what is assignment of an option

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Exercising your options

Managing an options trade is quite different from that of a stock trade. Essentially, there are 4 things you can do if you own options: hold them, exercise them, roll the contract, or let them expire. If you sell options, you can also be assigned.

If you are an active investor trading options with some percentage of your overall investment funds, here’s how you can evaluate the available choices for an options trade.

Holding your options

During the life of an options contract you’ve purchased, you can simply hold them (i.e., take no action). Suppose you own call options (which grant the right, but not the obligation, to buy a specified amount of an underlying stock at a specified strike price up and until a specified expiration date) and you believe the underlying stock price will rise within the time remaining until expiration. In this scenario, you would hold the option so that they increase in value over time.

The primary objective of this approach is potential appreciation of the option (based on the underlying stock rising and/or an increase in expected volatility for the underlying stock using our example of buying a call), in addition to delaying additional cost of buying the stock or any tax implications after you exercise the options.

To exercise an option means to take action on the right to buy or sell the underlying position in an options contract at the predetermined strike price, at or before expiration. The order to exercise your options depends on the position you have. For example, if you bought to open call options, you would exercise the same call options by contacting your brokerage company and giving your instructions to exercise the call options (to buy the underlying stock at the strike price).

There are a variety of reasons why you might choose to exercise options before they expire (assuming they are in the money, which means they have value). In addition to wanting to capture realized gains on your options, you may want to exercise:

Be aware that closing out an options position triggers a taxable event, so you would want to consider the tax implications and the timing of closing a trade on your specific situation. You should consult your tax advisor if you have additional questions.

In sum, there are many scenarios that might cause you to want to exercise your options before expiration, and they depend primarily on your outlook for the underlying stock and your objectives/risk constraints.

Employee stock plan options

There are additional choices you can make when exercising employee stock plan options . 1 These include:

Exercise-and-hold (cash-for-stock)
Exercise-and-sell-to-cover
Exercise-and-sell

Rolling your options

Before expiration—and, more commonly, near the end of the contract—you can also choose to roll the contract. This involves closing out your existing options position (by selling to close a long position or buying to close a short position) that is about to expire and simultaneously purchasing a substantially similar options position, only with a later expiration date. You might want to roll out your position if you want to have the same options exposure after your contract is set to expire.

In a covered call position, for example, you can also roll up, roll down, or roll out. This involves closing out your existing short options position that is about to expire, and simultaneously selling another options position, typically with a later expiration date. While there are differences among these choices, the objective is the same: to obtain similar exposure to an existing position.

If you sell an option, you have an obligation to sell stock if you are short a call, and an obligation to buy stock if you are short a put. The owner of call or put options has the right to assign the contract to the seller. This is known as assignment.

Assignment occurs when the buyer exercises an options contract on or before expiration, and the seller must fulfill the obligation by either buying or selling the underlying security at the exercise price. As a seller of options, you can be assigned at any time prior to expiration regardless of the underlying share price—meaning you might have to receive or deliver shares of the underlying stock.

Depending on your position, settlement can occur in a variety of ways. If you are assigned on a covered call, for example, the shares you own will be sold automatically.

Let the options expire

Remember, options have an expiration date. They either have intrinsic value (for calls, the stock is above the strike price, and for puts, the stock is below the strike price) or they will expire worthless. If the options have intrinsic value, you should plan to exercise at or before expiration, or anticipate having it automatically exercised at expiration if in the money. If they do not have intrinsic value, you can simply let your options expire. Of course, letting options expire can also have tax consequences.

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Option Assignment Process

Options trading 101 - the ultimate beginners guide to options.

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One of the biggest fears that new options traders have is that they may get assigned. The option assignment process means that the option writer is obligated to deliver on the terms specified in a contract.

For example, if a put option is assigned, the options writer would need to buy the underlying security at the strike price dictated in the contract.

Likewise for a call option, the options write would need to sell the underlying security at the strike price dictated in the contract.

As an options trader you’re usually seeking to make a profit from directional bets or to hedge your portfolio.

You’re rarely, if ever, looking to actually buy or sell the underlying security so being assigned can sound like a scary prospect.

This article will explore the option assignment process so you can understand how it works and how you can prevent yourself getting stuck with buying or selling an underlying security.

When Assignment Occurs

Assignment occurs when an option holder exercises an option. Exercising an option simply means that the option holder executes the terms in the options contract.

So for example if you are holding a call option, you have the right, but not the obligation to buy the underlying security at the agreed strike price.

When you exercise the option, the option holder will need to sell the underlying security at the agreed strike price and for the agreed quantity.

If you’re dealing with European style options, you will know when expiration is possible because they can only be exercised on the expiration date itself.

For American style options, which is what most people trade, options can be exercised at any time before the expiration date.

This means that if you are an options writer of American style options, you could theoretically be asked at any time to comply with the terms of the contract.

Unfortunately, there is no knowing when an assignment will take place.

However, generally options are not exercised prior to expiration as it is usually much more profitable to sell the option instead.

It’s worth noting that this will only happen to you if you’re an options seller. Option buyers can never be assigned.

There are two key steps to assignment and to make it fair, the process of selecting who is assigned is random.

In the first step, the Options Clearing Corporation (OCC) will issue an exercise notice to a randomly selected Clearing Member who maintains an account with the OCC.

In the second step, the Clearing Member then assigns the exercise notice to an individual account.

When You Are Most At Risk

There are several situations that can dramatically increase the risk that you will be assigned:

Situation 1: Your option is In The Money (ITM)

When an option is ITM, an option holder would stand to profit if they exercised the option.

The deeper the option is ITM, the greater the profit for the option holder and therefore the higher risk they may exercise the option and you will be assigned.

Situation 2: The option has an upcoming dividend

An ITM call buyer can profit from exercising an option before its ex-dividend date if the extrinsic value of the call is less than the amount of the dividend.

Situation 3: There is no extrinsic value left

If there is no extrinsic value left, an option buyer could be tempted to exercise the option.

If there is extrinsic value, an option buyer would typically make a bigger profit by selling the option and buying/selling shares of the underlying asset.

How You Can Avoid The Risk Of Being Assigned

There are several steps you can take to avoid, or at the very least minimise, your risk of being assigned.

The first step to consider is avoiding selling any options that have an upcoming dividend.

Before selling any option, first check that the underlying security doesn’t have an upcoming dividend and if it does, consider waiting until after the dividend has occurred (i.e. the stock has gone ex-dividend).

If you do end up selling an option with an upcoming dividend, then the second step to protecting yourself is to close your position early as your risk begins to increase.

For example, if you are short an option with an extrinsic value less than the dividend amount and the ex-dividend of the underlying security is not too far away, close your position.

Otherwise you risk being assigned and being forced to pay the dividend as well!

To completely avoid early assignment risk, you could always sell only European style options which are cash settled at expiration. You can read more that here and here .

The final way to manage your risk is to close positions well before expiration date approaches.

As the time left to expiration decreases, so too does the extrinsic value. For option buyers, it means they could stand to benefit and so there is a risk they may exercise the option.

While this article deals with the process and risks behind being assigned, there will be times when this isn’t an issue for you.

Provided you have enough capital to meet the assignment, you may be fine with being assigned.

If this is the case, you would simply have a new stock position added which you could hold onto or immediately liquidate.

In the event that you don’t have enough capital, your broker will issue you with a margin call and the position should be automatically closed.

As the process of assignment can differ between brokers, its best you contact your broker to check the specific process they use when issuing assignments to individual accounts.

In general, provided you take a few key steps to mitigate your risks, particularly around dividend issuing securities, the chances of assignment are very low.

Trade safe!

Disclaimer: The information above is for educational purposes only and should not be treated as investment advice . The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.

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What is Options Assignment & How to Avoid It

If you are learning about options, assignment might seem like a scary topic. In this article, you will learn why it really isn’t. I will break down the entire options assignment process step by step and show you when you might be assigned, how to minimize the risk of being assigned, and what to do if you are assigned.

Video Breakdown of Options Assignment

Check out the following video in which I explain everything you need to know about assignment:

What is Assignment?

To understand assignment, we must first remember what options allow you to do. So let’s start with a brief recap:

A call option gives its buyer the right to buy 100 shares of the underlying at the strike price
A put option gives its buyer the right to sell 100 shares of the underlying at the strike price

In other words, call options allow you to call away shares of the underlying from someone else, whereas a put option allows you to put shares in someone else’s account. Hence the name call and put option.

The assignment process is the selection of the other party of this transaction. So the person that has to buy from or sell to the option buyer that exercised their option.

Note that an option buyer has the right to exercise their option. It is not an obligation and therefore, a buyer of an option can never be assigned. Only option sellers can ever be get assigned since they agree to fulfill this obligation when they sell an option.

Let’s go through a specific example to clarify this:

The underlying security is stock ABC and it is trading at $100.
Peter decides to buy 1 put option with a strike price of 95 as a hedge for his long stock position in ABC
Kate sells this exact same option at the same time.

Over the next few weeks, ABC’s price goes down to $90 and Peter decides to exercise his put option. This means that he uses his right to sell 100 shares of ABC for $95 per share. Now Kate is assigned these 100 shares of ABC which means she is obligated to buy them for $95 per share.

Peter now has 100 fewer shares of ABC in his portfolio, whereas Kate has 100 more.

This process is analog for a call option with the only difference being that Kate would be short 100 shares and Peter would have 100 additional shares of ABC in his portfolio.

Hopefully, this example clarifies what assignment is.

Who Can Be Assigned?

To answer this question, we must first ask ourselves who exercises their option? To do this, let’s quickly look at the different ways that you can close a long option position:

Sell the option: Selling an option is probably the easiest way to close a long option position. Doing this will have no effect on the option seller.
Let the option expire: If the option is Out of The Money , it would expire worthless and there would be no consequence for the option seller. If, on the other hand, the option is In The Money by more than $0.01, it would typically be automatically exercised . This would start the options assignment process.
Exercise the option early: The last possibility would be to exercise the option before its expiration date. This, however, can only be done if the option is an American-style option. This would, once again, lead to an option assignment.

So as an option seller, you only have to worry about the last two possibilities in which the buyer’s option is exercised.

But before you worry too much, here is a quick fact about the distribution of these 3 alternatives:

Less than 10% of all options are exercised.

This means 90% of all options are either sold prior to the expiration date or expire worthless. So always remember this statistic before breaking your head over the risk of being assigned.

It is very easy to avoid the first case of being assigned. To avoid it, just close your short option positions before they expire (ITM). For the second case, however, things aren’t as straight forward.

Who Risks being Assigned Early?

Firstly, you have to be trading American-style options. European-style options can only be exercised on their expiration date. But most equity options are American-style anyway. So unless you are trading index options or other kinds of European-style options, this will be the case for you.

Secondly, you need to be an options seller. Option buyers can’t be assigned.

These two are necessary conditions for you to be assigned. Everyone who fulfills both of these conditions risks getting assigned early. The size of this risk, however, varies depending on your position. Here are a few things that can dramatically increase your assignment risk:

ITM: If your option is ITM, the chance of being assigned is much higher than if it isn’t. From the standpoint of an option buyer, it does not make sense to exercise an option that isn’t ITM because this would lead to a loss. Nevertheless, it is possible. The deeper ITM the option is, the higher the assignment risk becomes.
Dividends : Besides that, selling options on securities with upcoming dividends also increases your risk of assignment. More specifically, if the extrinsic value of an ITM call option is less than the amount of the dividend, option buyers can achieve a profit by exercising their option before the ex-dividend date.
Extrinsic Value: Otherwise, keep an eye on the extrinsic value of your option. If the option has extrinsic value left, it doesn’t make sense for the option buyer to exercise their option because they would achieve a higher profit if they just sold the option and then bought or sold shares of the underlying asset. Typically, the less time an option has left, the lower its extrinsic value becomes. Implied volatility is another factor that influences extrinsic value.
Puts vs Calls: This is more of an interesting side note than actual advice, but put options tend to get exercised more often than call options. This makes sense since put options give their buyer the right to sell the underlying asset and can, therefore, be a very useful hedge for long stock positions.

How can you Minimize Assignment Risk?

Since you now know what assignment is, and who risks being assigned, let’s shift our focus on how to minimize the assignment risk. Even though it isn’t possible to completely remove the risk of being assigned, there are things that you can do to dramatically decrease the chances of being assigned.

The first thing would be to avoid selling options on securities with upcoming dividend payments. Before putting on a position, simply check if the underlying security has any upcoming dividend payments. If so, look for a different trade.

If you ever are in the position that you are short an option and the ex-dividend of the underlying security is right around the corner, compare the size of the dividend to the extrinsic value of your option. If the extrinsic value is less than the dividend amount, you really should consider closing the position. Otherwise, the chances of being assigned are high. This is especially bad since being short during a dividend payment of a security will force you to pay the dividend.

Besides avoiding dividends, you should also close your option positions early. The less time an option has left, the lower its extrinsic value becomes and the more it makes sense for option buyers to exercise their options. Therefore, it is good practice to close your (ITM) short option positions at least one week before the expiration date.

The deeper an option is ITM, the higher the chances of assignment become. So the just-mentioned rule is even more important for deep ITM options.

If you don’t want to indefinitely close your position, it is also possible to roll it out to a later expiration cycle. This will give you more time and add extrinsic value to your position.

FAQs about Assignment

Last but not least, I want to answer some frequently asked questions about options exercise and assignment.

1. What happens if your account does not have enough buying power to cover the assigned position?

This is a common worry for beginning options traders. But don’t worry, if you don’t have enough capital to cover the new position, you will receive a margin call and usually, your broker will just automatically close the assigned shares immediately. This might lead to a minor assignment fee, but otherwise, it won’t significantly affect your account. Tatsyworks, for example, charges an assignment fee of only $5.

Check out my review of tastyworks

2. How does assignment affect your P&L?

When an option is exercised, the option holder gains the difference between the strike price and the price of the underlying asset. If the option is ITM, this is exactly the intrinsic value of the option. This means that the option holder loses the extrinsic value when he exercises his/her option. That’s also why it doesn’t make sense to exercise options with a lot of extrinsic value left.

This means that as soon as the option is exercised, it is only the intrinsic value that is relevant for the payoff. This is the same payoff as the option at its expiration date.

So as an options seller, your P&L isn’t negatively affected by an assignment. Either it stays the same or it becomes slightly better due to the extrinsic value being ignored.

As an example, if your option is ITM by $1, you will lose up to $100 per option or $1 per share that you are assigned. But this does not account for the extrinsic value that falls away with the exercise of the option. So this would be the same P&L as at expiration. Depending on how much premium you collected when selling the option, this might still be a profit or a minor loss.

With that being said, as soon as you are assigned, you will have some carrying risk. If you don’t or can’t close the position immediately, you will be exposed to the ongoing price fluctuations of that security. Sometimes, you might not be able to close the new position immediately because of trading halts, or because the market is closed.

If you weren’t planning on holding that security, it is a good idea to close the new position as soon as possible.

