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

Hey everyone. This is Kirk here again at optionalpha.com and welcome back to the daily call. Today, we are answering the question, “Are options automatically assigned when the strike price is breached?” This is a huge topic and one that we get a lot of questions on naturally because people are scared that when they start selling options or if they start buying options that they’ll automatically get assigned on a short option contract whenever the stock breaches or reaches the strike price that you’re selling. To use a very basic example here, let's say a stock is trading at $100, you sell the 105 call options and now, the stock starts trading up to 105. The stock trades at 105 or above, say 105.01 and many people would assume that at that price point now, the option contract that you sold, the 105 calls would automatically be assigned in your account and it's just not the case. Option, exercise and assignment happens mostly at expiration, in fact, the last couple of weeks of expiration. Now, that’s not to say