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Alerts at Fidelity

Market and account information you need, when you need it.

Alerts enable you to...

• Monitor activity and trading in your accounts.
• Track the price of a particular security.
• Receive account balances and positions.
• Be notified of stock, bond and mutual fund events.
• Subscribe to market commentaries and reports.

View the Fidelity Alert User Agreement

    Overview of InstantBroker InstantBroker provides order execution reports, admin reports, quote updates, account summaries, positions, notifications of stock corporate actions, notifications of bond calls and maturities, new issue updates and integrated balences including Retirement plans and Personal Investing accounts to its customers via one-way text pager, two-way text pager, e-mail, and/or eligible personal data assistant:

Trades, Confirmations and Status Reports  An order for any security on your account that gets filled or partially filled or cancelled will generate an execution report.  Notification of full and/or partial executions. Sample execution report format: Last 4 digits of account number Symbol Time of order execution BOT (Bought) or SLD (Sold) Quantity Price at which order executed 'Leaves' quantity (any unfilled quantity)

• Admin Reports

Status reports relative to your orders. Sample execution report format: Last 4 digits of account number You Are Stopped - A stopped order is where the specialist on the exchange floor has guaranteed a specific execution price and is seeking a better price. Too Late to Cancel - Displayed for an executed order when a cancellation attempt was too late. Nothing Done - An order that did not execute and is no longer valid. You are Out - A canceled order that is no longer valid.

• Account Summary

Scheduled summaries of a Fidelity brokerage account registered with InstantBroker.  All amounts are as of the previous business day's close.

Sample account summary format: Last 4 digits of account number Cash account balance Net worth Fed call House call NYSE call Margin market value Margin credit balance Margin debit balance

• Account Positions

Scheduled positions of a Fidelity brokerage account registered with InstantBroker.  InstantBroker will provide the symbol for a security when it is available, otherwise we will provide the security's CUSIP. Sample account position format: Last 4 digits of account number Account type (1-Cash, 2-Margin) Trade date quantity Symbol or CUSIP Price of position as of 24:00 on the prior business day

A quote schedule can be set up to send notification, at a specified time, with the quote for a desired symbol.  For example, once you have activated a quote schedule, you will receive notification with the quote for IBM at market open, Monday through Friday, until the quote schedule is deleted.  We currently permit you to maintain up to 30 securities quoted every 15 minutes with a maximum of 100 quotes per day. Sample quote format: Bid & Ask Bid & Ask size % Change Last trade size Open High/Low Previous close Volume Last tick

A trigger is a schedule that is set up to send you notification when the quote for a specified symbol is greater than or less than a specified dollar amount (Trigger point).  For example, once you set up a trigger for IBM greater than 70, you will receive notification when the quote of IBM is greater than $70 (Trigger point).  Once the page is sent, the trigger becomes expired, and will not be sent again. Sample trigger format: Symbol Trigger quote Text displaying whether the trigger went above or below the trigger quote. Active (Ready) Triggers Triggers that have been set up, but not executed. When viewing your list of expired triggers, active triggers are listed in the "Status" column as "Ready". Expired (Sent) Triggers Triggers that have been set up and executed. When viewing your list of expired triggers, expired triggers are listed in the "Status" column as "Sent".

• Margin Calls

Margin calls are automatically generated by InstantBroker after close of business, and are sent to your notification device.  A margin call is when the value of the marginable securities or cash in your margin account has fallen below the minimums required by Fidelity, the NYSE, or the Federal Reserve. Sample margin call format: Last 4 digits of account number Data and time of margin call Call type, i.e. FED, House, Exchange Amount Margin Call due-date

• Option Assignments

Option assignments are automatically generated by InstantBroker and sent to your notification device.  An option assignment is when your short in-the-money option has been exercised against you. Sample option assignment format: Last 4 digits of account number Spelled-out option symbol, i.e. BA AUG 55 Option type (Call or Put) Number of contracts

• Integrated Balances

Receive your NetBenefitsSM plan balances, Personal Investing account balances, and a portfolio total. The market value balances and portfolio total are as of the date displayed for your Personal Investing and NetBenefitsSM accounts. A NetBenefitsSM account is an account recordkept at Fidelity that your employer has set up so that you can take advantage of tax-deferred retirement account benefits. The availability of market value balances and portfolio totals depends on the specific features of your employer's plan. For more information on your NetBenefitsSM account visit http://netbenefits.fidelity.com Sample Integrated Balances format: NetBenefitsSM plan account balances (each listed separately) NetBenefitsSM plan(s) total balance Personal Investing account balances (each listed separately) Personal Investing total balance Total Integrated Portfolio balance