Option spreads such as vertical spreads, add protection to these price fluctuations since you can just exercise the long option to close the assigned share position at the strike price of the long option.

3. When an option holder exercises their option, how is the assignment partner chosen?

This is usually a random process. As soon as an option is exercised, the responsible brokerage firm sends a request to the Options Clearing Corporation (OCC). They send back the requested shares, whereafter they randomly choose another brokerage firm that currently has a client that is short the exercised option. Then the chosen broker has to decide which of their clients is assigned. This choice is, once again, random or a time-based priority system is used.

4. How does assignment work for index options?

As there aren’t any shares of indexes, you can’t directly be assigned any shares of the underlying asset. Therefore, index options are cash-settled. This means that instead of having to buy or sell shares of the underlying, you simply have to pay the difference between the strike price and the underlying trading price. This makes assignment easier and a lot less likely among index options.

Note that ETF options such as SPY options are not cash-settled. SPY is a normal security with openly traded shares, so exercise and assignment work just like they do among equity options.

I hope this article made you realize that assignment isn’t as bad as it might seem at first. It is just important to understand how the options assignment process works and what affects the likelihood of being assigned.

To recap, here’s what you should to do when you are assigned:

if you have enough capital in your account to cover the position, you could either treat the new position as a normal (stock) position and hold on to it or you could close it immediately. If you don’t have a clear trading plan for the new position, I recommend the latter.

If, on the other hand, you don’t have enough buying power, you will receive a margin call from your broker and the position should be closed automatically.

Assignment does not have any significant impact on your P&L, but it comes with some carrying risk. Options spreads can offer more protection against this than naked option positions.

To mitigate assignment risk, you should close option positions early, always keep an eye on the extrinsic value of your option positions, and avoid upcoming dividend securities.

And always remember, less than 10% of options are exercised, so assignment really doesn’t happen that often, especially not if you are actively trying to avoid it.

For the specifics of how assignment is handled, it is a good idea to contact your broker, as the procedures can vary from broker to broker.

Thank you for taking the time and reading this post. If you have any questions, comments, or feedback, please let me know in the comment section below.

22 Replies to “What is Options Assignment & How to Avoid It”

hi there well seems like finally there is one good honest place. seem like you are puting on the table the whole truth about bad positions. however my wuestion is when can one know where to put that line of limit. when do you recognise or understand that you are in a bad position? thanks and once again, a great site.

Well If you are trading a risk defined strategy the point would be at max loss and not too much time left until expiration. For undefined risk strategies however it can be very different. I would just say if you don’t have too much time until expiration and are far from making money you should use some common sense and admit that you are wrong.

What would happen in the event of a crash. Would brokers be assigning, options, cashing out these shares, and making others bankrupt. Well, I guessed I sort of answered my own question. Its not easy to understand, especially not knowing when this would come up. But seems like you hit the important aspects of the agreement.

Actually I wouldn’t imagine that too many people would want to exercise their options in case of a market ctash, because they probably wouldn’t want to hold stocks in this risky and volatile environment.

And to the part of the questions: making others bankrupt. This really depends on the situation. You can’t get assigned more stock than your option covers. This means as long as you trade with reasonable position sizing nothing too bad can happen. Otherwise I would recommend to trade with defined risk strategies so your maximum drawdown is capped.

Thanks for writing about assignment Louis. After reading the section how assignment works, I feel I am somewhat unclear about how assignment works when the exerciser exercises Put or Call option. In both cases, if the underlying is an index, is the settlement done through the margin account money? Would you be able to provide a little more detail of how exercising the option (Put vs Call) would work in case of an underlying stock vs Index.

Thank you very much in advance

Thanks for the question. Indexes can’t be traded in the same way as stocks can. That’s why index options are settled in cash. If your index option is assigned, you won’t have to buy or sell any shares of the underlying index at the strike price because there exist no shares of indexes. Instead, you have to pay the amount that your index option is ITM to the exerciser of your option. Let me give you an example: You are short a call option with the strike price of 1000. The underlying asset is an index and it’s price is 1050. This means your call option is 50 points ITM. If someone exercises your long call option, you will have to pay him/her the difference between the strike price and the underlying’s price which would be 50 (1050-1000). So the main difference between index and stock options is that you don’t have to buy/sell any shares of the underlying asset for index options. I hope this helps. Please let me know if you have any other questions or comments.

Can the same logic be applied for ETFs as it does Indexes? For example, if I trade the SPY ETF, would it be settled in cash?

Thanks! Johnson

Hi Johnson, Exercise and assignment for ETFs such as SPY work just like they do for equities. ETFs have shares that are openly traded, whereas indexes don’t. That’s why indexes are settled in cash, whereas ETFs aren’t. I hope this helps.

There are many articles online that I read that are biased against options tradings and I am a bit surprised to read a really helpful article like this. I find this helpful in understanding options trading, what are the techniques and how to manage the risks. Before, I was hesitant to try this financial game but now, after reading this article, I am considering participating with live accounts and no longer with a demo account. A few months ago, I signed up with a company called IQ Options, but really never involved real money and practiced only with a demo account.

Thanks for your comment. I am glad to see that you liked the post. However, I don’t recommend sing IQ Option to trade since they are a very shady trading firm. You could check out my Review of IQ Option for all the details.

this is a great and amazing article. i sincerely your effort creating time to write on such an informative article which has taught me a lot more on what is options assignment and avoiding it. i just started trading but had no ideas on this as a beginner. i find this article very helpful because it has given me more understanding on options trading and knowing the techniques and how to manage the risks. thanks for sharing this amazing article

You are very welcome

Hello, the first thing that i noticed when i opened this page is the beauty of the website. i am sure you have put much effort into creating this article and the details are really clear here. after watching the video break down, i fully understood the entire process on how to avoid options assignment.

Thank you so much for the positive feedback!

I would love to create a website like yours as the design used is really nice, simple and brings about clarity of the write ups, but then you wrote a brilliant article on how to avoid options assignment. great video here. it was confusing at first. i will suggest another video be added to help some people like me.

Thanks for the feedback. I recommend checking out my options trading beginner course . In it, I cover all the basics that weren’t explained here.

Thanks for your very helpful article. I am contemplating selling a call that would cover half my shares on company X. How can ensure that the assignment process selects the shares that I bought at a higher price, so as to maximize capital losses?

Hi Luis, When you are assigned, you just automatically buy/sell shares of the underlying at the strike price. This means your overall portfolio is adjusted by these 100 shares. The exact shares and your entry price are irrelevant. If you have 50 shares of X and your short call is assigned, you will sell 100 shares of X at the strike price. After this, your position would be -50 shares of X which would be equivalent to being short 50 shares of X. I hope this helps.

Louis, I entered a CALL butterfly spread at $100 below where I intended, just 2 days before expiration date. I intended to speculate on a big earning announcement jump the next day. It was a debit of 1.25. Also, when I realized my mistake, I tried to close it for anything at all. The Mark fluctuated between 40 and 70, but I could not get it to close. So now I am assigned to sell 200 share at 70 dollars below the market price of the stock. I am having a heart attack. I do not have the 200 shares to deliver, so it seems I have to buy them at the market, and sell them for $70 less, for a loss of $14,000.

What other options are open to me? Can my trading firm force a close with a friendly market maker and make it as if it happened on Friday? I am willing to pay a friendly market maker several hundred dollars to make this trade. Is that an option? Other options the trading firm can do for me that would cost me less than $14,000?

Hi Paul, Thanks for your comment. From the limited information provided, it is hard to say what is actually going on. If you bought a call butterfly spread, your max loss should be limited to the premium you paid to open the position. An assignment shouldn’t have a huge impact on your overall P&L. I highly recommend contacting your broker and explaining your situation to them since they have all the information required to evaluate what’s actually going on. But if the loss is real, there is no way for you to make a deal with a market maker to limit or undo potential losses. I hope this helps.

What happens with ITM long call option that typically gets automatically exercised at expiration, if the owner of the call option doesn’t have the cash/margin to cover the stock purchase?

He would receive a margin call

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The Risks of Options Assignment

Any trader holding a short option position should understand the risks of early assignment. An early assignment occurs when a trader is forced to buy or sell stock when the short option is exercised by the long option holder. Understanding how assignment works can help a trader take steps to reduce their potential losses.

Understanding the basics of assignment

An option gives the owner the right but not the obligation to buy or sell stock at a set price. An assignment forces the short options seller to take action. Here are the main actions that can result from an assignment notice:

Short call assignment: The option seller must sell shares of the underlying stock at the strike price.
Short put assignment: The option seller must buy shares of the underlying stock at the strike price.

For traders with long options positions, it's possible to choose to exercise the option, buying or selling according to the contract before it expires. With a long call exercise, shares of the underlying stock are bought at the strike price while a long put exercise results in selling shares of the underlying stock at the strike price.

When a trader might get assigned

There are two components to the price of an option: intrinsic 1 and extrinsic 2 value. In the case of exercising an in-the-money 3 (ITM) long call, a trader would buy the stock at the strike price, which is lower than its prevailing price. In the case of a long put that isn't being used as a hedge for a long stock position, the trader shorts the stock for a price higher than its prevailing price. A trader only captures an ITM option's intrinsic value if they sell the stock (after exercising a long call) or buy the stock (after exercising a long put) immediately upon exercise.

Without taking these actions, a trader takes on the risks associated with holding a long or short stock position. The question of whether a short option might be assigned depends on if there's a perceived benefit to a trader exercising a long option that another trader has short. One way to attempt to gauge if an option could be potentially assigned is to consider the associated dividend. An options seller might be more likely to get assigned on a short call for an upcoming ex-dividend if its time value is less than the dividend. It's more likely to get assigned holding a short put if the time value has mostly decayed or if the put is deep ITM and close to expiration with a wide bid/ask spread on the stock.

It's possible to view this information on the Trade page of the thinkorswim ® trading platform. Review past dividends, the price of the short call, and the price of the put at the call's strike price. While past performance cannot be relied upon to continue, this information can help a trader determine whether assignment is more or less likely.

Reducing the risk associated with assignment

If a trader has a covered call that's ITM and it's assigned, the trader will deliver the long stock out of their account to cover the assignment.

A trader with a call vertical spread 4 where both options are ITM and the ex-dividend date is approaching may want to exercise the long option component before the ex-dividend date to have long stock to deliver against the potential assignment of the short call. The trader could also close the ITM call vertical spread before the ex-dividend date. It might be cheaper to pay the fees to close the trade.

Another scenario is a call vertical spread where the ITM option is short and the out-of-the-money (OTM) option is long. In this case, the trader may consider closing the position or rolling it to a further expiration before the ex-dividend date. This move can possibly help the trader avoid having short stock on the ex-dividend date and being liable for the dividend.

Depending on the situation, a trader long an ITM call might decide it's better to close the trade ahead of the ex-dividend date. On the ex-dividend date, the price of the stock drops by the amount of the dividend. The drop in the stock price offsets what a trader would've earned on the dividend and there would still be fees on top of the price of the put.

Assess the risk

When an option is converted to stock through exercise or assignment, the position's risk profile changes. This change could increase the margin requirements, or subject a trader to a margin call, 5 or both. This can happen at or before expiration during early assignment. The exercise of a long option position can be more likely to trigger a margin call since naked short option trades typically carry substantial margin requirements.

Even with early exercise, a trader can still be assigned on a short option any time prior to the option's expiration.

1 The intrinsic value of an options contract is determined based on whether it's in the money if it were to be exercised immediately. It is a measure of the strike price as compared to the underlying security's market price. For a call option, the strike price should be lower than the underlying's market price to have intrinsic value. For a put option the strike price should be higher than underlying's market price to have intrinsic value.

2 The extrinsic value of an options contract is determined by factors other than the price of the underlying security, such as the dividend rate of the underlying, time remaining on the contract, and the volatility of the underlying. Sometimes it's referred to as the time value or premium value.

3 Describes an option with intrinsic value (not just time value). A call option is in the money (ITM) if the underlying asset's price is above the strike price. A put option is ITM if the underlying asset's price is below the strike price. For calls, it's any strike lower than the price of the underlying asset. For puts, it's any strike that's higher.

4 The simultaneous purchase of one call option and sale of another call option at a different strike price, in the same underlying, in the same expiration month.

5 A margin call is issued when the account value drops below the maintenance requirements on a security or securities due to a drop in the market value of a security or when buying power is exceeded. Margin calls may be met by depositing funds, selling stock, or depositing securities. A broker may forcibly liquidate all or part of the account without prior notice, regardless of intent to satisfy a margin call, in the interests of both parties.

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Option Assignment: What It Is, How to Avoid It, and Examples

January 3, 2023
Options and Derivatives

Options assignment is a must-know concept for anyone trading options, especially those selling them. It’s the process by which an option seller can be held to their contract terms — and it has risks.

We’ll go over what you need to know about the mechanics of assignment, why it occurs, and your exposure when selling options.

What is option assignment?

When an option holder decides to exercise their option, they’ll first need to notify their broker. This will trigger a notification of assignment to the writer (seller) of said option and force them to fulfill their side of the trade – be it buying or selling the underlying asset at whatever price is agreed upon.

For instance, let’s say that Dave holds a call option on XYZ stock with a strike price of $50. With XYZ currently trading at $55 a share, Dave decides to exercise his option – meaning he wants to exercise his right to buy 100 shares at $50.

The broker would then randomly assign an option seller – who would then be obligated to sell XYZ stock to Dave at the agreed-upon price of $50 a share.

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Reasons for assignment

At expiration, traders still holding short, in-the-money options often receive an unpleasant surprise – being forced to fulfill the terms of their contract. If you had a short put option, your assignment would mean buying stock – if a call option, you’ll be selling shares.

Though it’s not common, early assignment on options trades is still a possibility. Specifically for illiquid contracts that have wide bid/ask spreads or those with upcoming dividend payments – so best to keep an eye out!

Expiration: Most likely reason for an assignment. Any short, in-the-money options are nearly guaranteed to be assigned. Most brokers will automatically exercise their customers’ options even if they are just a penny in-the-money.
Wide spread: For an option holder, exercising early isn’t usually a preferred course of action. However, in certain cases—such as when the bid/ask spread is too wide due to illiquidity—they may have no choice but to exercise if they want to get any value out of their contract.
Dividend risk: Short, in-the-money (ITM) call options are at risk of being assigned early if the underlying stock pays a dividend. This risk is greatest when the dividend amount is higher than the extrinsic value left in the contract.

How to avoid option assignment

If you’re the writer (seller) of an option, a guaranteed way to avoid assignment is by closing out the option contract. If you no longer hold it, there’s no risk someone will assign it to you.

Another way to avoid assignment is by rolling your option. This means you would close out the current contract and open a new one at an expiry further in time or with a strike further out-of-the-money. It could take some practice, but it’s worth understanding if you want more control over how your options are managed!

