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Trading Options: Understanding Assignment

The options market can seem to have a language of its own. To the average investor, there are likely a number of unfamiliar terms, but for an individual with a short options position—someone who has sold call or put options—there is perhaps no term more important than " assignment "—the fulfilling of the requirements of an options contract.

Options trading carries risk and requires specific approval from an investor's brokerage firm. For information about the inherent risks and characteristics of the options market, refer to the Characteristics and Risks of Standardized Options also known as the Options Disclosure Document (ODD).

When someone buys options to open a new position ("Buy to Open"), they are buying a right —either the right to buy the underlying security at a specified price (the strike price) in the case of a call option, or the right to sell the underlying security in the case of a put option.

On the flip side, when an individual sells, or writes, an option to open a new position ("Sell to Open"), they are accepting an obligation —either an obligation to sell the underlying security at the strike price in the case of a call option or the obligation to buy that security in the case of a put option. When an individual sells options to open a new position, they are said to be "short" those options. The seller does this in exchange for receiving the option's premium from the buyer.

Learn more about  options from FINRA or access free courses like Options 101 at OCC Learning .

American-style options allow the buyer of a contract to exercise at any time during the life of the contract, whereas European-style options can be exercised only during a specified period just prior to expiration. For an investor selling American-style options, one of the risks is that the investor may be called upon at any time during the contract's term to fulfill its obligations. That is, as long as a short options position remains open, the seller may be subject to "assignment" on any day equity markets are open. 

What is assignment?

An option assignment represents the seller's obligation to fulfill the terms of the contract by either selling or buying the underlying security at the exercise price. This obligation is triggered when the buyer of an option contract exercises their right to buy or sell the underlying security.

To ensure fairness in the distribution of American-style and European-style option assignments, the Options Clearing Corporation (OCC), which is the options industry clearing house, has an established process to randomly assign exercise notices to firms with an account that has a short option position. Once a firm receives an assignment, it then assigns this notice to one of its customers who has a short option contract of the same series. This short option contract is selected from a pool of such customers, either at random or by some other procedure specific to the brokerage firm. 

How does an investor know if an option position will be assigned?

While an option seller will always have some level of uncertainty, being assigned may be a somewhat predictable event. Only about 7% of options positions are typically exercised, but that does not imply that investors can expect to be assigned on only 7% of their short positions. Investors may have some, all or none of their short positions assigned.

And while the majority of American-style options exercises (and assignments) happen on or near the contract's expiration, a long options holder can exercise their right at any time, even if the underlying security is halted for trading. Someone may exercise their options early based upon a significant price movement in the underlying security or if shares become difficult to borrow as the result of a pending corporate action such as a buyout or takeover. 

Note: European-style options can only be exercised during a specified period just prior to expiration. In U.S. markets, the majority of options on commodity and index futures are European-style, while options on stocks and exchange-traded funds (ETF) are American-style. So, while SPDR S&P 500, or SPY options, which are options tied to an ETF that tracks the S&P 500, are American-style options, S&P 500 Index options, or SPX options, which are tied to S&P 500 futures contracts, are European-style options.

What happens after an option is assigned?

An investor who is assigned on a short option position is required to meet the terms of the written option contract upon receiving notification of the assignment. In the case of a short equity call, the seller of the option must deliver stock at the strike price and in return receives cash. An investor who doesn't already own the shares will need to acquire and deliver shares in return for cash in the amount of the strike price, multiplied by 100, since each contract represents 100 shares. In the case of a short equity put, the seller of the option is required to purchase the stock at the strike price.

How might an investor's account balance fluctuate after opening a short options position?

It is normal to see an account balance fluctuate after opening a short option position. Investors who have questions or concerns or who do not understand reported trade balances and assets valuations should contact their brokerage firm immediately for an explanation. Please keep in mind that short option positions can incur substantial risk in certain situations.

For example, say XYZ stock is trading at $40 and an investor sells 10 contracts for XYZ July 50 calls at $1.00, collecting a premium of $1,000, since each contract represents 100 shares ($1.00 premium x 10 contracts x 100 shares). Consider what happens if XYZ stock increases to $60, the call is exercised by the option holder and the investor is assigned. Should the investor not own the stock, they must now acquire and deliver 1,000 shares of XYZ at a price of $50 per share. Given the current stock price of $60, the investor's short stock position would result in an unrealized loss of $9,000 (a $10,000 loss from delivering shares $10 below current stock price minus the $1,000 premium collected earlier).

Note: Even if the investor's short call position had not been assigned, the investor's account balance in this example would still be negatively affected—at least until the options expire if they are not exercised. The investor's account position would be updated to reflect the investor's unrealized loss—what they could lose if an option is exercised (and they are assigned) at the current market price. This update does not represent an actual loss (or gain) until the option is actually exercised and the investor is assigned. 

What happens if an investor opened a multi-leg strategy, but one leg is assigned?

American-style option holders have the right to exercise their options position prior to expiration regardless of whether the options are in-, at- or out-of-the-money. Investors can be assigned if any market participant holding calls or puts of the same series submits an exercise notice to their brokerage firm. When one leg is assigned, subsequent action may be required, which could include closing or adjusting the remaining position to avoid potential capital or margin implications resulting from the assignment. These actions may not be attractive and may result in a loss or a less-than-ideal gain.

If an investor's short option is assigned, the investor will be required to perform in accordance with their obligation to purchase or deliver the underlying security, regardless of the overall risk of their position when taking into account other options that may be owned as part of the overall multi-leg strategy. If the investor owns an option that serves to limit the risk of the overall spread position, it is up to the investor to exercise that option or to take other action to limit risk. 

Below are a couple of examples that underscore how important it is for every investor to understand the risks associated with potential assignment during market hours and potentially adverse price movements in afterhours trading.

Example #1: An investor is short March 50 XYZ puts and long March 55 XYZ puts. At the close of business on March expiration, XYZ is priced at $56 per share, and both puts are out of the money, which means they have no intrinsic value. However, due to an unexpected news announcement shortly after the closing bell, the price of XYZ drops to $40 in after-hours trading. This could result in an assignment of the short March 50 puts, requiring the investor to purchase shares of XYZ at $50 per share. The investor would have needed to exercise the long March 55 puts in order to realize the gain on the initial multi-leg position. If the investor did not exercise the March 55 puts, those puts may expire and the investor may be exposed to the loss on the XYZ purchase at $50, a $10 per share loss with XYZ now trading at $40 per share, without receiving the benefit of selling XYZ at $55.

Example #2: An investor is short March 50 XYZ puts and long April 50 XYZ puts. At the close of business on March expiration, XYZ is priced at $45 per share, and the investor is assigned XYZ stock at $50. The investor will now own shares of XYZ at $50, along with the April 50 XYZ puts, which may be exercised at the investor's discretion. If the investor chooses not to exercise the April 50 puts, they will be required to pay for the shares that were assigned to them on the short March 50 XYZ puts until the April 50 puts are exercised or shares are otherwise disposed of.

Note: In either example, the short put position may be assigned prior to expiration at the discretion of the option holder. Investors can check with their brokerage firm regarding their option exercise procedures and cut-off times.

For options-specific questions, you may contact OCC's Investor Education team at [email protected] , via chat on OptionsEducation.org or subscribe to the OIC newsletter . If you have questions about options trading in your brokerage account, we encourage you to contact your brokerage firm. If after doing so you have not resolved the issue or have additional concerns, you can contact FINRA .

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Assignment: Definition in Finance, How It Works, and Examples

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

What Is an Assignment?

Assignment most often refers to one of two definitions in the financial world:

• The transfer of an individual's rights or property to another person or business. This concept exists in a variety of business transactions and is often spelled out contractually.
• In trading, assignment occurs when an option contract is exercised. The owner of the contract exercises the contract and assigns the option writer to an obligation to complete the requirements of the contract.

Key Takeaways

• Assignment is a transfer of rights or property from one party to another.
• Options assignments occur when option buyers exercise their rights to a position in a security.
• Other examples of assignments can be found in wages, mortgages, and leases.

Uses For Assignments

Assignment refers to the transfer of some or all property rights and obligations associated with an asset, property, contract, or other asset of value. to another entity through a written agreement.

Assignment rights happen every day in many different situations. A payee, like a utility or a merchant, assigns the right to collect payment from a written check to a bank. A merchant can assign the funds from a line of credit to a manufacturing third party that makes a product that the merchant will eventually sell. A trademark owner can transfer, sell, or give another person interest in the trademark or logo. A homeowner who sells their house assigns the deed to the new buyer.

To be effective, an assignment must involve parties with legal capacity, consideration, consent, and legality of the object.

A wage assignment is a forced payment of an obligation by automatic withholding from an employee’s pay. Courts issue wage assignments for people late with child or spousal support, taxes, loans, or other obligations. Money is automatically subtracted from a worker's paycheck without consent if they have a history of nonpayment. For example, a person delinquent on $100 monthly loan payments has a wage assignment deducting the money from their paycheck and sent to the lender. Wage assignments are helpful in paying back long-term debts.

Another instance can be found in a mortgage assignment. This is where a mortgage deed gives a lender interest in a mortgaged property in return for payments received. Lenders often sell mortgages to third parties, such as other lenders. A mortgage assignment document clarifies the assignment of contract and instructs the borrower in making future mortgage payments, and potentially modifies the mortgage terms.

A final example involves a lease assignment. This benefits a relocating tenant wanting to end a lease early or a landlord looking for rent payments to pay creditors. Once the new tenant signs the lease, taking over responsibility for rent payments and other obligations, the previous tenant is released from those responsibilities. In a separate lease assignment, a landlord agrees to pay a creditor through an assignment of rent due under rental property leases. The agreement is used to pay a mortgage lender if the landlord defaults on the loan or files for bankruptcy . Any rental income would then be paid directly to the lender.

Options Assignment

Options can be assigned when a buyer decides to exercise their right to buy (or sell) stock at a particular strike price . The corresponding seller of the option is not determined when a buyer opens an option trade, but only at the time that an option holder decides to exercise their right to buy stock. So an option seller with open positions is matched with the exercising buyer via automated lottery. The randomly selected seller is then assigned to fulfill the buyer's rights. This is known as an option assignment.

