Does the seller of the option have control over assignment?
No, the seller (also called the option writer) does not have any control over the assignment process. Assignments are entirely managed and decided by the exchange through a random process, once the option buyer exercises the contract.
How Does Assignment Work?
- In physically settled contracts, if an option buyer chooses to exercise their right, the exchange randomly selects a seller with an open position to fulfill the obligation.
- The seller does not know in advance whether they will be assigned.
- There is no way for the seller to accept, reject, or delay an assignment.
This ensures fairness and avoids manipulation, as all sellers with open short positions are equally likely to be assigned.
What if...
| Scenario | Outcome |
|---|
| You’re short an in-the-money option at expiry | You may be assigned by the exchange |
| You want to avoid assignment | Close your short position before expiry or roll it over |
| You’re assigned but don’t have sufficient funds or stocks | You may face settlement penalties or auction obligations |
Important: The assignment process is automatic and non-negotiable. Always manage your open positions and margin carefully near expiry.
Last updated: 27 Jun 2025
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