OTM expiration: Out-of-the-money options will expire worthless upon expiration. An option holder has up to 90 minutes after market close to exercise – so it’s best to close the option prior to the bell to avoid any surprise assignments.
Rolling: Rolling an option is the process of closing your current position while simultaneously opening a new one. If the option is about to expire, you would be buying back the current option while simultaneously selling a new one further out in time. You could also choose to move it to a new strike and improve the probabilities.
Exit the trade: One surefire way you can avoid getting assigned is by closing your option. That’ll make it impossible for anyone to assign a contract to you!

Does option assignment count as a day trade?

In general, a day trade is defined as the opening and closing of a security on the same trading day. However, the exercise or assignment of an option contract does not count as a day trade.

What is dividend risk ?

Dividend risk is only a consideration for short, in-the-money call options on an underlying which pays dividends . It’s most likely to occur on the ex-dividend date for the stock on options with less extrinsic value left than the dividend being paid.

Most traders would find the extrinsic value left in the call option by using the value of the corresponding put. In the example below, let’s assume the stock goes ex-dividend tomorrow and pays a 26-cent dividend.

If we had sold the 18-strike call, using the put we can quickly see it has roughly 7 cents of extrinsic value. Since the dividend is higher than the extrinsic value, this option is at high risk of being assigned early.

Any in-the-money call option that has less extrinsic value than the amount of the dividend, may be at risk of early assignment. This could be avoided by exiting the option prior to the ex-dividend date, or by rolling the option to an expiration or strike less likely to be assigned.

Options assignment is a potential risk of options writing. In many situations, it can be avoided but needs to be fully understood to manage effectively.

By understanding the basics of options assignment, why it happens, and ways to avoid it; you can rest easy knowing that you’re prepared for anything. So next time option assignment comes knocking, you’ll be ready!

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Mike Martin

Option exercise and assignment explained w/ visuals.

Categories: Options Trading

Last updated on February 11th, 2022 , 06:38 am

Buyers of options have the right to exercise their option at or before the option’s expiration. When an option is exercised, the option holder will buy (for exercised calls) or sell (for exercised puts) 100 shares of stock per contract at the option’s strike price.

Conversely, when an option is exercised, a trader who is short the option will be assigned 100 long (for short puts) or short (for short calls) shares per contract.

Long American style options can exercise their contract at any time.
Long calls transfer to +100 shares of stock
Long puts transfer to -100 shares of stock
Short calls are assigned -100 shares of stock.
Short puts are assigned +100 shares of stock.
Options are typically only exercised and thus assigned when extrinsic value is very low.
Approximately only 7% of options are exercised.

The following sequences summarize exercise and assignment for calls and puts (assuming one option contract ):

Call Buyer Exercises Option ➜ Purchases 100 shares at the call’s strike price.

Call Seller Assigned ➜ Sells/shorts 100 shares at the call’s strike price.

Put Buyer Exercises Option ➜ Sells/shorts 100 shares at the put’s strike price.

Put Seller Assigned ➜ Purchases 100 shares at the put’s strike price.

Let’s look at some specific examples to drill down on this concept.

New to options trading? Learn the essential concepts of options trading with our FREE 160+ page Options Trading for Beginners PDF.

Exercise and Assignment Examples

In the following table, we’ll examine how various options convert to stock positions for the option buyer and seller:

As you can see, exercise and assignment is pretty straightforward: when an option buyer exercises their option, they purchase (calls) or sell (puts) 100 shares of stock at the strike price . A trader who is short the assigned option is obligated to fulfill the opposite position as the option exerciser.

Automatic Exercise at Expiration

Another important thing to know about exercise and assignment is that standard in-the-money equity options are automatically exercised at expiration. So, traders may end up with stock positions by letting their options expire in-the-money.

An in-the-money option is defined as any option with at least $0.01 of intrinsic value at expiration . For example, a standard equity call option with a strike price of 100 would be automatically exercised into 100 shares of stock if the stock price is at $100.01 or higher at expiration.

What if You Don't Have Enough Available Capital?

Even if you don’t have enough capital in your account, you can still be assigned or automatically exercised into a stock position. For example, if you only have $10,000 in your account but you let one 500 call expire in-the-money, you’ll be long 100 shares of a $500 stock, which is a $50,000 position. Clearly, the $10,000 in your account isn’t enough to buy $50,000 worth of stock, even on 4:1 margin.

If you find yourself in a situation like this, your brokerage firm will come knocking almost instantaneously. In fact, your brokerage firm will close the position for you if you don’t close the position quickly enough.

Why Options are Rarely Exercised

At this point, you understand the basics of exercise and assignment. Now, let’s dive a little deeper and discuss what an option buyer forfeits when they exercise their option.

When an option is exercised, the option is converted into long or short shares of stock. However, it’s important to note that the option buyer will lose the extrinsic value of the option when they exercise the option. Because of this, options with lots of extrinsic value remaining are unlikely to be exercised. Conversely, options consisting of all intrinsic value and very little extrinsic value are more likely to be exercised.

The following table demonstrates the losses from exercising an option with various amounts of extrinsic value:

As we can see here, exercising options with lots of extrinsic value is not favorable.

Why? Consider the 95 call trading for $7. Exercising the call would result in an effective purchase price of $102 because shares are bought at $95, but $7 was paid for the right to buy shares at $95.

With an effective purchase price of $102 and the stock trading for $100, exercising the option results in a loss of $2 per share, or $200 on 100 shares.

Even if the 95 call was previously purchased for less than $7, exercising an option with $2 of extrinsic value will always result in a P/L that’s $200 lower (per contract) than the current P/L. F

or example, if the trader initially purchased the 95 call for $2, their P/L with the option at $7 would be $500 per contract. However, if the trader decided to exercise the 95 call with $2 of extrinsic value, their P/L would drop to +$300 because they just gave up $200 by exercising.

7% Of Options Are Exercised

Because of the fact that traders give up money by exercising an option with extrinsic value, most options are not exercised. In fact, according to the Options Clearing Corporation, only 7% of options were exercised in 2017 . Of course, this may not factor in all brokerage firms and customer accounts, but it still demonstrates a low exercise rate from a large sample size of trading accounts.

So, in almost all cases, it’s more beneficial to sell the long option and buy or sell shares instead of exercising. We like to call this approach a “synthetic exercise.”

Congrats! You’ve learned the basics of exercise and assignment. If you’d like to know how the exercise and assignment process actually works, continue to the next section!

Who Gets Assigned When an Option is Exercised?

With thousands of traders long and short options in the market, who actually gets assigned when one of the traders exercises their option?

In this section, we’ll run through the exercise and assignment process for options so you know how the assignment decision occurs.

If a trader is short a single option, how do they get assigned if one of a thousand other traders exercises that option?

The short answer is that the process is random. For example, if there are 5,000 traders who are long a call option and 5,000 traders who are short that call option, an account with the short option will be randomly assigned the exercise notice. The random process ensures that the option assignment system is fair

Visualizing Assignment and Exercise

The following visual describes the general process of exercise and assignment:

If you’d like, you can read the OCC’s detailed assignment procedure here (warning: it’s intense!).

Now you know how the assignment procedure works. In the final section, we’ll discuss how to quickly gauge the likelihood of early assignment on short options.

Assessing Early Option Assignment Risk

The final piece of understanding exercise and assignment is gauging the risk of early assignment on a short option.

As mentioned early, only 7% of options were exercised in 2017 (according to the OCC). So, being assigned on short options is rare, but it does happen. While a specific probability of getting assigned early can’t be determined, there are scenarios in which assignment is more or less likely.

The following scenarios summarize broad generalizations of early assignment probabilities in various scenarios:

In regards to the dividend scenario, early assignment on in-the-money short calls with less extrinsic value than the dividend is more likely because the dividend payment covers the loss from the extrinsic value when exercising the option.

All in all, the risk of being assigned early on a short option is typically very low for the reasons discussed in this guide. However, it’s likely that you will be assigned on a short option at some point while trading options (unless you don’t sell options!), but at least now you’ll be prepared!

Next Lesson

Options Trading for Beginners

Intrinsic and Extrinsic Value in Options Trading Explained

Option Greeks Explained: Delta, Gamma, Theta & Vega

Projectfinance options tutorials.

➥ Bullish Strategies

➥ Bearish Strategies

➥ Neutral Strategies

➥ Vertical Spreads Guide

☆ Options Trading for Beginners ☆

➥ Basics of Calls and Puts

➥ What is a Strike Price?

➥ Option Expiration

➥ Intrinsic and Extrinsic Value

➥ Exercise and Assignment

➥ The Bid-Ask Spread

➥ Volume and Open Interest

➥ Option Chain Explained

➥ Option Greeks 101

➥ Delta Explained

➥ Gamma Explained

➥ Theta Explained

➥ Vega Explained

➥ Implied Volatility Basics

➥ What is the VIX Index?

➥ The Expected Move

➥ Trading VIX Options

➥ Trading VIX Futures

➥ The VIX Term Structure

➥ IV Rank vs. IV Percentile

➥ Option Order Types 101

➥ Stop-Loss Orders On Options Explained

➥ Stop Limit Order in Options: Examples W/ Visuals

➥ Limit Order in Option Trading Explained w/ Visuals

➥ Market Order in Options: Don’t Throw Away Money!

➥ TIF Orders Types Explained: DAY, GTC, GTD, EXT, GTC-EXT, MOC, LOC

Additional Resources

Exercise and Assignment – CME Group

Learn About Exercise and Assignment – CME Group

About the Author

Chris Butler received his Bachelor’s degree in Finance from DePaul University and has nine years of experience in the financial markets.

Chris started the projectfinance YouTube channel in 2016, which has accumulated over 25 million views from investors globally.

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Assignment in Options Trading

Introduction articles, what is an options assignment.

In options trading , an assignment occurs when an option is exercised.

As we know, a buyer of an option has the right but not the obligation to buy or sell an underlying asset depending on what option they have purchased. When the buyer exercises this right, the seller will be assigned and will have to deliver or take delivery of what they are contractually obliged to. For stock options, it is typically 1 , 000 shares per contract for the UK ; and 100 shares per contract in the US.

As you can see, a buyer will never be assigned, only the seller is at risk of assignment. The buyer, however, may be auto exercised if the option expires in-the-money .

The Mechanics of Assignment

Assignment of options isn’t a random process. It’s a methodical procedure that follows specific steps, typically beginning with the option holder’s decision to exercise their option. The decision then gets routed through various intermediaries like brokers and clearing +houses before the seller is notified.

Exercise by Holder: The holder (buyer) of the option exercises their right to buy (for Call ) or sell (for Put ).
Random Assignment by a Clearing House: A clearing house assigns the obligation randomly among all sellers of the option.
Fulfilment by the Writer: The writer (seller) now must fulfill the obligation to sell (for Call) or buy (for Put) the underlying asset.

Option Assignments: Calls and Puts

Call option assignments.

When a call option holder chooses to exercise their right, the seller of the call option gets assigned. In such a situation, the seller is obligated to sell the underlying asset at the strike price to the call option holder.

Put Option Assignments

Similarly, if a put option holder decides to exercise their right, the put option seller gets assigned. The seller is then obligated to buy the underlying asset at the strike price from the put option holder.

The Implications of Assignments for Options Traders

Understanding assignment in options trading is crucial as it comes with potential risks and rewards for both parties involved.

For Option Sellers

Option sellers, or ‘writers,’ face the risk of unexpected assignments. The risk of being assigned early is especially present for options that are in the money or near their expiration date. We explain the difference between American and European assignments below.

For Option Holders

For option holders, deciding when to exercise an option (potentially leading to assignment) is a strategic decision. This decision must consider factors such as the intrinsic value of the option, the time value, and the dividend payment of the underlying asset.

Can Options be assigned before expiration?

In short, Yes, but it depends on the style of options you are trading.

American Style – Yes, this type of option can be assigned on or before expiry.

European Style – No, this type of option can only be assigned on the expiry date as defined in the contract specifications.

Options Assignment Example

For example, an investor buys XYZ PLC 400 call when the stock is trading at 385. The stock in the coming weeks rises to 425 after some good news, the buyer then decides to exercise their right early to buy the XYZ PLC stock at 400.

In this scenario, the call seller (writer) has been assigned and will have to deliver stock at 400 to the buyer (sell their stock at 400 when the prevailing market is 425).

An option typically would only be assigned if it is in the money, considering factors like dividends which do play an important role in exercise/assignments.

Can an Options Assignment be Prevented?

Assignment can sometimes come as a bit of a surprise but normally you should see it coming. You can only work to prevent assignment by closing the option before expiry or before any possible risk of assignment.

Managing Risks in Options Trading

While options trading can offer high returns, it is not devoid of risks. Therefore, understanding and managing these risks is key.

Buyers Risk: The premium paid for an option is at risk. If the option is not profitable at expiration, the premium is lost.

Writers Risk: The writer takes on a much larger risk. If a call option is assigned, they must sell the underlying asset at the strike price, even if its market price is higher.

Options Assignment Summary

The concept of ‘assignment’ in options trading, although complex, is a cornerstone of understanding options trading. It not only clarifies the responsibilities of an options seller but also helps the traders to gauge and manage their risks more effectively. Successful trading involves not just knowing your options but also understanding your obligations.

Options Assignment FAQs

What is options assignment.

Options assignment refers to the process by which the seller (writer) of an options contract is obligated to fulfill their contractual obligation to buy or sell the underlying asset, as specified by the terms of the options contract.

When does options assignment occur?

Options assignment can occur when the buyer of the options contract exercises their right to buy (in the case of a call option) or sell (in the case of a put option) the underlying asset before or at expiration .

How does options assignment work?

When a buyer exercises their options contract, a clearing house randomly assigns a seller who is short (has written) the same options contract to fulfill the obligations of the exercise.

What happens to the seller upon options assignment?

If assigned, the seller (writer) of the options contract is obligated to fulfill their contractual obligation by buying or selling the underlying asset at the specified price (strike price) per the terms of the options contract.

Can options be assigned before expiration?

Yes, options can be assigned at any time (depending on contract type) before expiration if the buyer chooses to exercise their right. However, it is more common for options to be assigned closer to expiration as the time value diminishes.

What factors determine options assignment?

Options assignment is determined by the buyer’s decision to exercise their options contract. They may choose to exercise if the options contract is in-the- money and it is financially advantageous for them to do so.

How can I avoid options assignment?

As a seller (writer) of options contracts, you can avoid assignment by closing your position before expiration through a closing trade (buying back the options contract) or rolling it over to a future expiration date.

What happens if I am assigned on a short call option?

If assigned on a short call option, you are obligated to sell the underlying asset at the specified price (strike price). This means you would need to deliver the shares . To fulfill this obligation, you may need to buy the shares in the open market if you do not hold them .

What happens if I am assigned on a short put option?

If assigned on a short put option, you are obligated to buy the underlying asset at the specified price (strike price). This means you would need to purchase the shares .

How does options assignment affect my account?

Options assignment can impact your account by requiring you to fulfill the obligations of the assigned options contract, which may involve buying or selling the underlying asset. It is important to have sufficient funds or margin available to cover these obligations.

