What Happens If My Covered Call Gets Assigned?

When your covered call gets assigned, you're obligated to sell your 100 shares at the strike price. Here's exactly what happens:

Step-by-Step Assignment Process

  • Option expires ITM (or buyer exercises early)
  • OCC assigns your broker overnight
  • Your shares are sold at the strike price
  • Cash appears in your account next morning
  • You no longer own those shares

    • Example: NVDA Covered Call Assigned

  • You owned 100 NVDA at $125
  • You sold $140 call for $4 premium
  • NVDA rises to $150, option is assigned

    • What happens:

  • Your 100 shares sold at $140 = $14,000
  • You received $400 premium earlier
  • Total received: $14,400
  • Profit: $14,400 - $12,500 (cost) = $1,900

    • Is Assignment Bad?

    Not necessarily! Assignment means:

  • You sold at a price you agreed to
  • You made the premium + capital gains
  • Your trade was successful

    • What to Do After Assignment

  • Celebrate - You likely profited
  • Start the wheel - Sell cash-secured puts
  • Wait for pullback - Buy back shares lower
  • Move to new stock - Find next opportunity

    • How to Avoid Assignment

    If you want to keep your shares:

  • Roll the option out and up before expiration
  • Buy to close the option
  • Choose farther OTM strikes initially