Anytime you hold a short call position, either as a part of a covered call or a spread you could potentially be assigned. The holder of the long call options may exercise in order to collect the dividend. If the assignment occurs before or on the trading day prior to the underlying security’s ex-dividend date, the resulting position may cause you to forfeit the dividend (in the case that you were assigned on short calls as a part of a covered call) or even owe the dividend (if you were assigned on short calls as a part of a spread resulting in a short stock position).  

Alpaca may take action in your account to close positions that may have large dividend risk exposure on the trading day before the ex-dividend date.

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

For further educational information on Options trading, please refer to:

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.