What is the options assignment risk?
Trading options is a very lucrative way to make money in the stock market. Using the same methods that I teach in my trading PowerX Trading Strategy, I was able to turn a 25k account into a 45k account in 2 months!
25K to 45K in 2 months? This sounds too good to be true… and I would like to tell you that it is NOT too good to be true, but there are some inherent risks associated with options trading.
ONE of the biggest risks, and possibly the MOST common risk associated with trading options are options assignment risks.
As you may know by now, options contracts expire. When you purchase an options contract you have the right to exercise the contract, and buy or sell the underlying asset for the agreed-upon price. If you allow the contract to expire in the money (ITM) you run the risk of being assigned the 100 shares of the underlying stock.
This is known as an options assignment risk.
Specific Examples of Options With Different Expiration Dates
In the example we’re going to discuss today, we’re going to look at how options expiration or the length of time to expiration can affect your options assignment risk.
To illustrate the relationship between options assignment risk and options expiration, we’re going to look at trading a 315 call options contract on Apple (AAPL) with 7 days left until…
