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When the clearing house receives an exercise notice from the Options Clearing Corporation, they assign the notice to a customer who is a writer of an identical option contract.
Exercise assignment notices for option contracts are allocated among customer short positions pursuant to a manual procedure, which randomly selects from among all customer short option positions, including positions established on the day of assignment, those contracts which are subject to exercise.
All short American option positions are liable for assignment at any time. If, for example, an exercise notice is assigned to your account, you must deliver the underlying security to us in the case of a call, and you must deposit cash with us in the case of a put sufficient to properly margin the security within a stated period of time.
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