Once assigned, the writer (seller) of the option will have the obligation to sell (if a call option ) or buy (if a put option ) the designated number of shares of stock at the agreed-upon price (the strike price). For instance, if the writer sold calls they would be obligated to sell the stock, and the process is often referred to as having the stock called away . For puts, the buyer of the option sells stock (puts stock shares) to the writer in the form of a short-sold position.

Suppose a trader owns 100 call options on company ABC's stock with a strike price of $10 per share. The stock is now trading at $30 and ABC is due to pay a dividend shortly. As a result, the trader exercises the options early and receives 10,000 shares of ABC paid at $10. At the same time, the other side of the long call (the short call) is assigned the contract and must deliver the shares to the long.

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The Risks of Options Assignment

Any trader holding a short option position should understand the risks of early assignment. An early assignment occurs when a trader is forced to buy or sell stock when the short option is exercised by the long option holder. Understanding how assignment works can help a trader take steps to reduce their potential losses.

Understanding the basics of assignment

An option gives the owner the right but not the obligation to buy or sell stock at a set price. An assignment forces the short options seller to take action. Here are the main actions that can result from an assignment notice:

• Short call assignment: The option seller must sell shares of the underlying stock at the strike price.
• Short put assignment: The option seller must buy shares of the underlying stock at the strike price.

For traders with long options positions, it's possible to choose to exercise the option, buying or selling according to the contract before it expires. With a long call exercise, shares of the underlying stock are bought at the strike price while a long put exercise results in selling shares of the underlying stock at the strike price.

When a trader might get assigned

There are two components to the price of an option: intrinsic 1 and extrinsic 2  value. In the case of exercising an in-the-money 3 (ITM) long call, a trader would buy the stock at the strike price, which is lower than its prevailing price. In the case of a long put that isn't being used as a hedge for a long stock position, the trader shorts the stock for a price higher than its prevailing price. A trader only captures an ITM option's intrinsic value if they sell the stock (after exercising a long call) or buy the stock (after exercising a long put) immediately upon exercise.

Without taking these actions, a trader takes on the risks associated with holding a long or short stock position. The question of whether a short option might be assigned depends on if there's a perceived benefit to a trader exercising a long option that another trader has short. One way to attempt to gauge if an option could be potentially assigned is to consider the associated dividend. An options seller might be more likely to get assigned on a short call for an upcoming ex-dividend if its time value is less than the dividend. It's more likely to get assigned holding a short put if the time value has mostly decayed or if the put is deep ITM and close to expiration with a wide bid/ask spread on the stock.

It's possible to view this information on the Trade page of the thinkorswim ® trading platform. Review past dividends, the price of the short call, and the price of the put at the call's strike price. While past performance cannot be relied upon to continue, this information can help a trader determine whether assignment is more or less likely.

Reducing the risk associated with assignment

If a trader has a covered call that's ITM and it's assigned, the trader will deliver the long stock out of their account to cover the assignment.

A trader with a call vertical spread 4 where both options are ITM and the ex-dividend date is approaching may want to exercise the long option component before the ex-dividend date to have long stock to deliver against the potential assignment of the short call. The trader could also close the ITM call vertical spread before the ex-dividend date. It might be cheaper to pay the fees to close the trade.

Another scenario is a call vertical spread where the ITM option is short and the out-of-the-money (OTM) option is long. In this case, the trader may consider closing the position or rolling it to a further expiration before the ex-dividend date. This move can possibly help the trader avoid having short stock on the ex-dividend date and being liable for the dividend.

Depending on the situation, a trader long an ITM call might decide it's better to close the trade ahead of the ex-dividend date. On the ex-dividend date, the price of the stock drops by the amount of the dividend. The drop in the stock price offsets what a trader would've earned on the dividend and there would still be fees on top of the price of the put.

Assess the risk

When an option is converted to stock through exercise or assignment, the position's risk profile changes. This change could increase the margin requirements, or subject a trader to a margin call, 5 or both. This can happen at or before expiration during early assignment. The exercise of a long option position can be more likely to trigger a margin call since naked short option trades typically carry substantial margin requirements.

Even with early exercise, a trader can still be assigned on a short option any time prior to the option's expiration.

1  The intrinsic value of an options contract is determined based on whether it's in the money if it were to be exercised immediately. It is a measure of the strike price as compared to the underlying security's market price. For a call option, the strike price should be lower than the underlying's market price to have intrinsic value. For a put option the strike price should be higher than underlying's market price to have intrinsic value.

2  The extrinsic value of an options contract is determined by factors other than the price of the underlying security, such as the dividend rate of the underlying, time remaining on the contract, and the volatility of the underlying. Sometimes it's referred to as the time value or premium value.

3  Describes an option with intrinsic value (not just time value). A call option is in the money (ITM) if the underlying asset's price is above the strike price. A put option is ITM if the underlying asset's price is below the strike price. For calls, it's any strike lower than the price of the underlying asset. For puts, it's any strike that's higher.

4  The simultaneous purchase of one call option and sale of another call option at a different strike price, in the same underlying, in the same expiration month.

5  A margin call is issued when the account value drops below the maintenance requirements on a security or securities due to a drop in the market value of a security or when buying power is exceeded. Margin calls may be met by depositing funds, selling stock, or depositing securities. A broker may forcibly liquidate all or part of the account without prior notice, regardless of intent to satisfy a margin call, in the interests of both parties.

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Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Please read the options disclosure document titled  Characteristics and Risks of Standardized Options before considering any options transaction. Supporting documentation for any claims or statistical information is available upon request.

With long options, investors may lose 100% of funds invested.

Spread trading must be done in a margin account.

Multiple leg options strategies will involve multiple commissions.

Commissions, taxes and transaction costs are not included in this discussion, but can affect final outcome and should be considered. Please contact a tax advisor for the tax implications involved in these strategies.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

• assignments basic law

Assignments: The Basic Law

The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.

As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.

The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.

Basic Definitions and Concepts:

An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).

An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.

Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.

No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.

Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)

The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)

The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.

More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.

And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.

Novation Compared to Assignment:

Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.

Equitable Assignments:

An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.

In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.

An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.

Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .

But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.

Enforceability of Assignments:

Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.

In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.

After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.

Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.

Assignment of Contractual Rights:

Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.

If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.

In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).

On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.

The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.

Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.

A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.

Noncompete Clauses and Assignments:

Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.

A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.

Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.

Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.

A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.

Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.

A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.

Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.

It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)

It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.

Conclusion:

In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.

As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.

One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.

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Assignment of Lease: How It Works and Parties Involved

Jump to section, what is an assignment of lease.

The assignment of lease is a title document that transfers all rights possessed by a lessee or tenant to a property to another party. The assignee takes the assignor’s place in the landlord-tenant relationship.

You can view an example of a lease assignment here .

How Lease Assignment Works

In cases where a tenant wants to or needs to get out of their lease before it expires, lease assignment provides a legal option to assign or transfer rights of the lease to someone else. For instance, if in a commercial lease a business leases a place for 12 months but the business moves or shuts down after 10 months, the person can transfer the lease to someone else through an assignment of the lease. In this case, they will not have to pay rent for the last two months as the new assigned tenant will be responsible for that.

However, before the original tenant can be released of any responsibilities associated with the lease, other requirements need to be satisfied. The landlord needs to consent to the lease transfer through a “License to Assign” document. It is crucial to complete this document before moving on to the assignment of lease as the landlord may refuse to approve the assignment.

Difference Between Assignment of Lease and Subletting

A transfer of the remaining interest in a lease, also known as assignment, is possible when implied rights to assign exist. Some leases do not allow assignment or sharing of possessions or property under a lease. An assignment ensures the complete transfer of the rights to the property from one tenant to another.

The assignor is no longer responsible for rent or utilities and other costs that they might have had under the lease. Here, the assignee becomes the tenant and takes over all responsibilities such as rent. However, unless the assignee is released of all liabilities by the landlord, they remain responsible if the new tenant defaults.

A sublease is a new lease agreement between the tenant (or the sublessor) and a third-party (or the sublessee) for a portion of the lease. The original lease agreement between the landlord and the sublessor (or original tenant) still remains in place. The original tenant still remains responsible for all duties set under the lease.

Here are some key differences between subletting and assigning a lease:

• Under a sublease, the original lease agreement still remains in place.
• The original tenant retains all responsibilities under a sublease agreement.
• A sublease can be for less than all of the property, such as for a room, general area, portion of the leased premises, etc.
• Subleasing can be for a portion of the lease term. For instance, a tenant can sublease the property for a month and then retain it after the third-party completes their month-long sublet.
• Since the sublease agreement is between the tenant and the third-party, rent is often negotiable, based on the term of the sublease and other circumstances.
• The third-party in a sublease agreement does not have a direct relationship with the landlord.
• The subtenant will need to seek consent of both the tenant and the landlord to make any repairs or changes to the property during their sublease.

Here is more on an assignment of lease here .

Benjamin W.

Parties involved in lease assignment.

There are three parties involved in a lease assignment – the landlord or owner of the property, the assignor and the assignee. The original lease agreement is between the landlord and the tenant, or the assignor. The lease agreement outlines the duties and responsibilities of both parties when it comes to renting the property. Now, when the tenant decides to assign the lease to a third-party, the third-party is known as the assignee. The assignee takes on the responsibilities laid under the original lease agreement between the assignor and the landlord. The landlord must consent to the assignment of the lease prior to the assignment.

For example, Jake is renting a commercial property for his business from Paul for two years beginning January 2013 up until January 2015. In January 2014, Jake suffers a financial crisis and has to close down his business to move to a different city. Jake doesn’t want to continue paying rent on the property as he will not be using it for a year left of the lease. Jake’s friend, John would soon be turning his digital business into a brick-and-mortar store. John has been looking for a space to kick start his venture. Jake can assign his space for the rest of the lease term to John through an assignment of lease. Jake will need to seek the approval of his landlord and then begin the assignment process. Here, Jake will be the assignor who transfers all his lease related duties and responsibilities to John, who will be the assignee.

