What Does Assignment Mean?
1. When the property or rights of a person/individual/entity are transferred to other person or legal entity, it is termed as Assignment
2. When the option sold is exercised by the option buyer, there is a notice given to the option writer. This notice is also known as Assignment.
How Does Assignment Applied in Options Market?
1. Assignment relates just to the ownership transfer. An example for the same could be transfer of title from one person to other taking place due to the sales transaction of any car or other asset.
2. In case of assignment, the responsibility or obligation for completion of the necessary procedure for the option contract remains with the option writer. For example, if the option in question is a call option, it becomes the option writer’s obligation to sell the asset underlying at strike price and vice versa is true if it is a put option.
Tags: Assignment, option buyer
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