What Happens When Your Covered Call Gets Assigned? (Don't Panic)
Your covered call got assigned — now what? We walk through exactly what happens to your shares, your cash, and your tax bill. Plus 6 ways to avoid assignment in the first place.
Covered Call Assignment
Assignment is when the call buyer exercises their option and your shares are called away.
When Assignment Happens
At Expiration
Option is ITM (above strike)
Automatic exercise if $0.01+ ITM
Shares transferred at strike price
Early Assignment
Can happen anytime with American options
More likely when:
- Call is deep ITM
- Approaching ex-dividend date
- Near expiration
What Happens Mechanically
Option exercised by call buyer
You receive strike price × 100
Shares removed from account
Option position closes
Managing Assignment
If You Want to Keep Shares
Roll before expiration (buy to close, sell new call)
Monitor as stock approaches strike
Roll at 50% profit when possible
If Assignment is Okay
Let it happen
Collect strike price + premium
Redeploy capital via cash secured puts
Tax Implications
When assigned:
Sale price = Strike price + premium received
Cost basis = Original purchase price
Gain/loss depends on holding period
Ready to Find Your Next Covered Call?
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