You can read more on lease agreements here .

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Assignment of Lease From Seller to Buyer

In case of a residential property, a landlord can assign his leases to the new buyer of the building. The landlord will assign the right to collect rent to the buyer. This will allow the buyer to collect any and all rent from existing tenants in that property. This assignment can also include the assignment of security deposits, if the parties agree to it. This type of assignment provides protection to the buyer so they can collect rent on the property.

The assignment of a lease from the seller to a buyer also requires that all tenants are made aware of the sale of the property. The buyer-seller should give proper notice to the tenants along with a notice of assignment of lease signed by both the buyer and the seller. Tenants should also be informed about the contact information of the new landlord and the payment methods to be used to pay rent to the new landlord.

You can read more on buyer-seller lease assignments here .

Get Help with an Assignment of Lease

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Meet some of our Assignment of Lease Lawyers

Curt Brown has experience advising clients on a variety of franchising, business litigation, transactional, and securities law matters. Mr. Brown's accolades include: - Super Lawyers Rising Star - California Lawyer of the Year by The Daily Journal - Pro Bono Attorney of the Year the USC Public Interest Law Fund Curt started his legal career in the Los Angeles office of the prestigious firm of Irell & Manella LLP, where his practice focused on a wide variety of complex civil litigation matters, including securities litigation, antitrust, trademark, bankruptcy, and class action defense. Mr. Brown also has experience advising mergers and acquisitions and international companies concerning cyber liability and class action defense. He is admitted in California, Florida, D.C., Washington, Illinois, Colorado, and Michigan.

Shelia A. Huggins is a 20-year North Carolina licensed attorney, focusing primarily on business, contracts, arts and entertainment, social media, and internet law. She previously served on the Board of Visitors for the North Carolina Central University School of Business and the Board of Advisors for the Alamance Community College Small Business Center. Ms. Huggins has taught Business and Entertainment Law at North Carolina Central University’s law school and lectured on topics such as business formation, partnerships, independent contractor agreements, social media law, and employment law at workshops across the state. You can learn more about me here: www.sheliahugginslaw.com www.instagram.com/mslegalista www.youtube.com/mslegalista www.facebook.com/sheliahuugginslaw

Steven Stark has more than 35 years of experience in business and commercial law representing start-ups as well as large and small companies spanning a wide variety of industries. Steven has provided winning strategies, valuable advice, and highly effective counsel on legal issues in the areas of Business Entity Formation and Organization, Drafting Key Business Contracts, Trademark and Copyright Registration, Independent Contractor Relationships, and Website Compliance, including Terms and Privacy Policies. Steven has also served as General Counsel for companies providing software development, financial services, digital marketing, and eCommerce platforms. Steven’s tactical business and client focused approach to drafting contracts, polices and corporate documents results in favorable outcomes at a fraction of the typical legal cost to his clients. Steven received his Juris Doctor degree at New York Law School and his Bachelor of Business Administration degree at Hofstra University.

Morgan is a real estate attorney with six years of experience in residential, land, and commercial real estate transactions. He has experience assisting municipalities, businesses, buyers and sellers in real estate related matters. He has worked on various projects including purchase agreements, contract for deed, easements, mortgages, access agreements, contract/lease review and also title review. Prior to entering private practice, Morgan was a Realtor and assisted buyers and sellers in residential sales and closing services. Morgan provides proactive, responsive and dependable work to each client and project.

Bukhari Nuriddin is the Owner of The Nuriddin Law Company, P.C., in Atlanta, Georgia and an “Of Counsel” attorney with The Baig Firm specializing in Transactional Law and Wills, Trusts and Estates. He is an attorney at law and general counsel with extensive experience providing creative, elegant and practical solutions to the legal and policy challenges faced by entrepreneurs, family offices, and municipalities. During his legal careers he has worked with entrepreneurs from a wide array of industries to help them establish and grow their businesses and effectuate their transactional goals. He has helped establish family offices with millions of dollars in assets under management structure their estate plans and philanthropic endeavors. He recently completed a large disparity study for the City of Birmingham, Alabama that was designed to determine whether minority and women-owned businesses have an equal opportunity to participate in city contracting opportunities. He is a trusted advisor with significant knowledge and technical experience for structuring and finalizing a wide variety of complex commercial transactions, estate planning matters and public policy initiatives. Raised in Providence, Rhode Island, Bukhari graduated from Classical High School and attended Morehouse College and Howard University School of Law. Bukhari has two children with his wife, Tiffany, and they live in the Vinings area of Smyrna.

John has extensive leadership experience in various industries, including hospitality and event-based businesses, then co-founded a successful event bar company in 2016. As co-founder, John routinely negotiated agreements with venues, suppliers, and other external partners, swiftly reaching agreement while protecting the brand and strategic objectives of the company. He leverages his business experience to provide clients with strategic legal counsel and negotiates attractive terms.

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Assignment of Lease

Contract to lease land from a church?

I’m planning on leasing land from a church. Putting a gym on the property. And leasing it back to the school.

Ok; first step is that you will need a leasing contract with the church. Ask them to prepare one for you so you would just need an attorney to review the agreement and that should cost less than if you had to be the party to pay a lawyer to draft it from scratch. You need to ensure that the purpose of the lease is clearly stated - that you plan to put a gym on the land so that there are no issues if the church leadership changes. Step 2 - you will need a lease agreement with the school that your leasing it do (hopefully one that is similar to the original one your received from the church). Again, please ensure that all the terms that you discuss and agree to are in the document; including length of time, price and how to resolve disputes if you have one. I hope this is helpful. If you would like me to assist you further, you can contact me on Contracts Counsel and we can discuss a fee for my services. Regards, Donya Ramsay (Gordon)

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What is an Assignment in Options?

How does assignment work, what does “write an option” mean, how do you know if an option position will be assigned, what happens after an option is assigned, short put vs. short call, option assignment examples, option assignment summed up, supplemental content, what is an option assignment & how does it work.

Options assignment refers to the process in which the obligations of an options contract are fulfilled. This happens when the holder of an options contract decides to exercise their rights.

When an option holder decides to exercise, the Options Clearing Corporation (OCC) will randomly assign the exercise notice to one of the option writers.

A call option gives the holder the right to buy an underlying asset at a specified price (the strike price) within a certain period. If the holder decides to exercise a call option, the seller (writer) of the option is obligated to sell the underlying asset at the strike price. In this case, the option seller is said to be "assigned."

A put option gives the holder the right to sell an underlying asset at a specified price within a certain period. If the holder decides to exercise a put option, the seller of the option is obligated to buy the underlying asset at the strike price. Again, the option seller is "assigned" in this scenario.

Importantly, being assigned on an option can lead to significant financial obligations, particularly if the option writer does not already own the underlying asset for a call option (known as a naked call) or does not have the cash to buy the underlying asset for a put option. Therefore, option writers should be prepared for the possibility of assignment.

Options assignment works in tandem with the exercise of an options contract. It's the process of fulfilling the obligations of the options contract when the option holder decides to exercise their contractual right as outlined above.

When an option owner exercises their right to convert the option to stock, the option writer is assigned and the option is converted to 100 shares of stock per option contract. Simply put, assignment refers to an options contract being converted to 100 shares of stock, regardless of whether it is a naked option or part of a multi-leg options strategy.

Long call options convert to 100 shares of long stock, and short call options convert to 100 shares of short stock at the strike price.

Long put option contracts convert to 100 shares of short stock, and short put option contracts convert to 100 shares of long stock at the strike price.

In general, the options assignment process includes four steps, as outlined below: 

Option Exercise : The holder of the option (the investor who purchased the option) decides to exercise the option. This decision is typically made when it is beneficial for the option holder to do so. For example, if the market price of the underlying asset is favorable compared to the strike price in the option contract.

Notification : When the option is exercised, the Options Clearing Corporation (OCC) is notified. The OCC then selects a member brokerage firm, which in turn chooses one of its clients who has written (sold) an options contract of the same series (same underlying asset, strike price, and expiration date) to be assigned.

Assignment : The selected option writer (the investor who sold the option) is then assigned by the brokerage. The assignment means that the option writer now has the obligation to fulfill the terms of the options contract.

Fulfillment : If it was a call option that was exercised, the assigned writer must sell the underlying asset to the option holder at the agreed-upon strike price. If it was a put option that was exercised, the assigned writer must buy the underlying asset from the option holder at the strike price.

It's important to note that assignment cannot happen when the market is open - these transactions take place when the options market is closed.

Writing an option refers to the act of selling an options contract. 

This term is used because the seller is essentially creating (or "writing") a new contract that gives the buyer the right, but not the obligation, to buy or sell a security at a predetermined price within a specific period. In this case, "writing a put or call" and "shorting a put or call" refers to the same thing.

There are two types of options that investors/traders can write: a call option or a put option. Further details for each are outlined below:

Writing a Call Option : This process involves selling someone the right to buy a security from you at a specified price (the strike price) before the option expires. If the buyer decides to exercise their right, you, as the writer, must sell them the security at that strike price, regardless of the market price. If you don't own the underlying security, this is known as writing a naked call, which can involve substantial risk as there is no cap to how high a stock price can go. A short call holder assumes the risk of 100 shares of short stock above the strike price.

Writing a Put Option : This process involves selling someone the right to sell a security to you at a specified price before the option expires. If the buyer decides to exercise their right, you, as the writer, must buy the security from them at that strike price, regardless of the market price. A short put holder assumes the risk of 100 shares of long stock below the strike price.

When an investor/trader writes an option, he/she receives the option’s extrinsic value premium associated with assuming the intrinsic value risk of the options contract. This extrinsic value premium is theirs to keep if held through expiration, regardless of whether the option is exercised or expires worthless.

As such, writing options (i.e. selling options) is typically reserved for experienced investors/traders who are comfortable with the risks involved, as short options assume the risk of 100 shares of long or short stock depending on the options type.

It’s impossible to know for certain if a given option will be assigned, but the more extrinsic value there is associated with an option, the less likely it is to be assigned (excluding dividend risk associated with ITM short call options).

