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

Hey everyone, Kirk here again from optionalpha.com and welcome back to the daily call. Today, we are going to answer the question, “What do you do when one leg of a bull call spread is assigned?” First of all, let’s go over what a bull call spread is. A bull call spread is an option buying strategy where you are buying one call option and then selling one call option at a higher strike price. Let's assume that a stock is trading for $100. You might buy a 105 call option and sell a 106 call option to help cut down the cost of buying that 105 option. It is an option strategy where you are bullish on the underlying security, you want the underlying security to go higher and you are a net buyer of options. You’re actually not a net seller in this case. You’re a net buyer. What happens when one of these legs is assigned? Well, the first thing is that the only leg that would ever be assigned to you (traditionally assigned if you want to use the technical term) is the option contract that you sold. In our example, i