• Device Overview

What and How information will be sent.   SkyTel Two-Way SkyTel One-Way E-Mail BellSouth Two-Way Pager PageMart One-Way Pager via eligible PDA Account Balances Account Positions Stock Corp. Actions Bond Calls & Maturities Security Quotes   Security Triggers Order Executions Order Admin Msgs Option Assignments Margin Calls New Issue Offerings Integrated Balances

Prerequisites for Users Established Fidelity PIN & SSN Fidelity PIN Eligible users must have an established Fidelity Personal Identification Number (PIN) and SSN. If you currently maintain a Fidelity Brokerage Account and do not have a PIN, please call TouchTone Xpress � at 1-800-343-6038 or visit the Fidelity Home Page to set up your PIN on-line . Your new PIN will provide computer and TouchTone telephone access to all accounts registered in your name. Please see Your Fidelity PIN for more details. Social Security Number You must have a valid SSN in order to establish a InstantBroker account.

• A valid PIN for your Text Pager and/or eligible Personal Data Assistant and/or a valid e-mail address .
• Eastablished Institutional Retirement Account:

Please remember that the number of messages received such as quotes, account summary, positions, etc. can result in a charge to you from your paging vendor.  Many paging vendors charge per character sent.  For example, a InstantBroker quote can range from 50 characters to 250 characters, depending on the type of information selected.

Although charges per character, or message, vary from vendor to vendor, it may be wise to determine the total allotment of characters per month for the device selected to receive InstantBroker information.

For example, 30 quotes of an average length of 80 characters in one month will result in 1600 (80 char, 5 days, 4 weeks) additional characters used that month.

How to Use This Web Site

Login When signing on to InstantBroker, you are required to enter your Social Security Number and a secured Personal Identification Number (PIN). If the SSN and PIN that you enter are not correct, you will receive a warning message.  Please see Your Fidelity PIN and Security Information for more details. If you currently maintain a Fidelity Brokerage Account and do not have a PIN, please call TouchTone Xpress at 1-800-343-6038 or visit the Fidelity Home Page to set up your PIN on-line . Your new PIN will provide computer and TouchTone telephone access to all accounts registered in your name. For assistance with this web site please call 1-800-544-7595, Monday - Friday, 8:00am to 6:00pm eastern standard time. The Navigation Bar To return to Using This Site at any time, simply click on the "InstantBroker" title, located on the navigation bar on the top left-hand side of your screen. InstantBroker Device Setup Your InstantBroker account profile can be accessed by clicking on the "Device Setup" icon, located on the left side navigation bar. Use the "Account Profile" screen to set up how you would like to be notified, i.e. One-Way or Two-Way Pager. For more information on what and how information will be sent, click here. You have the option to enter one or more of the following methods of notification: SkyTel One-Way Pager SkyTel Two-Way Pager E-mail Address - not available for real-time quotes and trading . Fax Number - for New Issue Offerings. Telephone Number BellSouth Pager PageMart Pager Enter your pager PIN or E-mail address in the "Information" field.  Enter a personal description for each device in the "Description" field. For example, enter "Work PIN" in the description field next to the pager PIN entered in the information field. Enter the required information and click the "Save Updates" button to save/update your account profile.  Please note, you may change your account profile at any time.  Please omit the dash (-) when entering your PIN or other information. For example: Correct PIN entry: 1234567 Incorrect PIN entry: 123-4567 Click the "Add Device" button to add a new device to your profile.  From the "Add Device" screen, select a new device, enter the new information/description and select the "Save" button to add a new device to your profile. Click the "Delete Entire List" button to remove your account profile from the InstantBroker system. Please NOTE:  You will not receive any notices until you login again and enter new device information. Click the "Pager Applications" button  to download the Quote or Order Entry Application to your RIM Interactive 950 Two-Way Pager from BellSouth Wireless Data.