There are several situations in which an options assignment becomes more likely, as detailed below:

In-the-money (ITM) Options : An option is more likely to be exercised, and therefore assigned, if it's in the money . That means the market price of the underlying asset is above the strike price for a call option, or below the strike price for a put option. This is because exercising the option in such a scenario could start to make sense for the option owner as the option would have intrinsic value. OTM options are not likely to be assigned as the trader or investor could just buy or sell shares of stock at a better price in the outright market.

Near Expiration : Options are also more likely to be exercised as they approach their expiration date, particularly if they are in the money. This is because the extrinsic value of the option (a component of its price) diminishes as the option nears expiration, leaving only the intrinsic value (the difference between the market price of the underlying asset and the strike price).

Dividend Payments : For ITM call options, if the underlying security is due to pay a dividend, and the amount of the dividend is larger than the extrinsic value remaining in the option's price, it might make sense for the holder to exercise the option early to capture the dividend. This could lead to early assignment for the writer of the option.

Remember, even if the above scenarios exist, it does not guarantee assignment, as the option holder might not choose to exercise the option. The decision to exercise is entirely up to the option holder. 

Therefore, when writing (i.e. selling) options, investors and traders should be prepared for the possibility of assignment at any time until the option expires.

Remember, as the writer of the option, you receive and keep the premium regardless of whether the option is exercised or not. But this premium may not be sufficient to offset any loss from the assignment. That's why writing options involves risk and requires careful consideration.

This term is used because the seller is essentially creating (or "writing") a new contract that gives the buyer the right, but not the obligation, to buy or sell a security at a predetermined price within a specific period.

Writing a Call Option : This process involves selling someone the right to buy a security from you at a specified price (the strike price) before the option expires. If the buyer decides to exercise their right, you, as the writer, must sell them the security at that strike price, regardless of the market price. If you don't own the underlying security, this is known as writing a naked call, which can involve substantial risk.

Writing a Put Option : This process involves selling someone the right to sell a security to you at a specified price before the option expires. If the buyer decides to exercise their right, you, as the writer, must buy the security from them at that strike price, regardless of the market price.

1. Call Option Assignment:

Imagine a scenario in which you've written (sold) a call option for ABC stock. The call option has a strike price of $60 and the expiration date is in one month. For selling this option, you've received a premium of $5.

Now, let's say the stock price of ABC stock shoots up to $70 before the expiration date. The option holder can choose to exercise the option since it is now "in-the-money" (the current stock price is higher than the strike price). If the option holder decides to exercise their right, you, as the writer, are then assigned.

Being assigned means you have to sell ABC shares to the option holder for the strike price of $60, even though the current market price is $70. If you already own the ABC shares, then you simply deliver them. If you don't own them, you must buy the shares at the current market price ($70) and sell them at the strike price ($60), incurring a loss.

2. Put Option Assignment:

Suppose you've written a put option for XYZ stock. The put option has a strike price of $50 and expires in one month. You receive a premium of $5 for writing this option.

Now, if the stock price of XYZ stock drops to $40 before the option's expiration date, the option holder may choose to exercise the option since it's "in-the-money" (the current stock price is lower than the strike price). If the holder exercises the option, you, as the writer, are assigned.

Being assigned in this scenario means you have to buy XYZ shares from the option holder at the strike price of $50, even though the current market price is $40. This means you pay more for the stock than its current market value, incurring a loss.

As such, writing options (i.e. selling options) is typically reserved for experienced investors/traders who are comfortable with the risks involved.

What does an option assignment mean?

What happens when a call is assigned.

If it was a call option that was exercised, the assigned writer must sell the underlying asset to the option holder at the agreed-upon strike price.

What happens when a short option is assigned?

How often do options get assigned.

The frequency with which options get assigned can vary significantly, depending on a number of factors. These can include the type of option, its moneyness (whether it's in, at, or out of the money), time to expiration, volatility of the underlying asset, and dividends.

According to FINRA , only about 7% of options positions are typically exercised. But that does not imply that investors can expect to be assigned on only 7% of their short positions. Investors may have some, all, or none of their short options positions assigned.

How often do options get assigned early?

According to FINRA , only 7% of all options are exercised, which indicates that early assignment options constitute an even lower percentage of the total than 7%.

How late can options be assigned?

In most cases, options can be exercised (and thus assigned to the writer) at any time up to the expiration date for American style options. However, the exact timing can depend on the rules of the specific exchange where the option is traded.

Typically, the holder of an American style option has until the close of business on the expiration date to decide whether to exercise it. Once the decision is made and the exercise notice is submitted, the Options Clearing Corporation (OCC) randomly assigns the exercise notice to one of the member brokerage firms with clients who have written (sold) options in the same series. The brokerage firm then assigns one of its clients.

Do I keep the premium if I get assigned?

As the writer of the option, you receive and keep the premium regardless of whether the option is exercised or not. But this premium may not be sufficient to offset any loss from the assignment. That's why writing options involves risk and requires careful consideration.

Episodes on Assignment

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Understanding assignment risk in Level 3 and 4 options strategies

E*TRADE from Morgan Stanley

With all options strategies that contain a short option position, an investor or trader needs to keep in mind the consequences of having that option assigned , either at expiration or early (i.e., prior to expiration). Remember that, in principle, with American-style options a short position can be assigned to you at any time. On this page, we’ll run through the results and possible responses for various scenarios where a trader may be left with a short position following an assignment.

Before we look at specifics, here’s an important note about risk related to out-of-the-money options: Normally, you would not receive an assignment on an option that expires out of the money. However, even if a short position appears to be out of the money, it might still be assigned to you if the stock were to move against you just prior to expiration or in extended aftermarket or weekend trading hours. The only way to eliminate this risk is to buy-to-close the short option.

• Short (naked) calls

Credit call spreads

Credit put spreads, debit call spreads, debit put spreads.

• When all legs are in-the-money or all are out-of-the-money at expiration

Another important note : In any case where you close out an options position, the standard contract fee (commission) will be charged unless the trade qualifies for the E*TRADE Dime Buyback Program . There is no contract fee or commission when an option is assigned to you.

Short (naked) call

If you experience an early assignment

An early assignment is most likely to happen if the call option is deep in the money and the stock’s ex-dividend date is close to the option expiration date.

If your account does not hold the shares needed to cover the obligation, an early assignment would create a short stock position in your account. This may incur borrowing fees and make you responsible for any dividend payments.

Also note that if you hold a short call on a stock that has a dividend payment coming in the near future, you may be responsible for paying the dividend even if you close the position before it expires.

An early assignment generally happens when the put option is deep in the money and the underlying stock does not have an ex-dividend date between the current time and the expiration of the option.

Short call + long call

(The same principles apply to both two-leg and four-leg strategies)

This would leave your account short the shares you’ve been assigned, but the risk of the position would not change . The long call still functions to cover the short share position. Typically, you would buy shares to cover the short and simultaneously sell the long leg of the spread.

Pay attention to short in-the-money call legs on the day prior to the stock’s ex-dividend date, because an assignment that evening would put you in a short stock position where you are responsible for paying the dividend. If there’s a risk of early assignment, consider closing the spread.

Short put + long put

Early assignment would leave your account long the shares you’ve been assigned. If your account does not have enough buying power to purchase the shares when they are assigned, this may create a Fed call in your account.

However, the long put still functions to cover the position because it gives you the right to sell shares at the long put strike price. Typically, you would sell the shares in the market and close out the long put simultaneously.

Here's a call example

• Let’s say that you’re short a 100 call and long a 110 call on XYZ stock; both legs are in-the-money.
• You receive an assignment notification on your short 100 call, meaning you sell 100 shares of XYZ stock at 100. Now, you have $10,000 in short stock proceeds, your account is short 100 shares of stock, and you still hold the long 110 call.
• Exercise your long 110 call, which would cover the short stock position in your account.
• Or, buy 100 shares of XYZ stock (to cover your short stock position) and sell to close the long 110 call.

Here's a put example:

• Let’s say that you’re short a 105 put and long a 95 put on XYZ stock; the short leg is in-the-money.
• You receive an assignment notification on your short 105 put, meaning you buy 100 shares of XYZ stock at 105. Now, your account has been debited $10,500 for the stock purchase, you hold 100 shares of stock, and you still hold the long 95 put.
• The debit in your account may be subject to margin charges or even a Fed call, but your risk profile has not changed.
• You can sell to close 100 shares of stock and sell to close the long 95 put.

Long call + short call

Debit spreads have the same early assignment risk as credit spreads only if the short leg is in-the-money.

An early assignment would leave your account short the shares you’ve been assigned, but the risk of the position would not change . The long call still functions to cover the short share position. Typically, you would buy shares to cover the short share position and simultaneously sell the remaining long leg of the spread.

Long put + short put

An early assignment would leave your account long the shares you’ve been assigned. If your account does not have enough buying power to purchase the shares when they are assigned, this may create a Fed call in your account.

All spreads that have a short leg

(when all legs are in-the-money or all are out-of-the-money)

Pay attention to short in-the-money call legs on the day prior to the stock’s ex-dividend date because an assignment that evening would put you in a short stock position where you are responsible for paying the dividend. If there’s a risk of early assignment, consider closing the spread.

However, the long put still functions to cover the long stock position because it gives you the right to sell shares at the long put strike price. Typically, you would sell the shares in the market and close out the long put simultaneously. 

What to read next...

How to buy call options, how to buy put options, potentially protect a stock position against a market drop, looking to expand your financial knowledge.

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All About Condo Assignments

— We take our content seriously. This article was written by a real person at BREL.

