Options Trading
Trading stocks carries various considerations, such as understanding the rules governing option assignment after-hours. After-hours trading not necessarily taken place on exchanges, though it could still have an effect on a trader's position. Option assignment has potential to occur in many cases, including any time buyers initiate an option contract prior to the close of the listed exchange.
The exact definition of after-hours trading will vary depending on the exchange, settlement guidelines, and other factors. Generally, these trades may take place soon before an exchange opens or close. Assignment could also occur later than the exchange close, as long as it meets the settlement rules of the exchange.
Generally speaking, assignment occurs in exchange for an exercise of an option contract. After-hours trading in the latter scenario may place a buyer at a greater risk of assignment, as it may take place outside the parameters of the exchange rules. This could make it more difficult to assess value and the current risk of assignment.
When a trader's position is at risk of assignment, the buyer may begin to receive calls from the person exercising the option. The option seller may purchase stocks from the trader at a predetermined rate. This will occur if the buyer's position is taken anytime from when the option is exercised to the day of option expiration.
Therefore, the best way to avoid any potential risks of assignment is by becoming familiar with the rules and regulations related to after-hours trading. Knowing when and how assignment of options can take place may provide the trader with added peace of mind. individuals should contact their broker to understand the specific rules governing option assignment after-hours.
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