OptionsDesk Tips & Considerations

You should always have enough funds in your account to cover any assignment risk. If you have a short call position and it is in-the-money at the time of an ex-dividend be aware of extra assignment risk here as buyer/holder of the option may look to exercise to qualify for the dividend. Assignments can happen at any time!

Check out our other articles

Important information : Derivative products are considerably higher risk and more complex than more conventional investments, come with a high risk of losing money rapidly due to leverage and are not, therefore, suitable for everyone. Our website offers information about trading in derivative products, but not personal advice. If you’re not sure whether trading in derivative products is right for you, you should contact an independent financial adviser. For more information, please read our Important Derivative Product Trading Notes .

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Understanding assignment risk in Level 3 and 4 options strategies

E*TRADE from Morgan Stanley

With all options strategies that contain a short option position, an investor or trader needs to keep in mind the consequences of having that option assigned , either at expiration or early (i.e., prior to expiration). Remember that, in principle, with American-style options a short position can be assigned to you at any time. On this page, we’ll run through the results and possible responses for various scenarios where a trader may be left with a short position following an assignment.

Before we look at specifics, here’s an important note about risk related to out-of-the-money options: Normally, you would not receive an assignment on an option that expires out of the money. However, even if a short position appears to be out of the money, it might still be assigned to you if the stock were to move against you just prior to expiration or in extended aftermarket or weekend trading hours. The only way to eliminate this risk is to buy-to-close the short option.

Short (naked) calls

Credit call spreads

Credit put spreads, debit call spreads, debit put spreads.

When all legs are in-the-money or all are out-of-the-money at expiration

Another important note : In any case where you close out an options position, the standard contract fee (commission) will be charged unless the trade qualifies for the E*TRADE Dime Buyback Program . There is no contract fee or commission when an option is assigned to you.

Short (naked) call

If you experience an early assignment.

An early assignment is most likely to happen if the call option is deep in the money and the stock’s ex-dividend date is close to the option expiration date.

If your account does not hold the shares needed to cover the obligation, an early assignment would create a short stock position in your account. This may incur borrowing fees and make you responsible for any dividend payments.

Also note that if you hold a short call on a stock that has a dividend payment coming in the near future, you may be responsible for paying the dividend even if you close the position before it expires.

An early assignment generally happens when the put option is deep in the money and the underlying stock does not have an ex-dividend date between the current time and the expiration of the option.

Short call + long call

(The same principles apply to both two-leg and four-leg strategies)

This would leave your account short the shares you’ve been assigned, but the risk of the position would not change . The long call still functions to cover the short share position. Typically, you would buy shares to cover the short and simultaneously sell the long leg of the spread.

Pay attention to short in-the-money call legs on the day prior to the stock’s ex-dividend date, because an assignment that evening would put you in a short stock position where you are responsible for paying the dividend. If there’s a risk of early assignment, consider closing the spread.

Short put + long put

Early assignment would leave your account long the shares you’ve been assigned. If your account does not have enough buying power to purchase the shares when they are assigned, this may create a Fed call in your account.

However, the long put still functions to cover the position because it gives you the right to sell shares at the long put strike price. Typically, you would sell the shares in the market and close out the long put simultaneously.

Here's a call example

Let’s say that you’re short a 100 call and long a 110 call on XYZ stock; both legs are in-the-money.
You receive an assignment notification on your short 100 call, meaning you sell 100 shares of XYZ stock at 100. Now, you have $10,000 in short stock proceeds, your account is short 100 shares of stock, and you still hold the long 110 call.
Exercise your long 110 call, which would cover the short stock position in your account.
Or, buy 100 shares of XYZ stock (to cover your short stock position) and sell to close the long 110 call.

Here's a put example:

Let’s say that you’re short a 105 put and long a 95 put on XYZ stock; the short leg is in-the-money.
You receive an assignment notification on your short 105 put, meaning you buy 100 shares of XYZ stock at 105. Now, your account has been debited $10,500 for the stock purchase, you hold 100 shares of stock, and you still hold the long 95 put.
The debit in your account may be subject to margin charges or even a Fed call, but your risk profile has not changed.
You can sell to close 100 shares of stock and sell to close the long 95 put.

Long call + short call

Debit spreads have the same early assignment risk as credit spreads only if the short leg is in-the-money.

An early assignment would leave your account short the shares you’ve been assigned, but the risk of the position would not change . The long call still functions to cover the short share position. Typically, you would buy shares to cover the short share position and simultaneously sell the remaining long leg of the spread.

Long put + short put

An early assignment would leave your account long the shares you’ve been assigned. If your account does not have enough buying power to purchase the shares when they are assigned, this may create a Fed call in your account.

All spreads that have a short leg

(when all legs are in-the-money or all are out-of-the-money)

Pay attention to short in-the-money call legs on the day prior to the stock’s ex-dividend date because an assignment that evening would put you in a short stock position where you are responsible for paying the dividend. If there’s a risk of early assignment, consider closing the spread.

However, the long put still functions to cover the long stock position because it gives you the right to sell shares at the long put strike price. Typically, you would sell the shares in the market and close out the long put simultaneously.

What to read next...

How to buy call options, how to buy put options, potentially protect a stock position against a market drop, looking to expand your financial knowledge.

Options Assignment

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Options and Derivatives
Strategy & Education

Options Contract: What It Is, How It Works, Types of Contracts

Investopedia / Jiaqi Zhou

What Is an Options Contract?

An options contract is an agreement between two parties to facilitate a potential transaction on an underlying security at a preset price, referred to as the strike price , prior to or on the expiration date.

Key Takeaways

An options contract is an agreement between two parties to facilitate a potential transaction involving an asset at a preset price and date.
Call options can be purchased as a leveraged bet on the appreciation of an asset, while put options are purchased to profit from price declines.
Buying an option offers the right, but not the obligation, to purchase or sell the underlying asset.
For stock options, a single contract covers 100 shares of the underlying stock.

Understanding an Options Contract

Options are financial instruments that are based on the value of underlying securities such as stocks. An options contract offers the buyer the opportunity to buy or sell—depending on the type of contract they hold—the chosen underlying asset at a price set out in the contract either within a certain timeframe or at the expiration date .

American options can be exercised any time before the expiration date of the option, while European options can only be exercised on the expiration date or the exercise date.

The terms of an option contract specify the underlying security, the price at which that security can be transacted (strike price), and the expiration date of the contract. In the case of stocks, a standard contract covers 100 shares, but the share amount may be adjusted for stock splits, special dividends, or mergers.

Options are generally used for hedging purposes but can be used for speculation , too. Options generally cost a fraction of what the underlying shares would. Using options is a form of leverage, allowing an investor to make a bet on a stock without having to purchase or sell the shares outright. In exchange for this privilege, the options buyer pays a premium to the party selling the option.

Types of Options Contract

There are two types of options contract: puts and calls. Both can be purchased to speculate on the direction of the security or hedge exposure. They can also be sold to generate income.

In general, call options can be purchased as a leveraged bet on the appreciation of a stock or index, while put options are purchased to profit from price declines. The buyer of a call option has the right, but not the obligation, to buy the number of shares covered in the contract at the strike price. Put buyers, on the other hand, have the right, but not the obligation, to sell the shares at the strike price specified in the contract.

Option sellers, also known as writers , are obligated to transact their side of the trade if a buyer decides to execute a call option to buy the underlying security or execute a put option to sell.

Call Option Contract : In a call option transaction, a position is opened when a contract or contracts are purchased from the seller. In the transaction, the seller is paid a premium to assume the obligation of selling shares at the strike price. If the seller holds the shares to be sold, the position is referred to as a covered call .
Put Option Contract : Buyers of put options are speculating on price declines of the underlying stock or index and own the right to sell the shares at the strike price specified in the contract. If the share price drops below the strike price prior to or at expiration, the buyer can either assign shares to the seller for purchase at the strike price or sell the contract if the shares are not held in the portfolio.

Example of an Options Contract

Company ABC's shares trade at $60, and a call writer is looking to sell calls at $65 with a one-month expiration. If the share price stays below $65 and the options expire, the call writer keeps the shares and can collect another premium by writing calls again.

If, however, the share price appreciates to a price above $65, referred to as being in-the-money (ITM), the buyer calls the shares from the seller, purchasing them at $65. The call-buyer can also sell the options if purchasing the shares is not the desired outcome.

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Man or bear? Hypothetical question sparks conversation about women's safety

Women explain why they would feel safer encountering a bear in the forest than a man they didn't know. the hypothetical has sparked a broader discussion about why women fear men..

If you were alone in the woods, would you rather encounter a bear or a man? Answers to that hypothetical question have sparked a debate about why the vast majority say they would feel more comfortable choosing a bear.

The topic has been hotly discussed for weeks as men and women chimed in with their thoughts all over social media.

Screenshot HQ , a TikTok account, started the conversation, asking a group of women whether they would rather run into a man they didn't know or a bear in the forest. Out of the seven women interviewed for the piece, only one picked a man.

"Bear. Man is scary," one of the women responds.

A number of women echoed the responses given in the original video, writing in the comments that they, too, would pick a bear over a man. The hypothetical has people split, with some expressing their sadness over the state of the world and others cracking jokes. Some men were flabbergasted.

Here's what we know.

A bear is the safer choice, no doubt about it, many say

There were a lot of responses, more than 65,000, under the original post. Many wrote that they understood why the women would choose a bear.

"No one’s gonna ask me if I led the bear on or give me a pamphlet on bear attack prevention tips," @celestiallystunning wrote.

@Brennduhh wrote: "When I die leave my body in the woods, the wolves will be gentler than any man."

"I know a bear's intentions," another woman wrote. "I don't know a man's intentions. no matter how nice they are."

Other TikTok users took it one step further, posing the hypothetical question to loved ones. Meredith Steele, who goes by @babiesofsteele , asked her husband last week whether he would rather have their daughter encounter a bear or a man in the woods. Her husband said he "didn't like either option" but said he was leaning toward the bear.

"Maybe it's a friendly bear," he says.

Diana, another TikTok user , asked her sister-in-law what she would choose and was left speechless.

"I asked her the question, you know, just for giggles. She was like, 'You know, I would rather it be a bear because if the bear attacks me, and I make it out of the woods, everybody’s gonna believe me and have sympathy for me," she said. "But if a man attacks me and I make it out, I’m gonna spend my whole life trying to get people to believe me and have sympathy for me.'"

Bear vs. man debate stirs the pot, woman and some men at odds

The hypothetical has caused some tension, with some women arguing that men will never truly understand what it's like to be a woman or the inherent dangers at play.

Social media users answered this question for themselves, producing memes, spoken word poetry and skits in the days and weeks since.

So, what would you choose?

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Astros To Option José Abreu

By Darragh McDonald | April 30, 2024 at 11:58pm CDT

First baseman José Abreu is not with the Astros right now and will be optioned tomorrow to West Palm Beach. As a veteran with over five years of major league service time, Abreu cannot be optioned without his consent but agreed to be sent down in an attempt to overcome his struggles. Chandler Rome of The Athletic was among those to relay the news on X .

Abreu, now 37, signed a three-year deal with a $58.5MM guarantee with the Astros going into 2023. Houston was undoubtedly hoping for Abreu to continue performing like he did with the White Sox. He hit 243 home runs for that club from 2014 to 2022, slashing .292/.354/.506 in the process.

But things have not been going well since he joined the Astros. He was hitting .211/.276/.260 through May last year, before bouncing back with a solid showing of .277/.322/.466 in June and July. He was brutal again in August, hitting .188/.278/.271, before mounting a solid finish by slashing .237/.299/.536 in September and October. That up-and-down season finished with a line of .237/.296/.383, which translated to a wRC+ of 86, but he provided a bit more optimism by slashing .295/.354/.591 in the postseason.

Unfortunately, things have gone from bad to worse here in 2024, something that MLBTR’s Anthony Franco looked at last week. Abreu has just seven hits so far this season, with his one double the only extra-base knock of the bunch. He currently has a line of .099/.156/.113 on the year. His -21 wRC+ is the worst in the majors among players with at least 70 plate appearances.

His .130 batting average on balls in play is surely due for some regression, but Abreu isn’t hitting the ball with much authority either. He has yet to barrel a ball this season, per Statcast’s definition, while his exit velocity and hard hit rate are way down relative to his previous work.

As mentioned, veteran players cannot be optioned without their consent but Abreu has agreed to go down to the minors. General manager Dana Brown told reporters that both sides decided Abreu should go down to the farm “to get some at-bats and his timing back right,” per Rome, linked up top. “He unselfishly was on board and agreement with going back to West Palm Beach,” Brown said.

Obviously, it would be great for everyone involved if this plan were successful in getting him back on track. The Astros are off to their worst start in years, currently 9-19 and in last place in the American League West. Abreu’s struggles have obviously been a part of that but he could also be part of the solution if he were able to turn things around.

For now, it’s not totally clear what the plan will be at first base. Joey Loperfido was just added to the roster today but he will be playing outfield for now, Brown said, per Matt Kawahara of the Houston Chronicle . The Astros have Jon Singleton available to play first base but he’s not having a great year either, currently slashing .238/.319/.286.

Trey Cabbage could perhaps be an option, as he’s on the 40-man roster. He was just up with the club as their 27th man for the Mexico City Series but was sent back down after. Position players normally have to wait ten days after being optioned to be recalled again, but a “27th man” situation doesn’t count as being optioned.

Cabbage generally provides pop and can take a walk, but also racks up his share of strikeouts. He’s been hitting .271/.440/.486 in Triple-A this year, walking 23.1% of the time but striking out at a 31.9% clip. He also provides some wheels, having stolen seven bags on the year so far.

The Astros won’t officially option Abreu until tomorrow, so they will play a man short tonight and the corresponding move will be clear at that time.

241 Comments

Good luck, Jose. You’re a good guy.

Take a big man to go down to the minors.

Alex Manoah should take notes

Bregman next!

Lol, he’ll get going… eventually

Here comes Joey!!!

Hopefully, they find his real birth certificate

Thanks obama

SkipperLou: Yes, maybe one day, many decades from now, her legitimate birth certificate will surface.

About as dumb as a Bernie one

To be fair arguing politics on a sports site is pure our brain rot from both sides lol

@cr4 Amazing, to think there are still chronological adults who have yet to figure out that US politics is mere theater, intended to keep us at each other’s throats over 2% of the issues, specifically social issues that the billionaires who own the government don’t care about, issues which are almost surgically divorced from economics so they don’t get in the way of looting the treasury.

They have yet to figure out you can vote, but someone you cannot vote against war, you cannot vote against Wall St., you cannot vote against militarized police, you cannot vote for less government…

It’s just funny that we’re down to a choice between far right and center right and the guy who hasn’t even been in office (Bernie) who wants to bring back FDR policies (the ones that pulled us out of the Great Depression) is too left for them.