Some background on pre-construction condos…

To be able to really understand what an assignment is, you need to know a few things:

• When a Buyer agrees to buy a condo from a builder during the pre-construction phase, they sign a pre-construction purchase contract (with a price, terms and conditions, a deposit, etc.)
• When the new condo is built and ready to be moved into, there is a period of ‘interim occupancy’, where the Buyer can take possession (in other words, move into the unit). During the period of interim occupancy, the Buyer does not yet own the condo ; they simply pay the builder an amount roughly equal to what their mortgage payment + condo fees + taxes will equal. No transfer of land has yet occurred, and no mortgage has yet been given.
• Once a building has passed all the city inspections and gone through all the processes to become a legal entity, condominiums are officially registered . During this registration period, condo ownership is transferred to the Buyers, mortgages come into effect and Buyers officially become owners (a.k.a. the closing ). The period between occupancy and registration (i.e. the interim occupancy period) can be anywhere from 3 months to 2 years–though registration typically happens 4-8 months after people begin to move in for the interim occupancy period.
• Sometimes, Buyers of pre-construction condos change their minds and want to sell their condo either before the occupancy period or before the official close. Their life circumstances may have changed, or they may have been speculative investors who never intended on actually taking possession of the unit. Because they don’t yet own the condo, they can’t actually sell it. What they can do however, is sell their contract (their agreement with the builder to buy a unit) to another Buyer. This is what we call an assignment .

What is a condo assignment?

With an assignment, the Seller is actually selling their interest in a property (in other words, their contract with the builder). They aren’t selling the actual condo (as they don’t own it yet); they are selling their promise to purchase a property .

When you purchase an assignment, you are essentially stepping into the shoes of the original purchaser. You can’t renegotiate the price or terms of the contract, you are simply taking over the contract as it already exists.

It’s important to note that some builders won’t allow their original purchasers to assign contracts , or will only do so for a fee (we’ve seen assignment fees from $750 to $7,000). Builder approval to assign a contract is almost always necessary.

Advantages and Risks of Assignments for Buyers

• When you buy an assignment, you take on all the terms and conditions that the original purchaser agreed to – so if he or she didn’t get a lawyer to approve the agreement for example, those risks are passed onto you. While you can have your lawyer review the terms they agreed to, you can’t renegotiate them.
• You also take on the usual risks of buying a pre-construction condo: time delays, changes to the unit or building, extended interim occupancy periods, etc.
• Depending on what stage of construction the condo is in when the contract is assigned to you, you may or may not be able to be involved in selecting finishes and upgrades .
• Because it’s a new construction condo, HST may apply. If you don’t actually move into the unit, you’ll be responsible for paying tens of thousands of HST on closing.
• When a condo is assigned to you, you generally have to mirror the deposit that the original purchaser has paid to date . So rather than providing the usual 5% deposit for a resale condo, you may be required to provide 15% of even 20% as a deposit. If you are a first-time buyer with a lower down payment, you may not be able to afford the deposits required for an assignment.
• With an assignment, you will be eligible for the Tarion warranty program , which provides years of warranties against defects and problems with your condo, and because all the appliances will be new too, they’ll also be covered by warranties.
• When the unit is officially registered and you close on the purchase, you’ll be responsible for all sorts of closing costs that don’t apply to resale units. These ‘ builder adjustments’ apply to all new construction projects and include development and education costs, HST on appliances, utility connections fees and Tarion fees. These builder closing costs can easily amount to 1-3% of the original purchase price (and there’s talk of the development fees doubling in Toronto in the near future). If you’re looking at taking over someone else’s contract via an assignment, look to see if the original purchaser capped the amount of these costs when they originally negotiated the unit. Otherwise, make sure you have lots of money put aside for closing costs.
• Legal fees to purchase an assignment condo are generally higher than typical resale condo purchases. For a condo under $500K, plan on legal fees around $2,500 (vs $1,800 for a resale).
• When you close on the actual purchase with the builder, you’ll need to pay land transfer tax . Because no land ever exchanged hands, the original purchaser will get to avoid paying land transfer tax.
• Going through the assignment process can be a great way to purchase a condo in a building that has no remaining inventory , and often the actual purchase price (before closing costs) is lower than it will be once the building has registered and the condos are offered for sale in the resale market.

The assignment process is a tricky one, with risks, legal requirements and paperwork that doesn’t look anything like the usual agreement of purchase and sale for a condo.   If you’re considering an assignment, make sure you work with a REALTOR who understands the intricacies of assignments and can guide you through the process. As always, we’d be happy to help!

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Do you have 2 bedroom unit in 50 Wellesley?

Melanie Piche says:

No sorry, we don’t have anything at 50 Wellesley right now.

Clinton says:

Can you explain how the above might affect an “assigned sale” property being rented out?

In other words- if I purchased a unit – and it’s currently under assigned sale and I wish to rent it out in an unfinished building at the moment is there anything the prospective tenant should know ahead of time?

The original agreement of purchase and sale with the builder will define what’s allowed during the occupancy period – some builders restrict rentals completely, some want to approve them, some allow rentals if the buyer uses the builder’s agent and some let people do whatever they want.

Vanessa says:

Do you have any advice on selling a condo assignment? How successful are they?

Condo assignments aren’t easy or in huge demand, but if you bought in a sold-out building that people are still interested in, it’s totally possible. That assumes you have the right to assign the unit in your contract of course…

If the Agreement of purchase and sale stated that prior to closing, the purchaser covenants and agrees not to sell, lease, transfer or assign this Agreement or unit, could I still be able to assign the unit if I pay a fee with the vendor written consent?

It sounds like you’ve agreed not to do it in your contract…you’d have to talk to the builder to see if they are are open changing the terms of your contract.

Sha Song says:

If i am buying an Assignment with a tenant in the unit in May and i plan to use it as my primary residence after final closing in September 2016. Does the few months of rent I receive from the tenant affect my qualification for the HST rebate?

You’ll want to check that with your lawyer…HST rebate laws are complicated and beyond the scope of what we can give advice about. Good luck!

mohsen says:

if i buy an assignment condo with a purchase price higher that what original buyer paid, how is the land transfer tax calculated? Builder only charges tax based on original purchase price. How should I declare the purchase price, so when i sell the condo few years down the road and if I have to pay capital gain, I won’t have to pay capital gain based on the price I actually paid?

Excellent questions! You’ll want to talk to your lawyer/accountant about that…that’s outside of the scope of the advice we can give.

Brendan Powell says:

You might find this Ministry of Finance bulletin useful:

http://www.fin.gov.on.ca/en/guides/ltt/guidenote1.html

Generally though, when it comes to land transfer tax you are paying tax on the value of what you bought, i.e. What YOU paid. For capital gain, I expect you only pay tax on whatever gain YOU had. Gain that happened on someone else’s watch is their problem!

As Melanie says though, you need an accountant and lawyer to advise on your particular situation.

sorry in my last comment, I meant ” I won’t have to pay capital gain based on the price original buyer paid”

if I buy an assignment property, do I pay the despoits to original buyer right away or do I wait until closing also do I have to get mortage pre approval right away or can I wait until later.

Pooja says:

How likely is it that a seller is able to get a higher price on an assignment than they paid? If they do, then is the buyer required to pay the entire amount at once?

Many people successfully assign properties at a premium. On the closing of the assignment, the buyer pays you whatever deposit you paid the builder + any profit you’ve agreed on. They pay the rest of the money (usually via mortgage) to the builder when the building registers.

Sandra says:

Hello, I am looking to assign my newly-built three-bedroom townhouse in Mississauga (close to Erin Mills Town Centre mall) as I am moving out of the country. My agent said that we are not allowed to advertised on MLS so how are we supposed to find potential buyers then? Word-of-mouth really restricts the buyers pool. Well, if anyone is interested please let me know by responding to this comment. Thanks.

Where and how you are allowed to advertise an assignment is set by the builder and would have formed part of the Agreement of Purchase and Sale that you signed. While it’s sometimes possible to negotiate these things while you’re making the purchase, if you signed something that restricted marketing, unfortunately you’re options are few. Hopefully you’re working with an agent who does a lot of assignments and has a ready list of buyers!

Jamey says:

Actually, I am not sure if you would answer to my question but… I at least wanted to try as I am very desperate to hear 3rd expert’s invaluable opinion. I am in the process of buying an assignment and currently waiting for a builder to approve my contract with an original purchaser. My issue here is… this approval has been pending for about 6 months now and I was wondering if it is a common case. Regardless it’s common or not, what reason do you think there is, why the builder put a hold on to approve this agreement this long? The original written contract between the original seller and the builder clearly indicates that their contract can be assigned one time before the condo registration so this whole thing was totally allowed.

It would be deeply appreciated if you could provide some thoughts on this. Thank you very much.

I’m not able to answer your question because it’s a current transaction, and of course, I don’t know the whole story. I would suggest you talk to the agent who is representing you – they should be able to shed some light on what’s going on!

Dawn Renwick says:

Hi, I am an international investor who recently purchased a condo which will complete in 2020. I am instructed that if I want to sell once we approach completion this is called an assignment. In my contract there are no restrictions as long as 90% of the units have been sold. My question is as an international investor is there any other tax implications that I should be aware of??

You should talk to your realtor and an accountant to understand the current tax situation (which of course may very well change by 2020).

Could assignement fees be negotiated with the builder?

Yes, during the initial negotiation of the purchase contract.

yusuf matadar says:

MLS allow to advertise underconstruction condo for sale if builder gives consent to do so ?

Could you “sell” your assignment to your kids? Of course without a profit on my end, at the price of the purchase I have made years ago when it was still cheap? What costs other than the legal and developer fees do I need to consider?

You can sell your assignment to your kids at whatever price you want..though check with an accountant to see if there are any tax implications for either of you. Legal fees are usually the only thing you’ll need to account for, other than builder assignment fees. Developer fees and land transfer taxes would be paid by your kids..

What percentage would you typically purchase an assignment compared to an actual closed unit?

The price totally depends on what’s happening with demand/supply in the building…closed units usually come at a premium (given additional costs incurred by the buyer) but it is building-dependent.

Thanks for the helpful article (and comments!). I bought a unit off-plan in Feb 2015 and the property has definitely increased in value since that time. The latest interim occupancy date is for June 2018 but I’m considering selling my unit on assignment – do you have any guidelines for setting the price?

