How are option exercise assignments allocated?

When an option is exercised, assignment is allocated by the Options Clearing Corporation (OCC).

How it works:

• The OCC assigns exercise notices to clearing firms holding short positions in the same option
• The clearing firm then allocates assignments to customer accounts holding short positions
• Allocation is typically done using a random selection process across eligible positions

Important:

• Short option positions may be assigned at any time prior to expiration (American-style options)

If assigned:

• Short calls: you must deliver the underlying shares
• Short puts: you must have sufficient cash to purchase the shares
• You must maintain sufficient equity to support potential assignment"