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Understanding Assignment

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Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Options are more likely to be assigned when the extrinsic value becomes very low or a if you are short a call with an upcoming dividend.

If assigned, you have a few options (no pun intended):

  • Sell a call to create a covered call, thereby reducing basis
  • close out the position and establish a new position
  • or close the position out and move on

Tune in as Tom and Tony walk through these steps and when to use each!

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