I’d suggest you work with an agent who is experienced with assignments! They’ll be able to help you set the price and find a buyer. Happy to connect you with our assignment specialist – just email [email protected]

Hi When I buy an assignment, wondering if I can get a mortgage on an assignment price? Or the original price will be the price that I can get mortgage on

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Meaning of assignment in English

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• It was a jammy assignment - more of a holiday really.
• He took this award-winning photograph while on assignment in the Middle East .
• His two-year assignment to the Mexico office starts in September .
• She first visited Norway on assignment for the winter Olympics ten years ago.
• He fell in love with the area after being there on assignment for National Geographic in the 1950s.
• act as something
• all work and no play (makes Jack a dull boy) idiom
• be at work idiom
• be in work idiom
• housekeeping
• in the line of duty idiom
• join duty idiom

You can also find related words, phrases, and synonyms in the topics:

assignment | American Dictionary

Assignment | business english, examples of assignment, collocations with assignment.

These are words often used in combination with assignment .

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Assignment is a legal term whereby an individual, the “assignor,” transfers rights, property, or other benefits to another known as the “ assignee .”   This concept is used in both contract and property law.  The term can refer to either the act of transfer or the rights /property/benefits being transferred.

Contract Law   

Under contract law, assignment of a contract is both: (1) an assignment of rights; and (2) a delegation of duties , in the absence of evidence otherwise.  For example, if A contracts with B to teach B guitar for $50, A can assign this contract to C.  That is, this assignment is both: (1) an assignment of A’s rights under the contract to the $50; and (2) a delegation of A’s duty to teach guitar to C.  In this example, A is both the “assignor” and the “delegee” who d elegates the duties to another (C), C is known as the “ obligor ” who must perform the obligations to the assignee , and B is the “ assignee ” who is owed duties and is liable to the “ obligor ”.

(1) Assignment of Rights/Duties Under Contract Law

There are a few notable rules regarding assignments under contract law.  First, if an individual has not yet secured the contract to perform duties to another, he/she cannot assign his/her future right to an assignee .  That is, if A has not yet contracted with B to teach B guitar, A cannot assign his/her rights to C.  Second, rights cannot be assigned when they materially change the obligor ’s duty and rights.  Third, the obligor can sue the assignee directly if the assignee does not pay him/her.  Following the previous example, this means that C ( obligor ) can sue B ( assignee ) if C teaches guitar to B, but B does not pay C $50 in return.

            (2) Delegation of Duties

If the promised performance requires a rare genius or skill, then the delegee cannot delegate it to the obligor.  It can only be delegated if the promised performance is more commonplace.  Further, an obligee can sue if the assignee does not perform.  However, the delegee is secondarily liable unless there has been an express release of the delegee.  That is, if B does want C to teach guitar but C refuses to, then B can sue C.  If C still refuses to perform, then B can compel A to fulfill the duties under secondary liability.

Lastly, a related concept is novation , which is when a new obligor substitutes and releases an old obligor.  If novation occurs, then the original obligor’s duties are wiped out. However, novation requires an original obligee’s consent .  

Property Law

Under property law, assignment typically arises in landlord-tenant situations.  For example, A might be renting from landlord B but wants to another party (C) to take over the property.   In this scenario, A might be able to choose between assigning and subleasing the property to C.  If assigning , A would be giving C the entire balance of the term, with no reversion to anyone whereas if subleasing , A would be giving C for a limited period of the remaining term.  Significantly, under assignment C would have privity of estate with the landlord while under a sublease, C would not. 

[Last updated in May of 2020 by the Wex Definitions Team ]

• business law
• landlord & tenant
• property & real estate law
• trusts, inheritances & estates
• wex definitions

Understanding Assignments

What this handout is about.

The first step in any successful college writing venture is reading the assignment. While this sounds like a simple task, it can be a tough one. This handout will help you unravel your assignment and begin to craft an effective response. Much of the following advice will involve translating typical assignment terms and practices into meaningful clues to the type of writing your instructor expects. See our short video for more tips.

Basic beginnings

Regardless of the assignment, department, or instructor, adopting these two habits will serve you well :

• Read the assignment carefully as soon as you receive it. Do not put this task off—reading the assignment at the beginning will save you time, stress, and problems later. An assignment can look pretty straightforward at first, particularly if the instructor has provided lots of information. That does not mean it will not take time and effort to complete; you may even have to learn a new skill to complete the assignment.
• Ask the instructor about anything you do not understand. Do not hesitate to approach your instructor. Instructors would prefer to set you straight before you hand the paper in. That’s also when you will find their feedback most useful.

Assignment formats

Many assignments follow a basic format. Assignments often begin with an overview of the topic, include a central verb or verbs that describe the task, and offer some additional suggestions, questions, or prompts to get you started.

An Overview of Some Kind

The instructor might set the stage with some general discussion of the subject of the assignment, introduce the topic, or remind you of something pertinent that you have discussed in class. For example:

“Throughout history, gerbils have played a key role in politics,” or “In the last few weeks of class, we have focused on the evening wear of the housefly …”

The Task of the Assignment

Pay attention; this part tells you what to do when you write the paper. Look for the key verb or verbs in the sentence. Words like analyze, summarize, or compare direct you to think about your topic in a certain way. Also pay attention to words such as how, what, when, where, and why; these words guide your attention toward specific information. (See the section in this handout titled “Key Terms” for more information.)

“Analyze the effect that gerbils had on the Russian Revolution”, or “Suggest an interpretation of housefly undergarments that differs from Darwin’s.”

Additional Material to Think about

Here you will find some questions to use as springboards as you begin to think about the topic. Instructors usually include these questions as suggestions rather than requirements. Do not feel compelled to answer every question unless the instructor asks you to do so. Pay attention to the order of the questions. Sometimes they suggest the thinking process your instructor imagines you will need to follow to begin thinking about the topic.

“You may wish to consider the differing views held by Communist gerbils vs. Monarchist gerbils, or Can there be such a thing as ‘the housefly garment industry’ or is it just a home-based craft?”

These are the instructor’s comments about writing expectations:

“Be concise”, “Write effectively”, or “Argue furiously.”

Technical Details

These instructions usually indicate format rules or guidelines.

“Your paper must be typed in Palatino font on gray paper and must not exceed 600 pages. It is due on the anniversary of Mao Tse-tung’s death.”

The assignment’s parts may not appear in exactly this order, and each part may be very long or really short. Nonetheless, being aware of this standard pattern can help you understand what your instructor wants you to do.

Interpreting the assignment

Ask yourself a few basic questions as you read and jot down the answers on the assignment sheet:

Why did your instructor ask you to do this particular task?

Who is your audience.

• What kind of evidence do you need to support your ideas?

What kind of writing style is acceptable?

• What are the absolute rules of the paper?

Try to look at the question from the point of view of the instructor. Recognize that your instructor has a reason for giving you this assignment and for giving it to you at a particular point in the semester. In every assignment, the instructor has a challenge for you. This challenge could be anything from demonstrating an ability to think clearly to demonstrating an ability to use the library. See the assignment not as a vague suggestion of what to do but as an opportunity to show that you can handle the course material as directed. Paper assignments give you more than a topic to discuss—they ask you to do something with the topic. Keep reminding yourself of that. Be careful to avoid the other extreme as well: do not read more into the assignment than what is there.

Of course, your instructor has given you an assignment so that they will be able to assess your understanding of the course material and give you an appropriate grade. But there is more to it than that. Your instructor has tried to design a learning experience of some kind. Your instructor wants you to think about something in a particular way for a particular reason. If you read the course description at the beginning of your syllabus, review the assigned readings, and consider the assignment itself, you may begin to see the plan, purpose, or approach to the subject matter that your instructor has created for you. If you still aren’t sure of the assignment’s goals, try asking the instructor. For help with this, see our handout on getting feedback .

Given your instructor’s efforts, it helps to answer the question: What is my purpose in completing this assignment? Is it to gather research from a variety of outside sources and present a coherent picture? Is it to take material I have been learning in class and apply it to a new situation? Is it to prove a point one way or another? Key words from the assignment can help you figure this out. Look for key terms in the form of active verbs that tell you what to do.

Key Terms: Finding Those Active Verbs

Here are some common key words and definitions to help you think about assignment terms:

Information words Ask you to demonstrate what you know about the subject, such as who, what, when, where, how, and why.

• define —give the subject’s meaning (according to someone or something). Sometimes you have to give more than one view on the subject’s meaning
• describe —provide details about the subject by answering question words (such as who, what, when, where, how, and why); you might also give details related to the five senses (what you see, hear, feel, taste, and smell)
• explain —give reasons why or examples of how something happened
• illustrate —give descriptive examples of the subject and show how each is connected with the subject
• summarize —briefly list the important ideas you learned about the subject
• trace —outline how something has changed or developed from an earlier time to its current form
• research —gather material from outside sources about the subject, often with the implication or requirement that you will analyze what you have found

Relation words Ask you to demonstrate how things are connected.

• compare —show how two or more things are similar (and, sometimes, different)
• contrast —show how two or more things are dissimilar
• apply —use details that you’ve been given to demonstrate how an idea, theory, or concept works in a particular situation
• cause —show how one event or series of events made something else happen
• relate —show or describe the connections between things

Interpretation words Ask you to defend ideas of your own about the subject. Do not see these words as requesting opinion alone (unless the assignment specifically says so), but as requiring opinion that is supported by concrete evidence. Remember examples, principles, definitions, or concepts from class or research and use them in your interpretation.

• assess —summarize your opinion of the subject and measure it against something
• prove, justify —give reasons or examples to demonstrate how or why something is the truth
• evaluate, respond —state your opinion of the subject as good, bad, or some combination of the two, with examples and reasons
• support —give reasons or evidence for something you believe (be sure to state clearly what it is that you believe)
• synthesize —put two or more things together that have not been put together in class or in your readings before; do not just summarize one and then the other and say that they are similar or different—you must provide a reason for putting them together that runs all the way through the paper
• analyze —determine how individual parts create or relate to the whole, figure out how something works, what it might mean, or why it is important
• argue —take a side and defend it with evidence against the other side

More Clues to Your Purpose As you read the assignment, think about what the teacher does in class:

• What kinds of textbooks or coursepack did your instructor choose for the course—ones that provide background information, explain theories or perspectives, or argue a point of view?
• In lecture, does your instructor ask your opinion, try to prove their point of view, or use keywords that show up again in the assignment?
• What kinds of assignments are typical in this discipline? Social science classes often expect more research. Humanities classes thrive on interpretation and analysis.
• How do the assignments, readings, and lectures work together in the course? Instructors spend time designing courses, sometimes even arguing with their peers about the most effective course materials. Figuring out the overall design to the course will help you understand what each assignment is meant to achieve.

