How Do I Avoid Assignment on Covered Calls?

If you want to keep your shares, here are 6 strategies to avoid assignment:

1. Sell Farther OTM Strikes

  • Choose 0.15-0.25 delta
  • Lower premium but higher probability of keeping shares
  • 75-85% chance of expiring worthless

    • 2. Roll Out and Up Before Expiration

    When your call is ITM:

  • Buy to close current call
  • Sell new call with higher strike, farther expiration
  • Ideally for a net credit

    • 3. Close at 50% Profit

    Don't wait for expiration. When you've captured 50% of premium:

  • Buy to close
  • Sell new call
  • Reduces gamma risk

    • 4. Avoid Ex-Dividend Dates

    Early assignment is common when:

  • Call is ITM near ex-dividend
  • Time value < dividend amount
  • Roll or close before ex-date

    • 5. Choose Longer Expirations

  • 45-60 DTE gives more time
  • Less gamma risk near expiration
  • More time to react and roll

    • 6. Set Alerts on Your Stock

    Be proactive:

  • Set alert at your strike price
  • Monitor when stock approaches
  • Take action before Friday

    • When to Accept Assignment

    Sometimes it's okay:

  • You've hit your target price
  • Stock is fully valued
  • You want to deploy capital elsewhere