Ok, enjoy hanging on by a thread then. See if the billionaires ever feel like letting any crumbs fall from the table (spoiler: they don’t)

You’re either 12 or never took an economics course

Let’s go Brandon!

You’re a presumptuous fool and a complete Tool, cndb41a.

They’re all fake and frauds, nj.

cr4 “pure our brain rot”??

Bring it, JackStrawb!!

West Palm Beach? Maybe it’s in a Mar a Lago bathroom.

From what I’ve read, you have to flush those Mar a Lago toilets “10 times, 15 times, as opposed to once”. Kooky, huh?

Plenty of interesting reading material in there too.

Thanks to the clueless imbeciles and their political commentary

Why doesn’t everyone grow up and realize that anyone politically inclined is being played for fools? Keep politics where they belong and let people that are trying to catch up on baseball do it in peace! Both sides suck just about as much as the ones choosing sides!

I thought we were having a discussion involving complex plumbing issues?

baseballfreak: Heads up their asses is why. Almost everyone is steeped in Perpetual Infantilism, obsessed with sports or comic books or various collecting, or, much, much worse: Hollywood, movies, celebrities, gambling, pop music, wrestling, etc.

Stuffing their faces all day, every day, with poison semi-food; and willfully injecting themselves with other brain-damaging poisons like weed, cigars, liquor, Rx’s, tattoo ink….things that they PAY for, no less!

Most people are absolute messes, and hopeless.

One more time and Beetlejuice appears!

Site froze up and I had to refresh. Not sure why it posted twice.

Probably because it’s twice as important and relevant as any comment in the history of this site. If only all of the pathetic lunkheads would read it and learn from it.

Which of course will never happen.

IDK what is more surprising, Abreau getting optioned or him accepting it. Ya just don’t see vets doing that. Hope you get it together Jose.

I just said the same thing to my buddy. Veterans basically never consent.

He probably feels guilty. Human emotion

Not guilt. He said in the ESPN article that he was genuinely embarrassed. He was brought in to do a job, and wasn’t getting it done. I wish him the best in his search to regain his swing and production at the plate.

Jose seems like a genuinely caring guy. I respect that he is willing to go down to try to fix himself so he can help the team that hired him. He was loyal to a fault on the Sox. His loyalty to his team doesn’t waver. Much respect.

at 37, the idea of going back to a ST site to work on your swing is so incredibly rare.

props to an amazing team player.

hope he turns it around.

10yrs service time in – check Guaranteed contract for millions through 2025 – check

Two big things already in place, so why not? Does show what type of dude he is by doing that. Some mlb-ers might take the “do you KNOW who I am” stance. Hopefully he gets his stuff right….

The “why not” part is that as of now, he could be stuck riding a bus in AAA for the next 2 years which is far different than what he is used to doing.

If he doesn’t get called back up, he can’t keep getting paid if he quits.

Now, to each his own so also yes, he has faith in himself to get back and he’s, he may not care about riding the bus so he can keep playing.

Most 37 year old vets would never accept which is why this reads like a shocker that he did.

Houston really talking him up for being gracious.

I wonder who / when the last similar situation guy was that accepted.

I can’t think of one – maybe a guy on expiring contract but not with nearly 40 mil and 2 years on the hook.

I would be surprised if they have not already set a time limit on his minor league stay. Still, it shows his determination to fulfill his end of the contract, and I applaud him.

Styme, I was actually wondering if a behind the scenes call back up agreement isn’t in play as well.

Maybe he just likes being a baseball player. Shocking!

It’s a nice gig, especially at those salaries.

@tigerdoc616 More surprising that Abreu accepted this, I think. We don’t see it much bc in no small part, veterans at the end of the tether often want to GTHO of places where they precipitously declined, and figure a fresh-ish start somewhere else may be just the thing to get them going again. .

Which suggests the Astros have been patient, and Astros fans haven’t given him too hard a time about his struggles. Not a fan either way so I really can’t say. Maybe someone else can weigh in on this?

Not sure he will be able to overcome it. The guy looks flat out overmatched and Father Time has caught up to him.

Bonds was an MVP hitter till mid 40s

About the same time his hat size started going down

Maybe not the best, most pure comparison…

Give Jose some roids.

Apples to oranges

Highly likely he was taking PED’s during the early 2000’s when he was maybe the greatest player ever.

Highly likely is an understatement when you look at his pirates days compared to his melon head days

Do roida help you hit a baseball

Exactly, that to me makes it pretty obvious.

They can certainly help you hit the baseball better.

No, they help with muscle bulk and recovery. So at the very least, a hitter is able to have more PAs and hit the ball a bit farther when making hard contact.

Baseball has been very good to me – roid Sosa says yes, they do help.

My comment was to hotdog2

They help make your swing quicker, so yes.

Bonds was a filthy cheater, but try to explain that to Gen-X and Gen-Z.

Since steroids make you stronger, that increases bat speed, which just makes you a better hitter overall

Also I have never met someone who said that bonds MIGHT have not taken steroids, so I guess 73 homers was legit and he randomly grew into G.I. Joe in his 30s

@Hotdog 2 That nonsense gets an immediate Mute. Take care,

If someone banged on something loud like a trashcan to let Abreu know a heater was coming that would probably help. Wonder why nobody’s ever done that?? Oh wait…

Unfortunately Beltran is gone and Cora is managing Boston, so the 2 cheaters have been long gone for quite a while.

I know Altuve and Bregman are little guys so they’re easy to miss, but those little cheaters are still there.

Altuve didn’t like the system.

Not the cheating aspect but the system they were doing to cheat didn’t work for him?

He asked them to not do it when he was at the plate, so you tell me.

Again, not the cheating aspect? But the way they were cheating wouldn’t benefit him? There is no way to parse a few bad apples from that season and team. The whole bunch is spoiled because all went along with it. Not one player coach etc. stopped it. They all cheated because they all prospered from the cheating with winning. How is what I just wrote wrong?

Even as a Mariners fan, I’m over the whole Astros cheating thing. It happened, get over it & move on. They won the Championship fair & square in 2022.

It’s wrong because:

1. Cheating is about intent. He had desire to use that system. If he wanted to cheat, he wouldn’t have objected to them banging the trash can during his at-bats (which they did anyways).

2. You don’t know what was said or not said.

3. “There is no way to parse a few bad apples from that season and team” – except I literally did just that. You just don’t want there to be a way.

Well, aren’t you the mature boy on the playground. I. . . have nothing to get over. Maybe I was seeking something else? But thanks for chiming in.

no* Typo. I was more than happy to point out the flaws in your logic. You’re welcome!

Oh, I thought you were replying to me. Whoops!

My last replay was to our Mariners friend Desmond 1992.

This is to goastros123. You gave me what I was looking for and I thank you for that. What you are saying is what he said after the fact. Cheated can be after the fact as well. He cheated you, as well as all Astro fans and the game of baseball in 2017. They aren’t the first and will not be the last. I was just curious on how you parse him from them. Thanks.

And you just reinforced #3 by saying what you just said. I’ll break down for you: cheating = trying to gain an unfair advantage. Asking them to not bang the trashcan during his at-bats = the opposite of that. Therefore, he did not cheat and that is how you parse him.

How is Altuve’s, or everyone involved for that matter, cover up (or lie by omission while it was perpetrated) not an intricate part of the cheating that went on? He prospered as the team prospered, that is why he said nothing. He stole like the rest. They all did. Cheating involves lying. I just wanted the why you are defending someone who stole from you, as his fan, and you gave it. Thank you.

For you, cheating is not the same as lying about cheating. Thanks.

But since they did bang, you’re saying that he simply cheated without trying. Now what was the reason he wouldn’t take his shirt off again?

What you just said makes zero sense. Lol.

Altuve not cheater he just shy

until one of the relief pitchers from that 2022 team ends up on the Oakland A’s and rats them out for hacking into the other team’s PitchCom

Not funny. Swing and a miss

What’s amazing to me is all anyone mentions is the sign stealing scandal and ignore the fact Astros were also on the forefront of the spider tack era. A major reason why little Robby Manfred hates Bauer so much is because he called out the Astros pitching staff for cheating and MLB baseball for doing nothing about it.

Yes, let’s ignore the allegations and him displaying signs of being a bad teammate to focus on him “exposing” the Astros.

Being an a hole doesn’t mean Bauer was wrong about stuff he said.

Yeah, Bauer was a terrible teammate… such a terrible teammate that several Cleveland pitchers gave him credit for helping them elevate their game.

You should do some research on the “bad teammate” thing. It steams from his time in Arizona where he wanted to follow his own training regime and coach, at the time that was unheard of. Flash forward to now, almost every single pitcher follows their own training regime and has their own personal pitching coach.

@drasco036 Can always count on some sad schlub to defend Trevor Bauer in the MLBTR comment section (regardless of what the article is about).

He once won an arbitration case against the then Cleveland Indians and said the Indians tried to assassinate his character. I suggest you do some research of your own because that clubhouse cancer stigma stems from more than just his decisions in Arizona.

It’s not that he was wrong, but rather he had zero credibility on account of him fighting against the spider tack ban.

That is basically what teams do in arbitration hearings. And maybe you should read those entire articles.

I actually brought up the fact Bauer called out the Astros pitchers for cheating. It’s the Bauer haters that come out in full force whenever his name is mentioned.

Oh, can you name others players who accused teams of trying to assassinate their character during arbitration cases and made it sound like a personal attack? I’ll gladly admit I’m wrong if you can name at least 5. Maybe you should revisit Bauer’s entire career from beginning to now. Defending him is a horrible look for you.

You’re clearly defending him. Not a good look for you.

What isn’t a good look is for goastros to comment and then mute me. Sorry I’m a not a sheep that makes up his own mind vs blinding following “popular” (media infused bias) opinion.

Horton to AAA, News at …….well now.

In the words of Astro great Mike Scott: “That’s what she said”

Bauer is that you?

Sounds good, but if we win it all don’t rip my jersey off. It’s against my religion or something like that…

Cmon man, that’s not a comms array under there… it’s my third, fourth, and fifth nipples and associated equipment and peripherals and wiring harness, etc.

@raisins You dont get real time pitch calls from your nipples? Must be tough.

Stick a car Jumpstarter to each one and see what kind of sign you get…bzzz ow.

He just shy

@C Us Sink: Woah! An Astros trash can joke in 2024?

Super hilarious and original, bro!

Astros still living in his head rent free.

No statute of limitations. Once a cheater always a cheater. Or haven’t you heard, the Samny-Raffy-Big Mac hall of fame display has had a bit of a delay

He’s surprisingly younger than I thought. I hope this isn’t the end, but good MLB career if it is.

Classy move to accept this assignment. Wishing him good health and progress.

The good news is the Astros get to face George Kirby, Logan Gilbert and Bryce Miller this weekend.

ALCS preview

Sign Bauer. Everyone already hates the Astros anyway.

Might I ask why?

Why do some keep bringing this up?

That’s what you mean, right? Please tell me that’s what you mean.

Guess again

I’m very sorry to hear it.

Because he’s an unlikable guy who abuses woman. No team needs a guy like that.

Your Astros traded for Roberto Osuna after his domestic violence incident. Stop talking.

I think I’ll keep talking because that is irrelevant to the topic of why the Astros should not sign Trevor Bauer. He asked, and I answered. Try again, bud.

If incompetent is how you want to be judged and treated, cool with me son.

If you want to make things difficult for your favorite team by signing Trevor Bauer, go right ahead and ask them to sign him. Bauer would only make things worse.

Way to change the subject again, incompetent.

You said no team needs a guy who abuses women. Your team gladly accepted one. Instead of owning it, you called it irrelevant. It IS relevant because your Astros not only accept abusers but will gladly cheat.

Feel free to add hypocrite to your list of achievements and accept that you are flat out wrong about your Astros.

The fact that not one team wants him even for practically nothing is information most people can use to understand the situation. Those who can’t make any sense of it are basically volunteering for a cult. No amount of information will ever penetrate that armor.

@goastros123 Fake news!

Signing him won’t make anything difficult.

I got asked a question and I answered. I didn’t change the topic: you did.

He’s not worth the headache.

People said the same thing about the SDSU punter and then the Chiefs signed him and it was a story for like a day or two.

You answered nothing, incompetent. You changed the topic. You know you backed yourself in a corner with the Bauer comment.

Kid, admit you were wrong and should have thought before typing. I promise I’ll forgive you for your hypocrisy and lack of knowledge.

Deal, goastros?

A lot of fans completely miss the point. The policy requires suspended players to take ownership of their behavior and accept the need to modify it if they wish to be employed in the game. This is the road back for them. Until now all, except for the one, have taken it. This is the only comparison anyone needs to make to understand why nobody wants him even for nothing.

^ Exactly. He dodges responsibility and shows zero remorse. No team wants or needs a guy like that. It speaks volumes about his character. I do not want him on the Astros because of that. He would only be a hindrance.

“I’m certainly taking accountability for my role in this. I’ve put myself in a lot of positions that have made things very hard for people, and I’m trying to be better.”

“I agreed to do things I shouldn’t have done,” Bauer said. “It was reckless. It hurt a lot of people along the way. It made things very difficult for Major League Baseball, for the Dodgers, my teammates, friends, family, people close to me. So I’ve done a lot of reflecting on that and made a lot of changes in my life to address that.”

Certainly sounds like he took responsibility for his actions…

He says it without actually doing it, because then he claims to be a victim who hasn’t done anything wrong. Taking accountability in these cases means accepting that you broke the rules and giving MLB and the PA reason to believe that you understand why and aren’t going to embarrass the sport again. In a long interview in the LA Times a couple of months ago he made it clear that his head just isn’t in that space yet, and may never be. He is radioactive for a reason, and this is it.

Yes, Bauer has to take the walk the shame while people throw feces on him. He’s radio active because sheep like you believe what you want to believe. People should just lay down, allow themselves to be extorted and not stand up for themselves. He engages in a consensual act, nothing to apologize for, he apologized for putting himself in that position and he would not do it again. For all those who complain about the rough sex aspect, check your wives browser history because women, not men, want it a lot more than you probably think.

Like I said, some people volunteer to join cults. This is why they exist.

You win today’s frowny.

Not my fault you live a sexually sheltered life.

You win the rare but coveted double frowny.

And you win the titanium dunce cap.

I sure hope you didn’t strain anything coming up with this witticism.

Even if those allegations never happened, his online rants and misogynistic bullying and his blatant disrespect for the game as well as for one of it’s great managers in Francona, would be reasons enough for teams to avoid him.

@grnmtnyeti None of that happened. Ever

He certainly bullied women on the internet AND threw the ball over the outfield fence instead of handing it to Francona. You can stick your head back in the sand now…

si.com/mlb/2019/01/09/indians-trevor-bauer-college…

He is a loser

You accuse him of “misogynistic bullying.” There is no evidence that what he did to Ms. Gilles was misogynistic in nature.

And people need to let it go on the “throwing the ball over the fence” thing. Who the Hell cares? The Reds and Dodgers sure didn’t.