Now, what about your reader? Most undergraduates think of their audience as the instructor. True, your instructor is a good person to keep in mind as you write. But for the purposes of a good paper, think of your audience as someone like your roommate: smart enough to understand a clear, logical argument, but not someone who already knows exactly what is going on in your particular paper. Remember, even if the instructor knows everything there is to know about your paper topic, they still have to read your paper and assess your understanding. In other words, teach the material to your reader.

Aiming a paper at your audience happens in two ways: you make decisions about the tone and the level of information you want to convey.

• Tone means the “voice” of your paper. Should you be chatty, formal, or objective? Usually you will find some happy medium—you do not want to alienate your reader by sounding condescending or superior, but you do not want to, um, like, totally wig on the man, you know? Eschew ostentatious erudition: some students think the way to sound academic is to use big words. Be careful—you can sound ridiculous, especially if you use the wrong big words.
• The level of information you use depends on who you think your audience is. If you imagine your audience as your instructor and they already know everything you have to say, you may find yourself leaving out key information that can cause your argument to be unconvincing and illogical. But you do not have to explain every single word or issue. If you are telling your roommate what happened on your favorite science fiction TV show last night, you do not say, “First a dark-haired white man of average height, wearing a suit and carrying a flashlight, walked into the room. Then a purple alien with fifteen arms and at least three eyes turned around. Then the man smiled slightly. In the background, you could hear a clock ticking. The room was fairly dark and had at least two windows that I saw.” You also do not say, “This guy found some aliens. The end.” Find some balance of useful details that support your main point.

You’ll find a much more detailed discussion of these concepts in our handout on audience .

The Grim Truth

With a few exceptions (including some lab and ethnography reports), you are probably being asked to make an argument. You must convince your audience. It is easy to forget this aim when you are researching and writing; as you become involved in your subject matter, you may become enmeshed in the details and focus on learning or simply telling the information you have found. You need to do more than just repeat what you have read. Your writing should have a point, and you should be able to say it in a sentence. Sometimes instructors call this sentence a “thesis” or a “claim.”

So, if your instructor tells you to write about some aspect of oral hygiene, you do not want to just list: “First, you brush your teeth with a soft brush and some peanut butter. Then, you floss with unwaxed, bologna-flavored string. Finally, gargle with bourbon.” Instead, you could say, “Of all the oral cleaning methods, sandblasting removes the most plaque. Therefore it should be recommended by the American Dental Association.” Or, “From an aesthetic perspective, moldy teeth can be quite charming. However, their joys are short-lived.”

Convincing the reader of your argument is the goal of academic writing. It doesn’t have to say “argument” anywhere in the assignment for you to need one. Look at the assignment and think about what kind of argument you could make about it instead of just seeing it as a checklist of information you have to present. For help with understanding the role of argument in academic writing, see our handout on argument .

What kind of evidence do you need?

There are many kinds of evidence, and what type of evidence will work for your assignment can depend on several factors–the discipline, the parameters of the assignment, and your instructor’s preference. Should you use statistics? Historical examples? Do you need to conduct your own experiment? Can you rely on personal experience? See our handout on evidence for suggestions on how to use evidence appropriately.

Make sure you are clear about this part of the assignment, because your use of evidence will be crucial in writing a successful paper. You are not just learning how to argue; you are learning how to argue with specific types of materials and ideas. Ask your instructor what counts as acceptable evidence. You can also ask a librarian for help. No matter what kind of evidence you use, be sure to cite it correctly—see the UNC Libraries citation tutorial .

You cannot always tell from the assignment just what sort of writing style your instructor expects. The instructor may be really laid back in class but still expect you to sound formal in writing. Or the instructor may be fairly formal in class and ask you to write a reflection paper where you need to use “I” and speak from your own experience.

Try to avoid false associations of a particular field with a style (“art historians like wacky creativity,” or “political scientists are boring and just give facts”) and look instead to the types of readings you have been given in class. No one expects you to write like Plato—just use the readings as a guide for what is standard or preferable to your instructor. When in doubt, ask your instructor about the level of formality they expect.

No matter what field you are writing for or what facts you are including, if you do not write so that your reader can understand your main idea, you have wasted your time. So make clarity your main goal. For specific help with style, see our handout on style .

Technical details about the assignment

The technical information you are given in an assignment always seems like the easy part. This section can actually give you lots of little hints about approaching the task. Find out if elements such as page length and citation format (see the UNC Libraries citation tutorial ) are negotiable. Some professors do not have strong preferences as long as you are consistent and fully answer the assignment. Some professors are very specific and will deduct big points for deviations.

Usually, the page length tells you something important: The instructor thinks the size of the paper is appropriate to the assignment’s parameters. In plain English, your instructor is telling you how many pages it should take for you to answer the question as fully as you are expected to. So if an assignment is two pages long, you cannot pad your paper with examples or reword your main idea several times. Hit your one point early, defend it with the clearest example, and finish quickly. If an assignment is ten pages long, you can be more complex in your main points and examples—and if you can only produce five pages for that assignment, you need to see someone for help—as soon as possible.

Tricks that don’t work

Your instructors are not fooled when you:

• spend more time on the cover page than the essay —graphics, cool binders, and cute titles are no replacement for a well-written paper.
• use huge fonts, wide margins, or extra spacing to pad the page length —these tricks are immediately obvious to the eye. Most instructors use the same word processor you do. They know what’s possible. Such tactics are especially damning when the instructor has a stack of 60 papers to grade and yours is the only one that low-flying airplane pilots could read.
• use a paper from another class that covered “sort of similar” material . Again, the instructor has a particular task for you to fulfill in the assignment that usually relates to course material and lectures. Your other paper may not cover this material, and turning in the same paper for more than one course may constitute an Honor Code violation . Ask the instructor—it can’t hurt.
• get all wacky and “creative” before you answer the question . Showing that you are able to think beyond the boundaries of a simple assignment can be good, but you must do what the assignment calls for first. Again, check with your instructor. A humorous tone can be refreshing for someone grading a stack of papers, but it will not get you a good grade if you have not fulfilled the task.

Critical reading of assignments leads to skills in other types of reading and writing. If you get good at figuring out what the real goals of assignments are, you are going to be better at understanding the goals of all of your classes and fields of study.

You may reproduce it for non-commercial use if you use the entire handout and attribute the source: The Writing Center, University of North Carolina at Chapel Hill

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Pink discharge: What does it mean, causes, and is it normal?

Written by Lauren McKay

Lauren McKay

Fact checked by Maja Garbulinska , Scientist at Natural Cycles

Maja Garbulinska

Follows NC° Editorial Policy

 At Natural Cycles, our mission is to empower you with the knowledge you need to take charge of your health. At Cycle Matters, we create fact-checked, expert-written content that tackles these topics in a compassionate and accessible way. Read more ...

Last updated:

Key Takeaways:

• Pink discharge usually occurs when a small amount of blood mixes with vaginal mucus
• It can be a normal part of your menstrual cycle, but it can also be a sign of a more serious issue like an infection or pelvic inflammatory disease, as well as an early pregnancy symptom
• Treatment for pink discharge depends on the underlying cause — it's important to consult a doctor if pink discharge is unusual for you or comes with concerning symptoms

Pink discharge is vaginal discharge that has a pinkish tint. If your discharge is pink, it usually means it contains blood. This can be completely normal, and often happens before, during or after a period when fresh blood mixes with your vaginal mucus. However, sometimes pink discharge with no period can be a sign of something more serious. Understanding what normal discharge is for you is the key to understanding whether any discharge — whether it’s pink or another color — is cause for concern.

What causes pink discharge?

Pink vaginal discharge is typically caused by a small amount of blood mixing with normal vaginal secretions, often due to factors like hormonal changes, ovulation, implantation bleeding, infections, or cervical irritation. Some of the most common causes include:

• Your period: It’s common to have light pink discharge just before your period starts, as your body transitions to a different hormonal state (as a new cycle begins) or at the very end of your period [1]. That’s because the menstrual blood is either just starting to flow, or the flow is starting to slow down at the end of your period. The blood may mix with your cervical mucus , turning the discharge pink.
• Ovulation spotting: This is a type of light bleeding around the time you ovulate . Only around 5% of women experience mid-cycle spotting that could be linked to ovulation, but if you’re one of them, you may find that the blood is pink — a sign that the blood is mixed with cervical fluid [2].
• Hormonal birth control: If you’ve recently switched to a new method of hormonal birth control , you may have some bleeding. This can look like pink discharge, or like a light period. It’s most common with the hormonal IUD , implant , and low-dose birth control pills [3] and usually settles down within a few weeks or months.
• Sex: If you have pink discharge after sex, it’s usually a sign that you’ve been bleeding. This could be caused by friction (if you’re experiencing vaginal dryness , for example), a yeast infection, cervical polyps, infection of the cervix, or a sexually transmitted infection like chlamydia or gonorrhea [4,5]. If you’re concerned about pink discharge or bleeding after sex, it’s a good idea to speak to your doctor or local sexual health clinic.
• Sexually transmitted infections: If you have an STI like chlamydia, gonorrhea, or trichomoniasis, it may cause pink discharge. While the discharge normally associated with these STIs is yellow or green, it can also appear pinkish. This is usually if your vagina is irritated, which sometimes happens during sex.
• Pelvic inflammatory disease: Pelvic inflammatory disease, or PID, is an infection that can affect your uterus, ovaries, and fallopian tubes. It often does not cause any symptoms, but when it does, they can include pelvic pain, pain during sex, bleeding between periods and unusual discharge [6]. Although this discharge is typically yellow or green, it may also appear pink if it’s mixed with blood.
• Uterine fibroids: These are non-cancerous growths in the uterus which can cause various types of abnormal bleeding, including spotting between periods [7]. Again, this may appear like pink discharge, especially when mixed with cervical mucus.
• Endometriosis: Endometriosis can cause a range of symptoms, including abnormal vaginal bleeding, which might sometimes appear as pink discharge [8].
• Implantation bleeding: Implantation bleeding is a type of light bleeding or spotting that happens very early in a pregnancy, usually a few days before your expected menstruation. It’s usually pink or brown, and can be very light — more like discharge than a period [9].
• Ectopic pregnancy: Ectopic pregnancy happens when a fertilized egg cell implants outside of the uterus, usually in the fallopian tube. These types of pregnancies aren’t viable, and can potentially be very serious, especially if there’s a fallopian tube rupture. One of the symptoms of an ectopic pregnancy is spotting, which can look like pink charge especially if it’s mixed with regular discharge. Other symptoms can include lower back pain, abdominal pain, and pelvic pain, while symptoms of a rupture include sudden severe abdominal or pelvic pain, shoulder pain, and dizziness [10].
• You’ve just given birth: If you’ve recently given birth, you’ll have some bleeding known as lochia. This usually lasts four to six weeks, but can last for up to twelve. On the first day after delivery, the lochia is bright red, before it becomes dark brown or pinkish and gradually becomes lighter [11].
• Cancer: Rarely, pink discharge can sometimes be a sign of cervical [12] or uterus [13] cancer. If you’re concerned about your discharge or any other symptoms of these cancers, you should see your doctor.