A price trigger is a schedule that is set up to send you notification when the quote for a specified symbol is greater than or less than a specified dollar amount (Trigger point).  For example, once you set up a trigger for IBM greater than 70, you will receive notification when the quote of IBM is greater than $70 (Trigger point).  Once the page is sent, the trigger becomes expired, and will not be sent again . 

Active (Ready) Triggers

Triggers that have been set up, but not executed. When viewing your list of expired triggers, active triggers are listed in the "Status" column as "Ready".

Expired (Sent) Triggers

Triggers that have been set up and executed. When viewing your list of expired triggers, expired triggers are listed in the "Status" column as "Sent".

In order to view and/or modify your active triggers, please click on the "Triggers" icon, located on the left side navigation bar.

Add Triggers

Select the "Add Triggers" button to add new triggers to your InstantBroker account.  On the "Add Trigger" screen, enter the symbol, choose greater than or less than, enter a trigger point, and select your method(s) of notification from the selection list.  In order to select more than one device, hold the "Control" (CTRL) key down and click on the desired devices.

If a method of notification is not selected, the triggers will be sent to the first item in the device list.

INDEX When entering an index, place a "." before the index symbol.

Index example: Type ".DJI" to receive the Dow Jones Industrial Average.

For a description of index symbols , click here.

PREFERRED EQUITIES

For example, preferred equity PZN PRA

To request a quote using InstantBroker enter:

To place a trade using InstantBroker enter:

OPTIONS When entering an option, enter a dash (-) and the option symbol (Example: -IBMAB). Option quotes entered in this manner will default to the Chicago Board Options Exchange (CBOE) since no particular exchange is designated. For securities that do not trade on the CBOE or for those options that you would like to have priced on a particular exchange, enter a dot "." after the option symbol followed by the desired exchange symbol. (Example: -AOLKE.P). The following are option exchanges with corresponding exchange symbols:

Chicago Board Options Exchange (W), American Options Exchange (A), Pacific Options Exchange (P), Philadelphia Options Exchange (X). There may be variances in prices through other quotation channels as other systems generate a primary exchange quote as opposed to defaulting to the CBOE.

For a description of exchange symbols , click here.

Two-Way quoting functionality is currently only available using BellSouth's pager. For more information, click here.

In order to activate new triggers, you must click the "Save" button.  You will receive a confirmation that your trigger list has been saved, as well as a confirmation of the total number of rows that have been added.

Remove A Single Trigger

When viewing your active triggers, place a check in the box located in the "Remove Item" column and click the "Save Updates" button to delete the selected Trigger.

Delete Entire List

Select this button to delete the entire trigger list. You will receive a confirmation that your list has been deleted, as well as a confirmation of the total number of rows that have been deleted.

You will not receive any trigger notices until you enter new trigger information.

Save Updates

Select this button to save any changes or updates made to your active trigger list.  You will receive a confirmation that your list has been saved or deleted, as well as a confirmation of the total number of rows that have been added or deleted.

View Closed Triggers

Select this button to view your list of closed or expired triggers , triggers that have already been sent.  You will be able to view the symbol, greater than or less than, trigger point, status, and time that notification was sent to your designated device by InstantBroker.