“No team wants Bauer”.

“Oh yeah, we’ll take players with domestic violence on their record”.

You wear the dunce cap well.

Lots of players have DV on their record. If you want to blackball all of them then that’s fine but it’s all or nothing. Bauer wasn’t even the most severe.

Dating back to 1997, only 19 players have gotten in trouble for domestic abuse, and most of them are no longer in MLB. Because of that, you can’t blackball them. Only a few currently play for a team. Whether or not Bauer is/was the most severe is irrelevant to the fact that if the Astros or any other team wanted him, he’d already be signed because right now he costs next to nothing. Again, Harambe: no one wants or needs a guy like him.

Suspensions* Whoops. There’s been a few players who engaged in domestic abuse that were never suspended, such as Milton Bradley. Those players are also no longer in MLB. Defending Bauer is a horrible look for you, but I answered your question, Harambe. See ya. I’m done here.

Oh no, grnmtnyeti, don’t tell me he’s a….a….a……..a BULLY!??

No, not that. Not a bully!!

Oh, the humanity…!

goastros you are defending domestic violence. Seriously you need help, let alone being done.

20 hours ago

re: Osuna. Who cares?! That’s a private matter between family members. None of your or my or MLB’s effing business.

How does one “take ownership” of being falsely accused and innocent and scapegoated and railroaded??!

What the eff do YOU really know about any of that, goastros??!

Do you have a shred of valid evidence that might demonstrate that he’s NOT the victim here?!

I just mentioned Bauer being the first pitcher to call out the Astros pitching staff for cheating, I imagine there are still some hurt feelings there.

Others knew about it and Fiers was the one who actually blew the whistle

AFTER he accepted his WS ring and his $500K playoff share. I didn’t see where he gave those back. What a schmuck.

Trevor Bauer called out the Astros pitching staff for cheating in 2018, the sign stealing wasn’t outed until 2019.

Being a whistle blower implies he didn’t do it for selfish reasons. The guy did talked to the media because he was butt hurt

And you would be wrong, but I can see how you reached that conclusion because you clearly love the guy (which is sad).

Hard sex is abuse

@thelegendaryharambe: You Bauer simps really don’t know how to give it a rest.

Nope. He’s still an immature loser.

Maybe Bauer can help Justine and Kate with Le Sexy time

Is Yuli available?

He’s probably busy doing Asian eyes jokes somewhere.

He’s turning Japanese I really think so.

Ha! He’s in the Braves minor league system I think we are better off taking our chances with Loperfido

I too would like to he optioned to West Palm Beach.

Same here. I want to hang out at MarALago with Alina Habba. Sign me up!

Abreu has always been a team first guy. Helps when you’re in the Minors making 20 million a year. I hate to be an I told you so but that contract they offered him was for Silly money. I said so at the time and it was a bad deal before the ink dried. Class guy but he was basically over with the Sox.

I wanted the Cubs to sign him but 3 years was crazy!

It was a toss up between Belli and Abreu but Belli was only 1 year and it turned out way better for the Cubs. Plus Belli played 2 positions. But then the Cubs signed Mancini and Hosmer and that was ridiculous money also even though it was only like 15 million for Mancini. It worked out for the Cubs in the end.

I don’t think it was ever between Bellinger and Aberu, the Cubs priority was centerfield last year and they signed Bellinger early. I felt they needed a bridge at first base as well, Aberu was rumored at one year which I thought was perfect. Being he was already living in Chicago, comfortable in the area, made a lot of sense. Even had he replicated what he did last year on a single year deal it would have worked out almost perfectly for the Cubs.

@Unclemike1526: How is paying Hosmer the league minimum “ridiculous money”?

Did you see the guy play? 5 bucks was too much. And 2 years for 15 million for Mancini was horrible and kept the Cubs from getting another reliever.

I saw the way our guys played and saw Abreu drive in 90 rbis. One cannot assume Abreu would be as bad for the Cubs as he was for the Astros either, he was comfortable in Chicago and had a high rate of success in Wrigley. Also, if all were to stay the same, Abreu would have hit 6 more home runs in Wrigley than in Houston.

I remember some strong rumblings about that. The Cubs and Jose apparently discussed a contract. Didn’t work out. The Cubs signed Eric Hosmer and Trey Mancini and we know how that worked out.

@Unclemike1526 You think you’re going to get a 4.3 WAR player coming off a .300 BA season in 2 of the last 3 years, who rarely missed a game and who was getting MVP votes every year—for less than that?

Even Abreu’s K-rate dropped significantly in 2022. His EV rate was still plus plus, much higher than say, Pete Alonso’s. The only hitch might have been the .350 BABIP in 2022 and 2020, but he always had good BABIP numbers.

If you were able to predict his decline on the facts on record, there are 30 FOs with whom you can write your own ticket.

It has to be a humbling, if not embarrassing experience to be asked to do this, but I respect any one willing to swallow their pride and accept.

Breaking news! Flaherty may break the single game k record!

He sure is motivated pitching against his former teammates.

Sticking it to the Cardinals must be some kind of fun.

Was 6 up and 6 down before I had to leave to run errands.

White Sox dumpster fire is contagious

White Sox could take him back as long as Houston pays. He’d fit right in.

Like a European football loan transfer. Sox benefit with fan favorite back. Jose benefits feeling at home again whilst getting his stroke back. Astros benefit by paying his salary but getting a better option short term until Jose looks ready and then bring him back. MLB needs a loan transfer rule.

I mean why not.

White Sox take on his remaining salary for this year and next Ask the astros to send back some decent prospects. Baez, Matthews, Dezenzo, Blubaugh, Bloss.

You’re essentially buying prospects during bad years and giving the Astros some significant wiggle room financially.

Jose had some great seasons with the White Sox. A professional hitter, good in the clutch, solid in the dugout/club house. A quiet leader who led by example. One of my favorites. Will Jose land some where? Who knows? Maybe some team takes a chance.

I know your repeating the well-said line that he was a leader with the Sox. If he was a leader, was he any good as a leader? Makes you wonder considering how all fiends crawled out of the woodwork last season. As a leader was Abreu aware of the clubhouse problems? Was he able to keep it under control so that only when he left did it explode? Maybe he was a leader in the sense that he didn’t care if his teammates were dogging it. Turning a blind eye and zipping your lip are hardly the traits of a leader except for one who is a leader only in name.

@Fred K. Burke ” …good in the clutch, …” —————————————————-

In fact, no: baseball-reference.com/players/split.fcgi?id=abreu…

for you Jose. I’m sure this has been very stressful. Best wishes

The Lastros are back bay bay!

Been waiting 7 years to make this comment huh

Haha you been trash canned

Oh, those… things!

No way Josè. Southside might call.

Singleton and Cabbage are “options“, yet Brandon Belt, a Texas native no less, sits at home.

Belt sits at home as is his choice. All he had to do was tell his agent to pass the word that Money was not the obstacle teams expected it to be. If he had, he would be playing.

I have a lot of respect for Jose, has always seemed like a class act. He’ll figure it out, he may not be the borderline Hall of Famer he was with the White Sox, but he will still be a productive player.

@Desmond1992 That’s a real stretch, comrade. Better to say Jose was ‘borderline Hall of the Very Good’ with Chicago. Add in his Cuban stats and he probably makes the HOVG, but with Chicago he only put up three seasons of 9 better than 3.5 bWAR, and he had only one season better than 4.9 bWAR—where the context is a HOFer usually betters 5 bWAR every season of his prime..

Wow! Kudos to Mr. Abreu for accepting the assignment in an effort to help the team.

Agreeing to this was very classy of Abreu.

.099 batting avg means he was 7-for-71 in the first month of the season. He was only a former MVP (in the 60-game pandemic season) and a former Rookie of the Year. I’d retire before accepting the demotion to Low-A.

You mean give up? Shows your character

How many Sox fans were furious with JR for not reupping Abreu for something like 5 years and $100M? I remember well all the flack I got on Sox boards when I said, “Let’im go.”

Don’t be surprised if he is back with the Sox this year if the Astros are willing to retain salary. Vaughn is a bust. Walsh is a medical mystery and Sheets is needed more in RF than 1B.

Abreu for Benintendi. Who says no?

White Sox. If the Astro’s could get out of the contract the wouldn’t even need anything in return. Ben would just be icing on the cake

The Astros say no, and it isn’t close. Benni has about $65M due, and Abreu only ~ $35M.

Astros decline. Benintendi has quite a bit more owed in total contract dollars. JR would love the cash savings even if Abreu is toast since the team is awful until he sells. Rising temps have always helped Abreu. He may at least be playable June thru August.

Benny has had more HR in a week than proud Jose will the rest of the season.

You can have Remilliard. Both got optioned so win win

Worse places to go than West Palm Beach in spring while earning millions.

More like summer

2-for-5 Saturday got him over .100. Then he went 0-for-4. I guess it’s hard to keep an .099 hitting first baseman on the roster.

Good, couldn’t happen to a worse organization.

This is rather unprecedented, but I think it’s the best move for the team and for Abreu. If anything can “fix” Abreu, I think it’s the pressure being removed from his shoulders and him having time to just work on himself without the pressure of winning ballgames (not that the Astros are doing much of that to begin with..) I still think he is washed but hopefully this will prove whether that’s true or not.

That takes a lot of guts, I give him a lot of credit. Most establish veterans players would rather get released than accepting the minors option.

Would you have more practicing time in the Minors than the Majors? Or you get lesser practice time since your time is taken more on transportation?

This is why you don’t sign a 37 year old player to a 3 year contract. Should be year to year at that point. Teams never learn.

Unless it’s Pudge or Cheli. Then the rule be dont sign a 47 yo to a 3 year contract.

I like the idea of seeing Joey Loperfido. He can play 1B, CF and run some too. I hope he plays well.

Can we stop using the word “slashing” when we’re talking about .237?

If it’s a number that goes between the slashes, he’s slashing.

If you are citing one statistic you probably should stop using the term slashing as there are no slashes in your slash line.

He’s citing this line:

>currently slashing .238/.319/.286.

Someone doesn’t know what “slashing” means… hint hint, it’s you.

Cool story, here’s what OP was referencing. Literally Abreu’s “slash line.”

Soreng, I wasn’t talking about you (if you were responding to me) I was talking to the guy that doesn’t know what a triple slash line is.

Whoops, my bad. Sorry!

Imagine reading this site and not knowing what a slash line is. ‍

You have to applaud Jose for really honoring his contract, great job.

Buh Bye! Guy won’t be back. He’s cooked.

So instead of abreau’s life story, what’s the agreement on the assignment? Is it within cba? Is there an agreement to call abreau back up at some point? After a month or batting avg war threadhold?

mounting a solid finish by slashing .237/.299/.536 LOL A solid finish? My god wtf are the standards now

Well, the leave average slugging percentage for 2023 was .417, given Abreu hit over 100 points higher than the league average that is considered “solid” as would the OPS of over .800. Learn how to read a triple slash line.

I agree with many others.

I had heard what a Class act Jose Abreu was, on/off the field, Great teammate in clubhouse and community. Since becoming an Astro, I have seen and heard how Wonderful he is. So have I been disappointed in his struggles- Yes, but I had faith he and the organization could right the ship.

I can’t hardly imagine any other decorated MVP/All star of his caliber, to have the Courage and understanding to Willingly make this move- First for the Team and Himself. I and Respect him more for it. I pray Jose, you can relax, reset and find yourself again, We shall be Wishing you all the best, and Seen You Soon!!

Yeah he is a class act, accepting minor league assignment vs being DFA, released and forced to sign a minor league deal elsewhere. So brave, tremendous teammate.

Astros! Eat up the majority of his money and the White Sox will gladly take him. We’ll send you Andrew Vaughn, how about it?

Is Yuli gurriel still a Fa

Abreau is definitely a liability. But not the main reason for the demise of Houston. They had quite a 10 year or so run. All good things eventually come to an end.

To me, their problem is the owner. During Luhnow era, seemed like Crane kept his distance from the daily ongoings of the operation. Luhnow gets blasted by MLB as the fall guy for the trashcan tech sign stealing episode. Crane panics. Fires Jeff, and since than has seemed to become more involved with the daily operation since Jeff.

To get back on track, IMO, owner Crane has got to get out of the daily baseball decision making and a get comfortable putting full trust back in to his baseball people doung their jobs.

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News & Insights

Trading Options: Understanding Assignment

December 14, 2020 — 06:00 am EST

Written by FINRA & OCC Staff ([email protected]) for Finra ->

financial chart on lcd display picture

When someone buys options to open a new position (“Buy to Open”), they are buying a right —either the right to buy the underlying security at a specified price (the strike price) in the case of a call option, or the right to sell the underlying security in the case of a put option.

On the flip side, when an individual sells, or writes, an option to open a new position (“Sell to Open”), they are accepting an obligation —either an obligation to sell the underlying security at the strike price in the case of a call option or the obligation to buy that security in the case of a put option. When an individual sells options to open a new position, they are said to be “short” those options. The seller does this in exchange for receiving the option’s premium from the buyer.

American-style options allow the buyer of a contract to exercise at any time during the life of the contract, whereas European-style options can be exercised only during a specified period just prior to expiration. For an investor selling American-style options, one of the risks is that the investor may be called upon at any time during the contract’s term to fulfill its obligations. That is, as long as a short options position remains open, the seller may be subject to “assignment” on any day equity markets are open.

What is assignment?

An option assignment represents the seller’s obligation to fulfill the terms of the contract by either selling or buying the underlying security at the exercise price. This obligation is triggered when the buyer of an option contract exercises their right to buy or sell the underlying security.

To ensure fairness in the distribution of American-style and European-style option assignments, the Options Clearing Corporation (OCC), which is the options industry clearing house, has an established process to randomly assign exercise notices to firms with an account that has a short option position. Once a firm receives an assignment, it then assigns this notice to one of its customers who has a short option contract of the same series. This short option contract is selected from a pool of such customers, either at random or by some other procedure specific to the brokerage firm.

How does an investor know if an option position will be assigned?

While an option seller will always have some level of uncertainty, being assigned may be a somewhat predictable event. Only about 7% of options positions are typically exercised, but that does not imply that investors can expect to be assigned on only 7% of their short positions. Investors may have some, all or none of their short positions assigned.

And while the majority of American-style options exercises (and assignments) happen on or near the contract’s expiration, a long options holder can exercise their right at any time, even if the underlying security is halted for trading. Someone may exercise their options early based upon a significant price movement in the underlying security or if shares become difficult to borrow as the result of a pending corporate action such as a buyout or takeover.

Note: European-style options can only be exercised during a specified period just prior to expiration. In U.S. markets, the majority of options on commodity and index futures are European-style, while options on stocks and exchange-traded funds (ETF) are American-style. So, while SPDR S&P 500, or SPY options, which are options tied to an ETF that tracks the S&P 500, are American-style options, S&P 500 Index options, or SPX options, which are tied to S&P 500 futures contracts, are European-style options.

