Early Assignment Risk Checker for Short Options
This rule-based checker explains how likely early assignment is on a short option. It's an explainer, not a prediction: assignment can happen any time on American-style options.
- In the money with almost no time value left.
Assignment risk: HIGH. Intrinsic $5, time value $0.02. Assignment can happen at any time on American-style options.
Educational estimate, not advice.
How it works
It compares the option's remaining time value with simple thresholds, days to expiry and any dividend before expiry.
- Intrinsic: call = max(S − K, 0), put = max(K − S, 0)
- Extrinsic = option price − intrinsic
- HIGH: ITM and extrinsic < $0.05, or short ITM call before ex-dividend with extrinsic < dividend
- MEDIUM: ITM and extrinsic < $0.25, or ≤ 5 days left
- LOW: otherwise
Worked example
Short $100 put, stock $95, put price $5.02, 20 days: intrinsic $5.00, extrinsic $0.02 → HIGH risk.
Limitations
Real assignment is decided by option holders and allocated randomly; these rules only describe common conditions.
Questions
Will my short option get assigned?
It's most likely when the option is in the money with almost no time value left, or before an ex-dividend date for calls.
Can I be assigned on an OTM option?
Rarely, but it is possible.
How do I avoid assignment?
Close or roll the option before it's deep in the money with little time value.
Related
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