Options Trading Concepts Live - March 19, 2021 - Dividend and Assignment Risk

Published: March 19, 2021, 4:52 p.m.

Assignment risk applies to short ITM options that have very little extrinsic value, as the counterparty vaporizes all extrinsic value when converting to shares. It doesn't make sense to exercise options in most cases for this reason, but dividends can increase assignment risk in ITM short calls. 

The tastytrade crew explains how you can tell what the dividend will be, and how to avoid assignment risk if the extrinsic value is low.