Back
Assignment of option
For an option clearing house, the act of determining which of its members will deliver or take delivery of the underlying or, for the assigned clearing house member, the act of determining which of its clients will settle the exercise of the option, once the option holder has informed the clearing house of its intention to exercise the option.
(1) On a cash settlement market, assigned writers are obligated to pay the exercise settlement amount.
(2) Given the involvement of the clearing house, the initial transaction does not bind an option holder to an option writer; assignment is therefore necessary to pair up the holder with the writer when the option is exercised.
(3) In the context of an options market, the term assignment is most often used alone.
(4) The term assignment is also used on the futures market to designate the assignment of the notice of delivery, which determines the contract buyer who is obligated to take delivery.
Translations
Synonyms and variations
- Assignment