When you get assigned on a covered call, your broker automatically sells your 100 shares at the strike price. The cash lands in your account, the shares are removed, and the option disappears. The premium you originally collected is yours to keep.

Step-by-Step: What Happens in Your Account

Let's say you sold a $150 call on your 100 shares of META (bought at $140) for $4.00 premium.

Day of assignment:

  • 100 shares of META removed from your account
  • $15,000 cash credited (100 × $150 strike)
  • The short call position disappears
  • Your $400 premium was already credited when you sold the call

    • Your total profit: ($150 - $140) × 100 + $400 = $1,400

    Assignment Timing

    Most assignments happen at expiration, but early assignment can occur anytime the option is in the money. It's more common when:

  • A dividend ex-date is approaching (call holders exercise to capture the dividend)
  • The option has very little time value remaining
  • The option is deep in the money

    • If you're assigned early, the same mechanics apply — shares sold, cash credited, option gone.

    Tax Implications of Assignment

    Assignment creates a taxable event. Your cost basis for the stock sale is calculated as:

  • Sale price: Strike price + premium received
  • Cost basis: What you originally paid for the shares

    • Using our META example:

  • Sale price: $150 + $4.00 = $154/share
  • Cost basis: $140/share
  • Taxable gain: $14/share ($1,400 total)

    • The holding period of the stock determines whether this is short-term or long-term capital gains. The call premium is folded into the stock sale — it's not taxed separately.

    Your Three Best Moves After Assignment

    Option 1: Buy the stock back and sell another call

    If you're still bullish on META, buy 100 shares at the current market price and immediately sell another covered call. You're back in the same position with fresh premium.

    Option 2: Sell a cash-secured put to re-enter lower

    Instead of buying shares outright at $155, sell a $150 put for $3.50. If META pulls back, you get shares at an effective cost of $146.50. If it keeps rising, you pocket $350.

    Option 3: Redeploy capital elsewhere

    Maybe META has run up too much and the risk/reward is worse now. Use OptionsPilot's strike finder to identify other stocks with better covered call setups and deploy your $15,000 there.

    Avoiding Unwanted Assignment

    If you don't want to lose your shares, act before expiration:

  • Roll the call out to a later date at the same or higher strike
  • Buy the call back if it's cheap enough
  • Monitor the position as expiration approaches — don't ignore deep ITM calls

    • The general rule: if your call is more than $1 in the money with less than a week to expiration, expect assignment.

    Should You Fear Assignment?

    Many traders treat assignment like a failure. It's not. You sold at a price you chose and got paid extra for it. The only scenario where assignment truly hurts is if you wanted to hold the stock long-term and sold too aggressive a strike.

    Pick strikes you're genuinely comfortable selling at, and assignment becomes just another profitable exit.