Assignment Fees

An assignment fee is a charge from your broker when a short option position you hold is exercised by the option buyer, resulting in you being assigned. If you are short a call, assignment means you must sell 100 shares at the strike price. If you are short a put, assignment means you must buy 100 shares at the strike price. The assignment fee is charged on top of any commissions for the resulting stock transaction. Fees range from $0 at some brokers to $15-$20 at others.

Why It Matters

Assignment fees are an often-overlooked cost, especially for premium sellers who trade frequently. If you sell covered calls or cash-secured puts and get assigned regularly, these fees add up. A trader assigned 12 times per year at $15 per assignment spends $180 — equivalent to the premium on an entire small trade. Knowing your broker's assignment fee helps you decide whether to close positions before expiration to avoid assignment or let them run.

Assignment fees also factor into your breakeven calculations. If you sell a put for $1.00 and get assigned, your effective cost basis is not just the strike price minus the premium — it is the strike price minus premium plus the assignment fee. On small, low-premium trades, the assignment fee can represent a significant percentage of the credit received.

How It Works

When assignment happens:

• Your short option is in the money at expiration and the OCC auto-exercises it on behalf of the option holder.
• The option holder exercises early (possible with American-style options). Early assignment is most common when a short call is deep in the money near an ex-dividend date or when a short put is deep in the money with little time value remaining.
• Assignment is random — the OCC selects which short option holders are assigned through a lottery process. Your broker then assigns the notification to you.

Assignment fees by broker (approximate, verify current rates):

• tastytrade: $0
• thinkorswim (Schwab): $0
• Interactive Brokers: $0
• Fidelity: $0
• Robinhood: $0
• E*TRADE: $0 (formerly charged, eliminated in recent years)

Note: Most major brokers have eliminated assignment fees in recent years. Always verify with your specific broker, as policies change.

What happens after assignment:

• Short call assigned: You are now short 100 shares of the underlying stock per contract. If you do not own the shares, your account will show a short stock position.
• Short put assigned: You are now long 100 shares of the underlying stock per contract. Your account must have sufficient buying power or margin to hold the shares.
• Spread positions: If only one leg of a spread is assigned (common near expiration), you may have a naked stock position with significant risk until you can close it. This is called "leg risk."

How to avoid unwanted assignment:

• Close positions before expiration, especially if they are in the money.
• Monitor short calls near ex-dividend dates — this is the most common trigger for early assignment.
• Use European-style options (SPX) which cannot be assigned early.
• Be aware of "pin risk" — when the stock closes very near your short strike at expiration.

Quick Example

You sell a $50 put on a stock for $1.50 credit. At expiration, the stock closes at $49. Your put is in the money and you are assigned — you must buy 100 shares at $50. Your broker charges a $0 assignment fee (most brokers today). Your effective cost basis is $50 - $1.50 = $48.50 per share. With the stock at $49, you actually have an unrealized gain. If your broker charged a $15 fee, your effective basis would be $48.65 — still profitable, but the fee reduces your gain.