Assignment

Assignment — the moment an option buyer exercises their right and the covered-call writer’s shares are called away at the strike price. The writer keeps the premium and all gains up to the strike; everything above it belongs to the buyer — that was the product sold. Inside covered-call ETFs, assignment (or cash-settling to avoid it) is the mechanism by which the fund surrenders bull-market upside, which is why such funds lag badly in strong markets.

First used in: 2.4 · Yield is not free money