Assignment & Cost Basis
Assignment
Key Takeaways
- Assignment happens when a seller must fulfill their obligation: buying or selling shares at the strike.
- For put sellers: assignment means buying 100 shares. For call sellers: selling 100 shares.
- Your true cost basis includes the premium collected. Your broker won't show this automatically.
TL;DR
Assignment occurs when an option seller must buy (put) or sell (call) shares at the strike price. In income strategies like the wheel, assignment is part of the plan, not a mistake. Always track your adjusted cost basis (strike price minus premium collected) for accurate P&L.
What Is Assignment?
Assignment happens when an option seller is required to fulfill their obligation:
Sold a put → assigned → you must buy 100 shares at the strike price
Your cash decreases by (strike × 100). 100 shares appear in your account.
Sold a call → assigned → you must sell 100 shares at the strike price
Your shares are removed. Cash increases by (strike × 100).
Assignment usually happens automatically at expiration if the option is in the money. Early assignment is rare but possible, especially on dividend-paying stocks.
Powered byStanalystPut Assignment Example
You sold a $50 put on XYZ for $2 premium.
XYZ drops to $46 at expiration.
You're assigned: 100 shares of XYZ appear in your account. $5,000 is deducted from your cash.
Broker shows: Cost basis = $50/share
Your real cost basis: $50 - $2 premium = $48/share
The $2/share premium you collected reduces your actual entry price. This is critical for deciding when to sell covered calls and calculating your true P&L.
Call Assignment Example
You own 100 shares of ABC at $80. You sold a $90 covered call for $3 premium.
ABC rises to $95 at expiration.
You're assigned: 100 shares are sold at $90. $9,000 deposited to your account.
Total profit: $10/share (stock gain) + $3/share (premium) = $13/share ($1,300)
Yes, you "missed" the move from $90 to $95. You agreed to that price when you sold the call, and you profited handsomely.
Adjusted Cost Basis
Your broker won't automatically adjust cost basis for premiums collected. You must track this yourself.
For put assignment:
Real cost basis = Strike price − Premium collected
For stock after multiple calls sold:
Adjusted cost basis = Original cost − All premiums collected over time
If you bought stock at $50, sold 3 monthly covered calls for $1.50 each, your adjusted basis is $50 − $4.50 = $45.50.
This matters for tax reporting, rolling decisions, and knowing when you're actually profitable.
Assignment Is Part of the Plan
New traders fear assignment. Experienced traders welcome it. It's just the next step in the wheel.
Assigned on a put? You now own stock at a discount. Start selling covered calls.
Called away on a call? You sold at your target price with premium on top. Start selling puts again.
The key is only selling options on stocks you want to own and at prices you're happy with. If assignment would cause you stress, you picked the wrong stock or strike.
Cost Basis Tracking with Stanalyst
Stanalyst's Options Income tracker automatically adjusts your cost basis when assignments happen. Every premium you collect, every assignment event, every roll. It's all calculated for you.
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