Assignment risk is one of the first things that scares new options traders, and on this episode of Options In Action, Mike Butler makes the case that in most situations it's nothing to lose sleep over. When you sell an option, you can be assigned early and end up with a hundred shares of stock, but Mike walks through why that usually changes far less than people fear, and can even work in your favor.
The core idea: a short in-the-money option carries roughly the same risk profile as a hundred shares anyway, and anyone who exercises an option that still holds extrinsic value is essentially throwing that money away. He covers the one scenario that actually deserves attention, when one leg of a spread is assigned and the long leg drops off, how keeping the protective long option can turn your max profit from a fixed credit into far more, and why dividend dates are the real thing to watch on short in-the-money calls. This is educational and not a recommendation.
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