Why do I have pink discharge but no period?

The most common cause of pink discharge is your period. But sometimes, you may have pink discharge during another part of your menstrual cycle. This could be down to a number of different things as highlighted above, from an infection to pregnancy.

How long does pink discharge last?

The duration of pink discharge can vary depending on the cause, but it typically lasts a few days. Hormonal changes, such as those from birth control, may cause pink discharge for a few days or weeks. Implantation bleeding might last one to two days, and if the discharge is caused by an infection or medical condition like uterine fibroids or endometriosis, it may persist or keep recurring until the underlying issue is addressed.

If you have pink discharge for more than a few days, it reappears in more than one cycle, or it’s accompanied by any other symptoms, you should consult your healthcare provider for advice. 

What other symptoms accompany pink discharge?

Whether you have any other symptoms — and what those symptoms are — depends on the cause of the pink discharge. Here are some common ones:

• Implantation bleeding: You may experience other symptoms like light cramping, headaches, mood swings, and nausea [14].
• STIs: Chlamydia, gonorrhea, and other STIs may have other symptoms like pain during sex, bleeding between periods, pain when peeing, strong-smelling discharge or yellow discharge and pelvic pain — or they may have no symptoms at all [15,16].
• Endometriosis: Symptoms can include heavy periods, very painful periods, pelvic pain, fatigue, and pain during sex [17].
• PID: Symptoms often include pelvic pain, abnormal discharge, and pain during intercourse or urination. Serious cases can cause a high fever, extreme abdominal pain, and sickness [18].
• Cancer: Cervical and uterine cancer symptoms include bleeding after sex, post-menopausal bleeding, pelvic pain, and heavy periods [19,20]

If you’re worried about any symptoms, it’s important to consult a healthcare provider for proper diagnosis and treatment. 

How is pink discharge treated?

The treatment for pink discharge is dependent on the cause. If it’s just a normal part of your menstrual cycle, then no treatment is needed. However, if it’s caused by something else, you may need to address the root cause. Examples may include:

• STIs: If the pink discharge is a symptom of an STI like gonorrhea or chlamydia, then you’ll be prescribed a course of antibiotics by your healthcare provider. You should also avoid sex until after you’ve completed the course — and always make sure to take the full course, even if your symptoms start to clear up before it’s finished [21].
• Hormonal birth control: Spotting due to hormonal birth control pills should usually only last a few months, so no treatment is needed [22]. For other types of hormonal birth control, spotting may last longer — on the implant, for example, you may experience spotting for up to twelve months [23]. If it lasts longer than this, speak to your healthcare provider for advice.
• Ectopic pregnancy: You must see your healthcare provider if you suspect you have an ectopic pregnancy. Treatment options depend on your symptoms, but you may need to take medicine or have surgery [24].
• PID: Pelvic inflammatory disease is usually managed with antibiotics, but in particularly severe cases, you may need surgery [25].
• Endometriosis: There is currently no cure for endometriosis, but there are various options for managing your symptoms, including the combined contraceptive pill and surgery [17].
• Uterine fibroids: Depending on your symptoms and their severity, your doctor may prescribe the contraceptive pill or medicines like levonorgestrel intrauterine system (LNG-IUS), tranexamic acid, or gonadotropin-releasing hormone analogues (GnRHas) to shrink the fibroids and reduce any pain. If symptoms are particularly severe, you might need surgery [26].

When to see a doctor

You should see a doctor if pink discharge is persistent, occurs frequently, or is accompanied by other concerning symptoms such as pelvic pain, cramping, a foul odor, itching, or heavy bleeding. 

You should also consult your healthcare provider if you experience pink discharge during pregnancy to rule out any potential complications, especially if it’s accompanied by pain.

Most normal discharge is white, but for some people, it may appear slightly yellowish. Additionally, pre-period spotting can appear like pink discharge, and that's usually totally normal too. Knowing what's normal for you is key — so if you ever have any discharge, of any color, that isn't normal for you, or you're worried about, then you should see a doctor for further evaluation, advice, and treatment.

Get to know your body better

Every menstrual cycle is different — that’s why it’s so powerful to learn about what normal looks like for you. Natural Cycles allows you to track changes throughout your cycle, including spotting. That means you can learn all about your own unique cycle, helping you to better understand your own body and more quickly spot any unusual signs or symptoms.

• Jacobson, M. H., Howards, P. P., Kesner, J. S., Meadows, J. W., Dominguez, C. E., Spencer, J. B., Darrow, L. A., Terrell, M. L., & Marcus, M. (2020). Hormonal profiles of menstrual bleeding patterns during the Luteal-Follicular transition. The Journal of Clinical Endocrinology & Metabolism , 105 (5), e2024–e2031. https://doi.org/10.1210/clinem/dgaa099
• Dasharathy, S.S., Mumford, S.L., Pollack, A.Z., Perkins, N.J., Mattison, D.R., Wactawski-Wende, J. and Schisterman, E.F. (2012). Menstrual Bleeding Patterns Among Regularly Menstruating Women. American Journal of Epidemiology, [online] 175(6), pp.536–545. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3299419/
•   What you should know about breakthrough bleeding with birth control . (n.d.). ACOG. https://www.acog.org/womens-health/experts-and-stories/the-latest/what-you-should-know-about-breakthrough-bleeding-with-birth-control
• Is it normal to have a little spotting after sex? (2023, August 10). Planned Parenthood. https://www.plannedparenthood.org/blog/is-it-normal-to-have-a-little-spotting-after-sex
•  Tarney, C. M., & Han, J. (2014). Postcoital Bleeding: A Review on Etiology, diagnosis, and management. Obstetrics and Gynecology International , 2014 , 1–8. https://doi.org/10.1155/2014/192087
• Pelvic inflammatory disease .  (2024h, March 11). nhs.uk. https://www.nhs.uk/conditions/pelvic-inflammatory-disease-pid/
• Uterine fibroids . (n.d.). ACOG. https://www.acog.org/womens-health/faqs/uterine-fibroids
•   Symptoms | Endometriosis UK . (n.d.). https://www.endometriosis-uk.org/symptoms
• American Pregnancy Association. (2023, September 20). What is Implantation Bleeding? https://americanpregnancy.org/pregnancy-symptoms/what-is-implantation-bleeding/
• Ectopic pregnancy . (n.d.). ACOG. https://www.acog.org/womens-health/faqs/ectopic-pregnancy
• Nct. (2024, April 4). Bleeding after birth: 10 things you need to know | Life as a parent articles & support | NCT . NCT (National Childbirth Trust). https://www.nct.org.uk/life-parent/your-body-after-birth/bleeding-after-birth-10-things-you-need-know
• Symptoms (2024a, January 17). nhs.uk. https://www.nhs.uk/conditions/cervical-cancer/symptoms/
• Symptoms of womb cancer . (n.d.). https://www.cancerresearchuk.org/about-cancer/womb-cancer/symptoms
• American Pregnancy Association. (2023b, September 20). What is Implantation Bleeding? https://americanpregnancy.org/pregnancy-symptoms/what-is-implantation-bleeding/
• Symptoms . (2024s, June 6). nhs.uk. https://www.nhs.uk/conditions/chlamydia/symptoms/
• About gonorrhea . (2024, February 15). Gonorrhea. https://www.cdc.gov/gonorrhea/about/index.html
•   Endometriosis . (2024z, August 30). nhs.uk. https://www.nhs.uk/conditions/endometriosis/
• Pelvic inflammatory disease (2024j, March 11). nhs.uk. https://www.nhs.uk/conditions/pelvic-inflammatory-disease-pid/
• Cervical cancer symptoms . (2022, October 13). Cancer.gov. https://www.cancer.gov/types/cervical/symptoms
• Symptoms (2023b, July 14) nhs.uk. https://www.nhs.uk/conditions/womb-cancer/symptoms/
• Chlamydia, gonorrhea, and syphilis . (n.d.). ACOG. https://www.acog.org/womens-health/faqs/chlamydia-gonorrhea-and-syphilis
•   What are the side effects of the birth control pill? (n.d.-b). Planned Parenthood. https://www.plannedparenthood.org/learn/birth-control/birth-control-pill/birth-control-pill-side-effects
• What are the side effects of the birth control implant? (n.d.-b). Planned Parenthood. https://www.plannedparenthood.org/learn/birth-control/birth-control-implant-nexplanon/nexplanon-side-effects
• Treatment . (2024aa, July 23) nhs.uk. https://www.nhs.uk/conditions/ectopic-pregnancy/treatment/
•   Pelvic Inflammatory Disease (PID) - STI treatment guidelines . (n.d.). https://www.cdc.gov/std/treatment-guidelines/pid.htm
•   Treatment . (2024o, March 11) nhs.uk. https://www.nhs.uk/conditions/fibroids/treatment/

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