FREE Equity Delivery and MF
Flat ₹20/trade Intra-day/F&O
|
asked
Option Assignment Meaning: An option assignment means that the seller must fulfil his obligation under the contract by either selling or buying the underlying asset at the exercise price. This obligation is triggered when the buyer of an option contract exercises his right to buy or sell the underlying asset. An assignment is the exact opposite of an option exercise.
Suppose you have sold a Tata Motors 350 call option at a premium of Rs 15. The share price of Tata Motors rises to Rs 380. In this case, a trader who has bought a Tata Motors 350 call option may exercise his option. And if you are instructed by the software to redeem the contract, you have to bear the loss of Rs 30 - Rs 15 = Rs 15 and redeem the contract.
Only a small portion of the traded options are assigned. All option holders have the right to exercise their options irrespective of the profitability or loss of the trade.
Add a public comment...
List of all questions Ask your question
List of all questions Ask your question
FREE Intraday Trading (Eq, F&O)
Flat ₹20 Per Trade in F&O
|