls are more likely to be exercised early than puts. Exercising a call locks in profit for the option holder because they can buy the shares at below market price, and immediately sell them at the higher market price. If there are dividends due, the risk is even higher.
Nurses facing abnormally dangerous patient care assignments
You may have to make a decision about accepting an assignment involving abnormally dangerous conditions that pose an imminent risk to your safety and health, and could potentially cause serious injury or death. If you are a WSNA member and you accept an abnormally dangerous assignment, fill out an ADO to document that you are accepting an ...
Predicted Academic Performance: A new approach to identifying at-risk
The status quo approach to measuring student risk is limited in two ways: (1) The use of basic risk categories is a dated technology, and (2) common indicators used to identify at-risk students ...
The Assignment Risks of Writing Call and Puts
Second, there is assignment risk throughout the life of the trade for American-style options. Typically, options are assigned only when they are deep in-the-money, or when there is an advantage to exercising to capture a stock dividend (see "Dividend Considerations" below). Still, an option writer can be assigned anytime up until expiration.
Assignment Risk: Finance Explained
Assignment risk refers to the risk that the writer (seller) of an option contract will be required to fulfill their obligation to buy or sell the underlying asset (such as stocks) if the option is exercised by the buyer. This risk applies to both call options, where the writer may be forced to sell the asset, and put options, where the writer ...
Managing Global Assignment Risk for Expatriates
Steps you can take to minimize global assignment risks for your expatriate employees. Although daunting, there are basic steps that can be taken to help companies manage risk for their mobility programs. 1. Communicate and coordinate. As reflected in the risk areas above, the mobility program can touch multiple departments within an ...
Monitoring And Exiting Positions To Minimize Assignment Risk
Search based on keywords: strike price (33) short positions (16) underlying asset (11) risk tolerance (8) mitigating assignment risk (8) 1.Monitoring and Exiting Positions to Minimize Assignment Risk [Original Blog]. Monitoring and exiting positions is a crucial aspect of option writing that can help minimize assignment risk.As an option writer, it is important to stay vigilant and actively ...
Assignment #7
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Understanding options assignment risk
Understanding assignment risk in Level 3 and 4 options strategies. With all options strategies that contain a short option position, an investor or trader needs to keep in mind the consequences of having that option assigned, either at expiration or early (i.e., prior to expiration). Remember that, in principle, with American-style options a ...
Assignment Bias: Definition, Avoidance
Assignment bias happens when experimental groups have significantly different characteristics due to a faulty assignment process. For example, if you're performing a set of intelligence tests, one group might have more people who are significantly smarter. Although this type of bias is usually associated with non-random sampling and ...
Who is at risk of assignment? 1) Market maker
Market makers, brokers, and option buyers do not face this assignment risk in the same way.The correct option is (2) option seller. Explanation: Among the options provided, the option seller is at risk of assignment. This is because the option seller has the obligation to fulfill the terms of the option contract if the option buyer chooses to ...
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Everything You Need to Know About Options Assignment Risk
Before considering early assignment, let's determine our maximum risk on this call spread. The maximum risk for a bear call spread is the difference between the strike minus the net credit you receive. In this case, the difference between the strikes is $5, and we collect a net credit of $2, making our maximum risk on the position $3 or $300.
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Overview. In this case study assignment, you will select a company or organization of your choice that has been dealing with risk and uncertainty within the last six months. Then you will determine solutions to organizational problems that take into account principles of risk management to improve operations and profitability. Instructions.
Assignments: The Basic Law
Assignments: The Basic Law. The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States. As with many terms commonly used, people are familiar with the ...
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How dividends can increase options assignment risk

How dividends work

Avoiding or managing early assignment on covered calls

Avoiding or managing early assignment on calls not covered by shares

Other considerations and risks

Ways to avoid the risk of early assignment

Research options

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We're on our way, but not quite there yet

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When a trader might get assigned

Reducing the risk associated with assignment

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What Is Early Assignment Risk In Options Trading? Who Is Affected & How To Mitigate It?

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Moving forward

Assignment Risk: Finance Explained

Managing Global Assignment Risk for Expatriates

Key global assignment risks for expatriates

Regulatory and compliance risk

Financial and budgetary risk

Prosecution

Legal and employment law

Reputational risk

Employee satisfaction and retention

Permanent establishment

Steps you can take to minimize global assignment risks for your expatriate employees

1. Communicate and coordinate

2. Consider the corporate tax position

3. Documentation is critical

Consider a program risk review

Author: Mark Tirpak

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11.Introduction to Assignment Risk in Short Put Positions [Original Blog]

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