• Quote Lists

A quote list can be set up to send notification, at a specified time, with the quote for a desired symbol.  For example, once you have activated a quote schedule, you will receive notification with the quote for IBM at market open, Monday through Friday, until the quote schedule is deleted.  We currently permit you to maintain up to 30 securities quoted every 15 minutes with a maximum of 100 quotes per day. Quotes are available for stocks, mutual funds, indices and options. InstantBroker will allow up to 30 unique securities for a total of 100 quotes per day. For example, you could have 10 separate symbols to be quoted every half hour. In this example, you would reach your daily quote limit after 5 hours. After reaching your quote maximum of 100, you will not receive any additional quotes until the next day. Quote lists may be set up for market open, market close, mid-day, market open and close, market open/mid-day/close, every hour, every half hour, or every 15 minutes. You will continue to receive notification at this time, until the quote schedule is deleted . Quote options may be selected by checking the appropriate check box: Open Bid & Ask High & Low Bid & Ask Size % Change Previous Close Last Trade Size Volume Last Tick If none of the quote options are selected, the symbol's last trade price and change will be sent. In order to view and/or modify your active quote schedules, please click on the "Quote Lists" icon, located on the left side navigation bar. Add Quotes Select the "Add Quotes" button to add a new quote schedule to your InstantBroker account.  On the "Add Quotes" screen, enter the symbol, choose a quote schedule and quote options ( If none of the quote options are selected, the symbol's last trade price and change will be sent ), and select your method(s) of notification from the selection list.  In order to select more than one device, hold the "Control" (CTRL) key down and click on the desired devices. If a method of notification is not selected, the quotes will be sent to the first item in the device list. INDEX When entering an index, place a "." before the index symbol. Index example: Type ".DJI" to receive the Dow Jones Industrial Average. For a description of index symbols , click here.   PREFERRED EQUITIES For example, preferred equity PZN PRA To request a quote using InstantBroker enter: PZN/PA To place a trade using InstantBroker enter: PZNPRA   OPTIONS When entering an option, enter a dash (-) and the option symbol (Example: -IBMAB). Option quotes entered in this manner will default to the Chicago Board Options Exchange (CBOE) since no particular exchange is designated. For securities that do not trade on the CBOE or for those options that you would like to have priced on a particular exchange, enter a dot "." after the option symbol followed by the desired exchange symbol. (Example: -AOLKE.P). The following are option exchanges with corresponding exchange symbols: Chicago Board Options Exchange (W), American Options Exchange (A), Pacific Options Exchange (P), Philadelphia Options Exchange (X). There may be variances in prices through other quotation channels as other systems generate a primary exchange quote as opposed to defaulting to the CBOE. For a description of exchange symbols , click here. Two-Way quoting functionality is currently only available using BellSouth's pager. For more information, click here. In order to activate new quote schedule, you must click the "Save" button.  You will receive a confirmation that your quote list has been saved, as well as a confirmation of the total number of rows that have been added. Remove A Single Quote When viewing your active quote schedules, place a check in the box located in the "Remove Item" column and click the "Save Updates" button to delete the selected Quote. Delete Entire List Select this button to delete the entire quote list. You will receive a confirmation that your list has been deleted, as well as a confirmation of the total number of rows that have been deleted. You will not receive any quote notices until you enter new quote information. Save Updates Select this button to save any changes or updates to your active quote list.  You will receive a confirmation that your list has been saved or deleted, as well as a confirmation of the total number of rows that have been added or deleted. View Quotes Select this button to view your complete list of scheduled quotes.

For questions regarding the New Issue Offerings section of this web site, please click here .

The Help section, which you can access by clicking on the "Help" button on the navigation bar on the left-hand side of your screen, contains instructions on how to use the service. See especially the topics "Overview of InstantBroker" and "How to Use This Web Site".

InstantBroker will only send information regarding brokerage accounts associated with your Social Security or Tax Identification Number.

By registering for InstantBroker, we will send margin call and option assignment messages by default.

A Fidelity brokerage account can be set-up for report notification by clicking on the account number listed under "Account Information", located on the left side navigation bar.   These reports reflect your account balances as of the previous business day's close .

Trading Activity

Check "Trade Reports" to receive an alert of any full or partial trade executions in your account. To view sample execution report format, click here.  Clicking this you will also receive a report of administrative messages regarding your order. To view sample administrative report format, click here.  

Hold the "CTRL" (Control Key) down to select more than one device from the list.

Account Activity

Check "Account Summary" to receive a summary of your account balances, as of the previous business day's close.  To view sample account summary report format, click here.

Check "Account Positions" to receive your current account positions, at a specified time.  Account positions are reports as of the previous business day's close.  To view sample account position report format, click here.

Stocks - Corporate Actions

If a method of notification is not selected, the reports will be sent to the first item in the device list.

Select the "Save Updates" button to activate your request.

Select the "Delete" button to stop receiving reports for the specific account.  You will not receive any reports for the account until you enter new account information.

To end your on line session in InstantBroker, click "Logout" on the navigation bar on the bottom left-hand side of your screen. We recommend that you close your Web browser when you are finished using this online service. The account information you see remains in your Web browser's memory until you close the browser. If you would like to return to the InstantBroker Web Site, simply click the "Login Again" button.

Utilizing BellSouth's paging service with the "RIM" Interactive 950 Two-Way pager, customers may request and receive quotes and place stock orders directly using the pager. Customers may also receive integrated balances including Retirement plans and Personal Investing accounts via the Two-Way pager.