What happens after an option is assigned?

An investor who is assigned on a short option position is required to meet the terms of the written option contract upon receiving notification of the assignment. In the case of a short equity call, the seller of the option must deliver stock at the strike price and in return receives cash. An investor who doesn’t already own the shares will need to acquire and deliver shares in return for cash in the amount of the strike price, multiplied by 100, since each contract represents 100 shares. In the case of a short equity put, the seller of the option is required to purchase the stock at the strike price.

How might an investor’s account balance fluctuate after opening a short options position?

It is normal to see an account balance fluctuate after opening a short option position. Investors who have questions or concerns or who do not understand reported trade balances and assets valuations should contact their brokerage firm immediately for an explanation. Please keep in mind that short option positions can incur substantial risk in certain situations.

For example, say XYZ stock is trading at $40 and an investor sells 10 contracts for XYZ July 50 calls at $1.00, collecting a premium of $1,000, since each contract represents 100 shares ($1.00 premium x 10 contracts x 100 shares). Consider what happens if XYZ stock increases to $60, the call is exercised by the option holder and the investor is assigned. Should the investor not own the stock, they must now acquire and deliver 1,000 shares of XYZ at a price of $50 per share. Given the current stock price of $60, the investor’s short stock position would result in an unrealized loss of $9,000 (a $10,000 loss from delivering shares $10 below current stock price minus the $1,000 premium collected earlier).

Note: Even if the investor’s short call position had not been assigned, the investor’s account balance in this example would still be negatively affected—at least until the options expire if they are not exercised. The investor’s account position would be updated to reflect the investor’s unrealized loss—what they could lose if an option is exercised (and they are assigned) at the current market price. This update does not represent an actual loss (or gain) until the option is actually exercised and the investor is assigned.

What happens if an investor opened a multi-leg strategy, but one leg is assigned?

American-style option holders have the right to exercise their options position prior to expiration regardless of whether the options are in-, at- or out-of-the-money. Investors can be assigned if any market participant holding calls or puts of the same series submits an exercise notice to their brokerage firm. When one leg is assigned, subsequent action may be required, which could include closing or adjusting the remaining position to avoid potential capital or margin implications resulting from the assignment. These actions may not be attractive and may result in a loss or a less-than-ideal gain.

If an investor’s short option is assigned, the investor will be required to perform in accordance with their obligation to purchase or deliver the underlying security, regardless of the overall risk of their position when taking into account other options that may be owned as part of the overall multi-leg strategy. If the investor owns an option that serves to limit the risk of the overall spread position, it is up to the investor to exercise that option or to take other action to limit risk.

Below are a couple of examples that underscore how important it is for every investor to understand the risks associated with potential assignment during market hours and potentially adverse price movements in afterhours trading.

Example #1: An investor is short March 50 XYZ puts and long March 55 XYZ puts. At the close of business on March expiration, XYZ is priced at $56 per share, and both puts are out of the money, which means they have no intrinsic value. However, due to an unexpected news announcement shortly after the closing bell, the price of XYZ drops to $40 in after-hours trading. This could result in an assignment of the short March 50 puts, requiring the investor to purchase shares of XYZ at $50 per share. The investor would have needed to exercise the long March 55 puts in order to realize the gain on the initial multi-leg position. If the investor did not exercise the March 55 puts, those puts may expire and the investor may be exposed to the loss on the XYZ purchase at $50, a $10 per share loss with XYZ now trading at $40 per share, without receiving the benefit of selling XYZ at $55. Example #2: An investor is short March 50 XYZ puts and long April 50 XYZ puts. At the close of business on March expiration, XYZ is priced at $45 per share, and the investor is assigned XYZ stock at $50. The investor will now own shares of XYZ at $50, along with the April 50 XYZ puts, which may be exercised at the investor’s discretion. If the investor chooses not to exercise the April 50 puts, they will be required to pay for the shares that were assigned to them on the short March 50 XYZ puts until the April 50 puts are exercised or shares are otherwise disposed of.

Note: In either example, the short put position may be assigned prior to expiration at the discretion of the option holder. Investors can check with their brokerage firm regarding their option exercise procedures and cut-off times.

For options-specific questions, you may contact OCC’s Investor Education team at [email protected] , via chat on OptionsEducation.org or subscribe to the OIC newsletter . If you have questions about options trading in your brokerage account, we encourage you to contact your brokerage firm. If after doing so you have not resolved the issue or have additional concerns, you can contact FINRA . Subscribe to FINRA's newsletter for more information about saving and investing.

FINRA is dedicated to investor protection and market integrity. It regulates one critical part of the securities industry – brokerage firms doing business with the public in the United States. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit www.finra.org .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Trading Options: Understanding Assignment

OCC/OIC and FINRA collaborated to create this primer on options assignment.

DOWNLOAD ARTICLE (PDF)

The options market can seem to have a language of its own. To the average investor, there are likely a number of unfamiliar terms, but for an individual with a short options position—someone who has sold call or put options—there is perhaps no term more important than ‘assignment’ —the fulfilling of the requirements of an options contract.

When someone buys options to open a new position (Buy to Open), they are buying a right — either the right to buy the underlying security at a specified price (the strike price) in the case of a call option, or the right to sell the underlying security in the case of a put option.

On the flip side, when an individual sells, or writes, an option to open a new position (Sell to Open), they are accepting an obligation — either an obligation to sell the underlying security at the strike price in the case of a call option or the obligation to buy that security in the case of a put option. When an individual sells options to open a new position, they are said to be ‘short’ those options. The seller does this in exchange for receiving the option’s premium from the buyer.

What is assignment?

To ensure fairness in the distribution of American-style and European-style option assignments, The Options Clearing Corporation (OCC), which is the options industry clearing house, has an established process to randomly assign exercise notices to firms with an account that has a short option position. Once a firm receives an assignment, it then assigns this notice to one of its customers who has a short option contract of the same series. This short option contract is selected from a pool of such customers, either at random or by some other procedure specific to the brokerage firm.

How does an investor know if an option position will be assigned?

What happens after an option is assigned?

How might an investor’s account balance fluctuate after opening a short options position?

What happens if an investor opened a multi-leg strategy, but one leg is assigned?

For options-specific questions, you may contact OCC’s Investor Education team at [email protected] , via chat on OptionsEducation.org or subscribe to the OIC newsletter . If you have questions about options trading in your brokerage account, we encourage you to contact your brokerage firm. If after doing so you have not resolved the issue or have additional concerns, you can contact FINRA . Subscribe to FINRA’s newsletter for more information about saving and investing.

What’s next for José Abreu and the Astros after option agreement?

Houston Astros' José Abreu watches from the dugout during the eighth inning of a baseball game against the Chicago Cubs, Tuesday, April 23, 2024, in Chicago. (AP Photo/Erin Hooley)

HOUSTON — The Houston Astros arrived in Mexico City seeking a clean slate. Pregame introductions before their series opener against the Colorado Rockies mimicked those on Opening Day, allowing Houston to flush a forgettable first 26 games and start anew.

Two wins against a wretched team won’t salvage the season, but the symbolism felt fitting. A team trying to author a turnaround had found an inflection point. One day after discovering it, the Astros acknowledged its biggest impediment.

Monday afternoon at Minute Maid Park, Astros general manager Dana Brown, manager Joe Espada and many of their lieutenants met with José Abreu to answer the question eluding this franchise for most of the past 13 months.

“How can we get you back on course?” Brown wondered.

Other specifics of the meeting are scarce, but its outcome started a clock on Abreu’s star-crossed tenure in Houston. Abreu accepted a minor-league option to the team’s spring training facility in West Palm Beach, Fla., where he will report Wednesday for what amounts to a final attempt at salvaging a calamitous contract.

Abreu is a three-time All-Star who won American League Rookie of the Year honors in 2014 and, six seasons later, an MVP award. He remains one of the club’s most diligent workers and is beloved by teammates. By offering his consent for a demotion Tuesday, he might have earned even more respect from those within the organization.

“He put the team first and, as an organization, we want to win, but we want to take care of the people who wear this uniform. That’s exactly what we did as an organization,” Espada said. “We listened to him, and José said, ‘Joe, I have to do what’s best for the team, and I want to do what’s best for me.’ He’s a true professional, and the fact that he took that option to get his game back, I’m glad that we’re highlighting that because it meant a lot when he took that option.”

Abreu arrived in Houston in November 2022 on a three-year, $58.5 million contract — a heralded free-agent acquisition for a franchise that rarely gets them. At the time he signed, concerns were rampant within the industry about Abreu’s fading power, but few could have foreseen a decline this dramatic. Abreu is slashing .221/.280/.352 in 671 plate appearances as an Astro. According to FanGraphs, only two qualified players are worth fewer wins above replacement than Abreu’s negative-1.6 mark since 2023.

The Cleveland Guardians and San Diego Padres heavily pursued Abreu as a free agent at a similar price point, but he chose Houston, in part, for its championship culture. The Astros’ lack of activity at the higher end of the free-agent market magnified their decision to sign Abreu. So did their lack of baseball operations leadership during the negotiations.

Owner Jim Crane oversaw the department after “parting ways” with World Series-winning general manager James Click earlier that winter. Tuesday’s decision suggests Crane is either not yet willing to admit defeat on a deal of his own doing or had no interest in paying down the estimated $35 million Abreu is still owed.

Trying to extract any value from him in the meantime is mandatory. Brown and Espada echoed optimism that Abreu can be salvaged despite some dreadful underlying numbers.

Abreu has put 54 batted balls in play this season. Not one of them has been barreled — with an exit velocity of at least 98 mph and a launch angle between 26 and 30 degrees. He boasts a .099 batting average, but an expected batting average of .124 just underscores how poor his quality of contact remains.

Pitchers are throwing Abreu fastballs 63.8 percent of the time. He has five singles with an average launch angle of 2 degrees against them. Abreu is hitting groundballs at a 50 percent clip and line drives at just a 14.8 percent rate, more than 12 percent lower than his career average.

Still, Espada said the team’s “metrics” suggest Abreu, 37, still possesses enough bat speed to succeed. Brown, a longtime scout, said he still sees it while Abreu is launching home runs in batting practice.

“He has the bat speed — the bat speed is still pretty good — we just have to get his timing right and have to get his rhythm right so he can consistently do it,” Brown said. “I still feel really optimistic about it. If the bat was slower, I would be less optimistic. But he’s showing bat speed, it’s just that he’s so late with his trigger and timing that he’s so off.”

Abreu will have autonomy for “how to progress from one day to another” during his time in West Palm Beach, Espada said. Abreu will be under the supervision of Houston’s minor-league coordinators and get at-bats during extended spring training games. Whether he will go to a full-season affiliate afterward is unknown. So is any target date for his return, though Brown said, “We don’t see this as a long-term thing.”

Brown said he might fly to Florida himself to check in on Abreu’s progress. Hall of Fame first baseman Jeff Bagwell could make a trip, too, Brown said. Bagwell, who helped orchestrate the team’s free-agent deal with Abreu, has worked with Abreu during pregame batting practice during the past two seasons.

“We really want to do what’s best for José,” Espada said. “We believe in his ability, and we know he can hit. It was just trying to find the right time to do what’s best for José and the organization, and I think this was the right time to do it.”

In reality, Houston had no other choice. Espada had done everything in his power to mask Abreu’s misery, be it by dropping him to eighth in the batting order or making him a part of a platoon with Jon Singleton . As long as Abreu remained on the active roster, though, Espada couldn’t afford to ignore him entirely.

According to FanGraphs, the team entered Tuesday’s game extracting negative-1.4 wins above replacement from first base. No other major-league team had worse production. “We need to get some production out of first base,” Brown said Tuesday, offering the season’s most obvious statement.

Singleton, prospect Joey Loperfido and utilityman Mauricio Dubón are tasked with providing it. None of the three offers a foolproof solution, but teams aren’t supposed to have depth stockpiled at a position where they’ve invested $58.5 million in what is supposed to be an everyday player.

Loperfido is a natural outfielder who has started 56 professional games at first base. He made his major-league debut Tuesday in left field, a position he is far more comfortable playing than first base. The team believes Loperfido could handle some spot work at first base, but making it his primary position is a tall ask.

“It’s just getting him more reps and getting him comfortable there,” Espada said. “The speed here might be a little faster just based on the stage, but the fact (is) he has all the tools, ability and IQ to do it — there’s no doubt about that.”

Dubón started twice at first base last season — after not playing the position since high school. Both of Houston’s catchers — Victor Caratini and Yainer Diaz — have major-league experience at first base, but Espada said Tuesday “they don’t look like options to me” given how well both are performing behind the plate.

The most straightforward scenario would be starting either Singleton or Loperfido against right-handed pitching and Dubón against lefties. Houston will make a corresponding roster move Wednesday for Abreu and could add either Trey Cabbage or David Hensley to the mix, but the position will be a revolving door without Abreu.

No option is ideal, but neither was asking Abreu to appear in major-league games. The team is mired in its worst start since 1969 and entered Tuesday 10 games under .500. Abreu’s departure won’t solve everything that ails the Astros but does remove an albatross from a lineup that must buoy this team to wherever it intends to go.

“It’s really difficult to get a guy back on course at the major-league level,” Brown said. “You don’t have the time for the teaching that is going to take place, you can’t get extra at-bats. You can’t live with the 0-for-4, 0-for-3 all the time. At some point, you have to get creative, and the only way we were going to be able to do that is option him back.”

(Top photo: Erin Hooley / Associated Press)

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Chandler Rome is a Staff Writer for The Athletic covering the Houston Astros. Before joining The Athletic, he covered the Astros for five years at the Houston Chronicle. He is a graduate of Louisiana State University. Follow Chandler on Twitter @ Chandler_Rome

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2024 Kentucky Derby horses, field, odds, post positions: Fierceness, Sierra Leone early favorites for big race

The first triple crown race of the year is nearly here and we now know the post positions for the kentucky derby.

The Kentucky Derby is almost here. The 150th Run for the Roses is set for Saturday afternoon from Churchill Downs in Louisville, Kentucky, where 20 horses will be vying for this year's crown. The mint juleps will be flowing all day as fans make the annual pilgrimage to the famed racetrack to take in the fastest two minutes in sports. The post draw was held very early this year, a full week before the race takes place.

The favorite this year is Fierceness, who will start out of the No. 17 gate. The horse, trained by Todd Pletcher, has three wins in five career starts. Fierceness took home the win at the Florida Derby in March to go with a win at the Breeders Cup in November.

As is always the case, the favorite will have some stiff competition from the rest of the field at Churchill Downs. Sierra Leone (3-1), Catching Freedom (8-1), Forever Young (10-1), and Just a Touch (10-1) round out the rest of the favorites in this year's Kentucky Derby field. Dornoch, the younger brother of 2023 Kentucky Derby winner Mage, is something of a longshot at 20-1.

