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Assignment & Exercise

What actually happens when an option is acted on. Exercise — the holder invoking their right; assignment — the writer obliged to fulfil it; early assignment and why dividends trigger it; physical versus cash settlement; expiry auto-exercise; and pin risk. The plumbing behind every options strategy.

13 min readPublished 25 June 2026

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What Is An Option?

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What Is A Call Option?

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What Is A Put Option?

A focused guide to the put option — the right, but not the obligation, to sell. How a put pays off, its break-even and capped maximum gain, its dual use as a bearish bet and as portfolio insurance, the difference between buying and writing a put, and a full worked example.

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