If you do not have a RIM Interactive 950 Two-Way pager , and would like to obtain one, go to bottom of the Account Profile screen and push the "Purchase a BellSouth Pager" button.

If you do have the RIM Interactive 950 Two-Way pager , and do not have the Quote Application or the Order Entry Application, select the "Device Setup" option on the navigation bar on the left-hand side of your screen.  On the Device Setup screen, select the "Pager Applications" button.  Follow the instructions at the bottom of the screen to download the applications to your RIM device.

For more information regarding the particular applications, please click below:

Two-Way Quote Application

Two-Way Order Entry Application

Quick Reference to the Two-Way Pager

Two-Way Quote Application Instructions Once the Quote Application has been successfully installed, please follow these instructions for the Quote Application: 1. From power off, Click (Press down on the wheel). 2. Scroll the wheel and Click RAMpowertool.   The RAMpowertool is an application that runs on the device to enable Two-Way quoting functionality. 3. Scroll the wheel and Click Quote , on the main screen. 4. Scroll the wheel and Click Action. 5. Enter the Symbol (Upper or lower case). To enter more than one symbol, separate each quote by a space. 6. Click (Press down on the wheel). 7. Scroll and Click Send. 8. When the quote is retrieved, a line will appear above the quote request displaying the summary information for each symbol entered. 9.  If you wish to see additional symbol detail, scroll up to the desired symbol, press down on the wheel and select View . 10. Click the Backspace arrow (on upper right) to return to the previous screen.  To view other quotes, continue from step #9. 11.  To perform a new quote request, continue clicking the Backspace arrow until you reach the RAMpowertool main menu.   Highlight Quote and continue from step #3. Please Note:  If your pager runs out of memory, your expired quotes will be deleted automatically.  To delete expired quotes yourself, go to the RAMpowertool menu, highlight Quote, and select Purge from the dropdown menu.  You will not be able to delete quotes until the 1 hour expiration time has elapsed.

Two-Way Balances Application Instructions 1. From Powertool menu screen, select Balances, click on Action. 2. Enter SSN & PIN # and click on Send. 3. A summary line will appear above the "Sign On" line that will display the total portfolio amount. Select "View" to see NetBenefits and Personal Investing balances and the Portfolio Total. This includes all retirement plans and personal investing accounts. 4. Scroll the wheel down to select either NetBenefitsSM Total or Personal Investing Total and click Action. 5. All accounts for specified account type will be displayed in a list, along with corresponding account balances.

Your Fidelity PIN

Changing Your Fidelity PIN If you need to change your Fidelity PIN, please call TouchTone Xpress � at 1-800-343-6038, and our secured automated telephone system will walk you through the steps of changing your PIN. If you currently maintain a Fidelity Brokerage Account and do not have a PIN, please call TouchTone Xpress � at 1-800-343-6038 or visit the Fidelity Home Page to set up your PIN on-line . Your new PIN will provide computer and TouchTone telephone access to all accounts registered in your name. Forget Your PIN? If you forget your Fidelity PIN, your old PIN must be cleared by a representative before you re-establish a new one.  Please call 1-800-544-0187, and a Fidelity representative will assist you.

Security Information

Fidelity recommends that users of this electronic system take the following security steps: Create a hard-to-guess PIN. A general rule for creating a PIN is the longer the better. Don't use sequential or repetitive characters, or PINs such as your phone number or date of birth. Don't tell anyone your PIN. Ideally, your PIN will be easy for you to remember so you won't have to write it down, but difficult for others to guess. Change your PIN frequently. For instructions, see "Changing Your PIN," above. Be aware that if you leave your desk during or after an online session, another user may be able to use your browser's "Back" button to view information. We recommend that you exit your browser on completion of online activity to minimize this type of security risk. Keep your pager with you at all times to minimize the risk of someone else viewing your information.

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News & Insights

How Option Assignment Works: Understanding Options Assignment

May 26, 2023 — 08:00 am EDT

Written by [email protected] for Schaeffer  ->

Options assignment is a process in options trading that involves fulfilling the obligations of an options contract. 

It occurs when the buyer of an options contract exercises their right to buy or sell the underlying asset. The seller (writer) of the options contract must deliver or receive the underlying asset at the agreed-upon price (strike price).

What is Options Assignment?

