Your covered call was assigned. Your shares are gone. Now what? Don't panic - this is a normal part of the covered call strategy, and you have several good options.

What Just Happened?

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When your covered call is assigned:

  • Your 100 shares were sold at the strike price
  • You received the strike price × 100 in cash
  • You kept the premium you collected
  • The position is now closed

    • Example:

  • Owned 100 AAPL at $170 cost basis
  • Sold $180 call for $3.00 premium
  • Stock went to $185, call assigned
  • You received: $18,000 (strike) + $300 (premium) = $18,300
  • Profit: $18,300 - $17,000 = $1,300

    • Step 1: Calculate Your Actual Return

    Before doing anything, understand what you made:

    Total return = (Strike price - Cost basis + Premium) / Cost basis

    Using the example above: ($180 - $170 + $3) / $170 = 7.6%

    That's a good return! Assignment isn't a loss.

    Step 2: Decide Your Next Move

    Option A: Sell a Cash-Secured Put (The Wheel)

    This is the most popular next step. Use your cash to sell a put and potentially get back into the stock at a lower price.

    Example continuation:

  • You now have $18,300 cash
  • Sell $175 put for $2.50 premium
  • If assigned, you own AAPL again at effective cost of $172.50
  • If not assigned, keep $250 premium and try again

    • Option B: Move to a Different Stock

    Maybe AAPL ran up too much and you want a different opportunity. Use your capital for a new covered call position on another stock.

    Option C: Wait for a Pullback

    If you're bullish long-term but think the stock is overextended, wait for a pullback before re-entering.

    Option D: Buy Shares Back Immediately

    If you want the shares back right now, just buy them. You'll have a higher cost basis but maintain your position.

    Common Mistakes After Assignment

  • FOMO buying - Don't chase the stock higher just because you're "out"
  • Ignoring the win - You made money! Assignment = successful trade
  • Changing strategy - Stick with your plan, assignment is part of it
  • Not selling puts - The wheel works both directions

    • Tax Considerations

    Assignment triggers a taxable event:

  • Short-term gain if held < 1 year
  • Long-term gain if held > 1 year
  • Premium is added to your sale proceeds

    • Keep records of your original cost basis and premium received.

    The Mindset Shift

    Many traders feel bad about assignment because the stock went higher. Remember:

  • You chose that strike price because you'd be happy selling there
  • You collected premium on top of capital gains
  • Hindsight is 20/20 - you couldn't know the stock would keep rising
  • Consistent income beats trying to time tops