An options exercise or assignment happens when the holder of an option contract elects to exercise its right to purchase/sell the underlying shares at the strike price. This can happen automatically on option expiration if it's in-the-money. Prior to expiration, the owner of a long option, call or put, has the right and can request to exercise the option. If you are short options, there is a chance that you may be assigned prior to expiration. This is called early assignment.

For Call options, the option holder purchases the underlying shares at the strike price, and the owner of the short position sells the underlying shares at the strike price. For Put options, the option holder sells the underlying shares at the strike price, and the owner of the short position purchases the underlying shares at the strike price.

For further details on option trading at Alpaca, please navigate to our documentation.

For further educational information on Options trading, please refer to: https://www.optionseducation.org/

Options trading is not suitable for all investors due to its inherent high risk, which can potentially result in significant losses. Please read Characteristics and Risks of Standardized Options before investing in options.

All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. There is no guarantee that any investment strategy will achieve its objectives. Please note that diversification does not assure a profit, or protect against loss. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing.