Most traders freak out when they hear the word “assignment” — especially if it happens before expiration. But when you’re trading a debit spread, getting assigned is actually the best thing that can happen.
If you get assigned on a debit spread, that means you’ve hit your max profit. You don’t have to wait until expiration. You don’t have to sit through three more days of volatility, price swings or market noise.
The moment you get assigned, you can exercise your long leg and lock in the full gain — immediately.
Why Assignment Is in Your Favor
Let’s say you’re in a call debit spread. You bought the $92 strike call and sold the 93 call. If the stock rips higher and someone exercises the 93 call early, you now have a short stock position.
But you also own the 92 call. So you just exercise that one, and boom — you’ve locked in the $1 spread.
That’s max profit. You don’t need to wait until Friday to get paid. You’ve already won.
So if that happens, it’s not a risk — it’s a gift. The only time you have to be cautious is if the stock closes between your two strikes at expiration. Then, yes, you could get stuck with an unintended position.
But if you’re trading responsibly and managing things properly, that’s easy to avoid.
Stop Worrying About the Wrong Thing
Retail traders waste way too much energy trying to avoid assignment. But if you’re trading debit spreads, you should be hoping for it. It means you were dead right on direction, and the market rewarded you.
So don’t get spooked when it happens. Assignment is not the enemy — not when you’ve got protection in place with your long leg. You’re not exposed, you’re not stuck, and you’re not at risk.
You’re just done. You got the win early.
And in this market, that’s the kind of outcome you should want every time.
Kane Shieh
Kane Shieh Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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