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Assignment

• The receipt of an exercise notice by an options writer that requires the writer to sell (in the case of a call) or purchase (in the case of a put) the underlying security at the specified strike price.

• Is the action for the seller of the option of acquiring the opposite position when an option is exercised. When a put is exercised, the writer receives a long position in securities or a long futures contract. When a call is exercised, the writer receives a short position in the securities or a short futures contract.

• A voluntary liquidation procedure by which a firm's creditors pass the power to liquidate the firm's assets to an adjustment bureau, a trade association, or a third party, which is designated the assignee.

 
 Embedded terms in definition
 Assets
Call
Contract
Exercise
Futures contract
Futures
Liquidation
Long position
Long
Options
Option
Position
Purchase
Put
Securities
Security
Sell
Short position
Short
Strike price
Trade
Underlying security
Underlying
Writer
 
 Referenced Terms
 Pin risk: Is the uncertainty that an option position may be exercised into the underlying instrument. It is risky because it often refers to markets flirting with the prevailing at-the-money level. At such times, the gamma on a position is very erratic and difficult to hedge. Also, there are doubts about the exercise or Assignment process. A trader can experience significant changes in net positions due to option exercises.

 Swap sale: Also called a swap Assignment, a transaction that ends one counterparty's role in an interest rate swap by substituting a new counterparty whose credit is acceptable to the other original counterparty.

 
 Related Terms
 Swap assignment

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