Short-option risk
Assignment at expiration
Short options can create obligations if assigned. A short call can require share delivery. A short put can require share purchase. Multi-leg positions need each leg reviewed separately.
Example
One short $50 put with a standard 100-share multiplier has a $5,000 gross strike-value example before premium, commissions, taxes, margin, and price movement. That arithmetic does not predict assignment or account treatment.
What to verify
- Whether the option is in, at, or near the money.
- Whether you can handle shares or cash if assigned.
- How your broker allocates notices and handles spreads.
- What notifications and cutoffs apply.
Primary reading: OIC options basics and Expiration Friday · OIC exercising options · OIC options exercise FAQ · FINRA options overview and expiration risk · OCC Options Disclosure Document