The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we are going to answer the question, “Can my covered call get assigned early?” The simple answer to this is yes, it can get assigned early. I want to walk through the possible scenarios in which case, you might be assigned early on your covered call option which would then take away the stock that's basically covering that call option. Now, there are probably a couple of scenarios, but the most likely scenarios that would happen include short dividend assignment. What we talk about with short dividend assignment is that if a stock is going to pay a dividend and if the stock has been rallying much higher or dramatically higher and is about to pay that dividend, that might be an instance where your short call option gets assigned early on your covered call position and the reason would be if the dividend payment is actually more than a corresponding put option to your short call option. And in those scenarios as w