Last year, the morning-line favorite, Forte, was scratched the morning of the race. The massive shakeup atop the field led to one of the more interesting races in recent memory with no clear favorite. Mage, at 15-1, managed to hold off Angel Empire and Two Phil's for a massive win for jockey Javier Castellano, who picked up his first victories in the Run for the Roses and the Belmont Stakes last year.

The winner of the 150th edition of the Kentucky Derby will look to join the 13 Triple Crown winners in history. The last came in 2018 with Justify as the horse easily swept all three legs of the Triple Crown at the Kentucky Derby, Preakness Stakes and Belmont Stakes.

Check out the list of previous 149 winners before the action kicks off on May 4.

2024 Kentucky Derby post positions

Dornoch (20-1)
Sierra Leone (3-1)
Mystik Dan (20-1)
Catching Freedom (8-1)
Catalytic (30-1)
Just Steel (20-1)
Honor Marie (20-1)
Just a Touch (10-1)
Encino (20-1) Scratched
T O Password (30-1)
Forever Young (10-1)
Track Phantom (20-1)
West Saratoga (50-1)
Endlessly (30-1)
Domestic Product (30-1)
Grand Mo the First (50-1)
Fierceness (5/2)
Stronghold (20-1)
Resilience (20-1)
Society Man (50-1)
Epic Ride (30-1)
Mugtau (30-1)

2024 Kentucky Derby odds (sorted)

Fierceness -- 5/2
Sierra Leone 3-1
Catching Freedom 8-1
Just a Touch 10-1
Forever Young 10-1
Dornoch 20-1
Mystik Dan 20-1
Just Steel 20-1
Honor Marie 20-1
Encino 20-1
Track Phantom 20-1
Stronghold 20-1
Resilience 20-1
Catalytic 30-1
T O Password 30-1
Endlessly 30-1
Domestic Product 30-1
Epic Ride 30-1
Mugatu 30-1
West Saratoga 50-1
Grand Mo the First 50-1
Society Man 50-1

So who wins the 2024 Kentucky Derby? What double-digit longshot is a must-back? And how has Yu constructed her wagers? Visit SportsLine to see Yu's picks for the Kentucky Derby , all from the Santa Anita-based racing insider who has a long history of success in the Kentucky Derby, and find out.

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Astros to option veteran first baseman amidst struggles.

April 30, 2024
Chris Drosehn

The Astros option Jose Abreu amidst extended struggles.

The Houston Astros have had a busy day with their roster ahead of their series with the Cleveland Guardians. The team called up a versatile slugger in Joey Loperfido , designated reliever Joel Kuhnel for assignment, and sent utility infielder Grae Kessinger to the injured list. Now, it looks like the Astros are making another roster. This move will be official on Wednesday, with veteran first baseman Jose Abreu being optioned to West Palm Beach, according to Chandler Rome of the Athletic.

José Abreu is not with the Astros, GM Dana Brown said. Both sides decided that Abreu will be optioned to West Palm Beach effective tomorrow “to get some at-bats and his timing back right.” — Chandler Rome (@Chandler_Rome) April 30, 2024

Jose Abreu Optioned During Terrible Slump

Abreu, 37, is in the second year of a three-year, $58.5 million contract that he signed before the 2023 season. Many analysts thought it was an overpay, and Abreu has proven the doubters right so far with his production.

While his bat rebounded a little bit to end the season in 2023, it’s been largely underwhelming and even abysmal in 2024. Abreu hit .237/.296/.383 in 594 plate appearances. His bat seemingly lost power after his age-35 season, and he hit a career-low 15 homers in 2022 and 18 in 2023. To complicate things, he posted the lowest OBP of his career and walked in just 7.1% of his plate appearances. While he isn’t known as one to take his walks, Abreu was in the 35th percentile for walks in 2023.

It’s been even worse for him in 2024.

He’s struggled mightily at contact this season. He’s in the 38th percentile for strikeouts with 23.4%. His chase rate is in the 26th percentile, and his whiff rate is in the 17th percentile. When he does make contact, they’re not hard-hit balls. Abreu is in the 8th percentile for hard hit % and the 27th percentile for average exit velocity.

Making matters worse, he’s walked just 3.9% of the time, which would be the lowest of his career if it continued like this.

No matter how you slice Abreu’s 2024, it’s clear why the Astros sought to option Jose Abreu.

What to Expect in Abreu’s Absence

The choice for the Astros to option Jose Abreu wasn’t theirs to make. Given that his contract is a guaranteed major league contract, Abreu can refuse any minor league assignments. However, Abreu opted to work with the Astros and was willingly optioned to allow the team some flexibility and allow him to work out what the problems are and to fix them if they can be.

In his absence, we’ll likely see Jon Singleton and Joey Loperfido take over . Loperfido was thought to be used as a utility player a bit. It’s more likely that he’ll see at-bats at first base with Jose Abreu not being a factor. If Abreu does return, it will be interesting to see what the Astros do to alleviate the log jam. The obvious option would be to let go of Singleton. However, it does depend on Loperfido bringing his hot bat from the minors up to the major leagues.

With the Astros choosing to option Jose Abreu, some might see it as the end of the line for the aging superstar. There is a chance he comes back, as we’ve seen plenty of players bounce back in their late thirties. However, the numbers and profile mean that he’ll have an uphill battle to find his way back to the Astros roster.

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Send Us A Message

Yankees Pitcher Will Begin Rehab Assignment On Sunday; Could Return Soon After

New York fans should be excited as the club starts to get reinforcements back

Author: Patrick McAvoy

In this story:

The New York Yankees may get one of their most important bullpen pieces back shortly.

New York has had a lot of success out of the bullpen so far this season but has dealt with a handful of injuries. One player who has missed some time is hard-throwing righty Nick Burdi. The 31-year-old made the Yankees out of Spring Training and has been a revelation out of the bullpen.

Burdi hasn't allowed an earned run yet this season after seven appearances and has struck out eight batters in 6 1/3 innings pitched. He has been dealing with right hip inflammation but will begin a rehab assignment on Sunday with the Double-A Somerset Patriots, according to The Athletic's Chris Kirschner.

"Nick Burdi will throw in a rehab game on Sunday with Somerset," Kirschner said.

The fact that he is feeling well enough to get into game action on Sunday certainly is a great sign. New York's bullpen has been great this season but it has been stretched thin thanks to the plethora of injuries.

The eventual return of Burdi will give the Yankees another great arm and hopefully help ease the strain on the bullpen by adding more depth.

New York somehow has found ways to win games despite a multitude of injuries. The fact that the club should start to get reinforcements back soon should scare other teams. New York already is a World Series contender but it should get even better soon and Burdi will help.

More MLB: White Sox May Trade Veteran Starter; Yankees Could Be Ideal Landing Spot

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Rangers Outbid Yankees For All-Star; Will New York Pivot To Postseason Star?

Oct 20, 2023; Arlington, Texas, USA; Texas Rangers pitcher Jordan Montgomery (52) throws during the third inning of game five in the ALCS against the Houston Astros for the 2023 MLB playoffs at Globe Life Field. Mandatory Credit: Kevin Jairaj-USA TODAY Sports

Monty Takes Manhattan? Jordan Montgomery, Yankees Talking Again

IMAGES

Will I Be Assigned?
Options Assignment Explained
Sample Printable Assignment Of Option Agreement Forms Template 2023
Free Printable Assignment Of Option Agreement Form(PDF)
Option Exercise and Assignment (Best Guide w/ Examples)
Exercise and Assignment

VIDEO

How to manage options assignment #options #optionstrading #optionstrategy #optionselling #tastytrade
Multiple Pin assignment in Library Editor
Eco-Final Assignment: MCQs. 16-30
Enable Turnitin w/in a Canvas Assignment (using TII option 1)
How to deal with being assigned
Digital Assignment Option 1

COMMENTS

Trading Options: Understanding Assignment
An option assignment represents the seller's obligation to fulfill the terms of the contract by either selling or buying the underlying security at the exercise price. This obligation is triggered when the buyer of an option contract exercises their right to buy or sell the underlying security. To ensure fairness in the distribution of American ...
How Option Assignment Works: Understanding Options Assignment
Options assignment is a process in options trading that involves fulfilling the obligations of an options contract. It occurs when the buyer of an options contract exercises their right to buy or ...
What is Option Assignment? How and Why Assignment Happens
Option assignment is when an option seller is required to fulfill the obligation of the option per the contract's terms. If an option buyer exercises their right to buy or sell shares of stock at the strike price, the option seller must honor this request and fulfill their obligation. Option buyers have the right to exercise an option at any ...
Options Exercise, Assignment, and More: A Beginner's Guide
Learn about options exercise and options assignment before taking a position, not afterward. This guide can help you navigate the dynamics of options expiration. So your trading account has gotten options approval, and you recently made that first trade—say, a long call in XYZ with a strike price of $105. Then expiration day approaches and ...
What Is Option Assignment & How Does It Work?
Option assignment is the process of matching an exercised option with a writer of an option. In the rules laid out in a basic options trading guide , the individual short an options contract is obligated to fulfill their duty by either purchasing or selling a specific number of shares of the underlying stock should the holder choose to exercise ...
Options Basics: How the Option Assignment Process Works
An assignment is less probable when an option is out-of-the-money. An option is out-of-the-money when the security is trading at a higher value in the market as compared to the strike price.
How to exercise, roll, and assign options
The owner of call or put options has the right to assign the contract to the seller. This is known as assignment. Assignment occurs when the buyer exercises an options contract on or before expiration, and the seller must fulfill the obligation by either buying or selling the underlying security at the exercise price.
Option Assignment Process: Everything You Need to Know
The option assignment process means that the option writer is obligated to deliver on the terms specified in a contract. For example, if a put option is assigned, the options writer would need to buy the underlying security at the strike price dictated in the contract.
Assignment: Definition in Finance, How It Works, and Examples
Assignment: An assignment is the transfer of an individual's rights or property to another person or business. For example, when an option contract is assigned, an option writer has an obligation ...
Options Assignment & How To Avoid It
This would start the options assignment process. Exercise the option early: The last possibility would be to exercise the option before its expiration date. This, however, can only be done if the option is an American-style option. This would, once again, lead to an option assignment. So as an option seller, you only have to worry about the ...
The Risks of Options Assignment
An option gives the owner the right but not the obligation to buy or sell stock at a set price. An assignment forces the short options seller to take action. Here are the main actions that can result from an assignment notice: Short call assignment: The option seller must sell shares of the underlying stock at the strike price. Short put ...
Option Assignment: What It Is, How to Avoid It, and Examples
Options assignment is a potential risk of options writing. In many situations, it can be avoided but needs to be fully understood to manage effectively. By understanding the basics of options assignment, why it happens, and ways to avoid it; you can rest easy knowing that you're prepared for anything. So next time option assignment comes ...
Option Exercise and Assignment Explained w/ Visuals
Another important thing to know about exercise and assignment is that standard in-the-money equity options are automatically exercised at expiration. So, traders may end up with stock positions by letting their options expire in-the-money. An in-the-money option is defined as any option with at least $0.01 of intrinsic value at expiration.
Assignments in Options Trading
Options Assignment Summary. The concept of 'assignment' in options trading, although complex, is a cornerstone of understanding options trading. It not only clarifies the responsibilities of an options seller but also helps the traders to gauge and manage their risks more effectively. Successful trading involves not just knowing your ...
Understanding options assignment risk
Understanding assignment risk in Level 3 and 4 options strategies. With all options strategies that contain a short option position, an investor or trader needs to keep in mind the consequences of having that option assigned, either at expiration or early (i.e., prior to expiration). Remember that, in principle, with American-style options a ...
Ready for Options Trading? Make Sure You Understand Assignment First
An option assignment represents the seller's obligation to fulfill the terms of the contract by either selling or buying the underlying security at the exercise price. This obligation is triggered ...
What is Assignment?
What is Assignment? When an option is in-the-money at expiration, meaning that the price of its underlying security is above the strike price for a call or below the strike price for a put, the option holder will likely exercise. For the option seller, when this happens it's possible they will be assigned. If a seller is assigned on a call they ...
Options Assignment
Options assignment before expiration in options trading do not happen only when you write straight naked options. Options assignment in options trading can also happen to options which are written as part of an options trading strategy! This is why all options traders using complex options strategies need to take all possible options assignment ...
Options Contract: What It Is, How It Works, Types of Contracts
Options Contract: An options contract is an agreement between two parties to facilitate a potential transaction on the underlying security at a preset price, referred to as the strike price ...
Assignment Risk on 'Limited Risk' Options Spreads
A limited risk option spread, like a debit spread, credit spread, covered call, or iron condor, is built by writing (selling) options, and at the same time, buying (long) different options to create the desired options strategy. When you write options, either naked or covered within a spread, those options are at risk of being exercised by the ...
Man or bear explained: Online debate has women talking about safety
"Bear. Man is scary," one of the women responds. A number of women echoed the responses given in the original video, writing in the comments that they, too, would pick a bear over a man.
Astros To Option José Abreu
The Astros won't officially option Abreu until tomorrow, so they will play a man short tonight and the corresponding move will be clear at that time. Share 0 Retweet 0 Send via email 0 Houston ...
PDF Trading Options: Understanding Assignment
An option assignment represents the seller's obligation to fulfill the terms of the contract by either selling or buying the underlying security at the exercise price. This obligation is triggered when the buyer of an option contract exercises their right to buy or sell the
Trading Options: Understanding Assignment
An option assignment represents the seller's obligation to fulfill the terms of the contract by either selling or buying the underlying security at the exercise price. This obligation is ...
Trading Options: Understanding Assignment
An option assignment represents the seller's obligation to fulfill the terms of the contract by either selling or buying the underlying security at the exercise price. This obligation is triggered when the buyer of an option contract exercises their right to buy or sell the underlying security. To ensure fairness in the distribution of ...
What's next for José Abreu and the Astros after option agreement?
Abreu accepted a minor-league option to the team's spring training facility in West Palm Beach, Fla., where he will report Wednesday for what amounts to a final attempt at salvaging a calamitous ...
Astros to option José Abreu to Minor Leagues
HOUSTON -- Astros first baseman José Abreu agreed to be optioned to the Minor Leagues, general manager Dana Brown said Tuesday. The move will be effective on Wednesday, with a corresponding roster move to be announced then. Abreu will report to the Astros' Spring Training facility in West Palm Beach,
2024 Kentucky Derby horses, field, odds, post positions: Fierceness
The first Triple Crown race of the year is nearly here and we now know the post positions for the Kentucky Derby
Astros to Option Veteran First Baseman Amidst Struggles
The choice for the Astros to option Jose Abreu wasn't theirs to make. Given that his contract is a guaranteed major league contract, Abreu can refuse any minor league assignments. However, Abreu opted to work with the Astros and was willingly optioned to allow the team some flexibility and allow him to work out what the problems are and to ...
Yankees Pitcher Will Begin Rehab Assignment On Sunday; Could Return
The New York Yankees may get one of their most important bullpen pieces back shortly. New York has had a lot of success out of the bullpen so far this season but has dealt with a handful of ...