Options assignment can happen when the owner of an option exercises their right to buy or sell shares of stock or when options expire in the money (ITM). This process can be complex and involves various factors such as the type of option, expiration date, and market conditions.

There are two main styles of options contracts: American-style and European-style. American-style options allow the buyer of a contract to exercise at any time during the life of the contract. In contrast, European-style options can only be exercised on the expiration date.

Traders selling American-style options are at risk of assignment anytime on or before the expiration date. While they can technically be assigned anytime, the option must be ITM for the owner of the contract to benefit from exercising their right. 

On the other hand, many options traders prefer to sell European-style options as it is impossible to be assigned before the expiration date, giving them more flexibility to hold their contract without worrying about being assigned early. 

Who is at Risk of Assignment in Options Trading?

Traders with short options positions are at risk of assignment because they have sold the option and are obligated to deliver or receive the underlying asset. If the owner of the options contract decides to exercise their rights, the seller of the options contract must fulfill their obligations.

Traders with long options positions are not at risk of assignment as they are in control of exercising their options. A long option holder has the right, but not the obligation, to buy or sell the underlying asset at the strike price. If the long option holder decides not to exercise their options, they can let the options contract expire worthless.

What is the Risk of Assignment?

The risks associated with options assignment are primarily centered around the obligations of the seller of the options contract. If the holder of the options contract decides to exercise their right to buy or sell the underlying asset, the seller must fulfill their obligations.

For example, if a trader sold a put option with a $100 strike price, and the stock dropped to $90, they would still have to buy the stock at $100 per share. When an option is ITM, it generally indicates that the seller of the option is in an unfavorable spot.

Of course, if you sold a $100 strike put option when the stock was trading at $120, and now it is trading at $90, the seller is likely regretting their original trade. However, it is impossible always to time the market perfectly, and assignment risk is the risk option sellers must assume. 

Traders must be aware of market conditions that could increase the risk of assignment, such as large price movements in the underlying asset. Option selling strategies benefit from a stable market environment, so you must ensure the stock you are trading will remain stable until the expiration date. Events that may cause significant market volatility, such as earnings, are crucial to be aware of when selling options. 

How to Avoid Option Assignment

While it may not be possible to avoid options assignment completely, there are several strategies that options traders can use to reduce the likelihood of being assigned.

One strategy is to manage short options positions by closing the position if your strike gets tested. For example, if you sold a $100 strike put when a stock is trading at $120 per share, you can avoid assignment by closing the position before the stock drops under your strike price of $100. 

Another strategy is to roll over your option, which means you close it out and simultaneously sell a new contract with a different strike price and/or date. Traders can roll their contracts to the same strike price at a further date or even roll it down or up to ensure their contract stays out of the money (OTM). 

These strategies may not always be effective in avoiding assignment. Traders should always be prepared to fulfill their obligations if they are assigned and have a plan to manage their positions accordingly. If a stock moves hard overnight, there is no guarantee you will successfully avoid assignment. 

Do You Keep the Premium if You Get Assigned?

Yes, if you get assigned on a short options position, you still keep the premium you received initially. However, it is important to note that if you are assigned, you will also be obligated to fulfill the contract terms by buying or selling the underlying asset at the strike price. This means you may incur additional costs associated with fulfilling your obligation, such as purchasing the underlying asset at an unfavorable price.

What Happens When Your Covered Call Gets Assigned?

If a covered call gets assigned, the seller of the call option must sell the underlying stock at the strike price to the buyer of the call option. The seller will still be able to keep the premium received from the sale of the call option.

For example, if you own a stock at $100 per share and sell a $130 strike call option, you will be forced to sell if the stock is above $130 on the expiration date. Additionally, you can be assigned before the expiration date if the stock is trading above your strike price. 

While the covered call seller will still generate a profit from this trade, the downside is you are likely missing out on more upside potential had you not sold the covered call. The seller of the covered call doesn’t have to do anything, as the broker will take care of the assignment for you. 

Are Options Automatically Assigned?

If you are an option seller, your option will either be exercised by the buyer or automatically assigned if it is ITM on the expiration date. 

If you are an option buyer, your option will not be automatically assigned before expiration. However, most brokers will automatically assign ITM options on the expiration date. 

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Option Assignment Process

Options trading 101 - the ultimate beginners guide to options.

Download The 12,000 Word Guide

One of the biggest fears that new options traders have is that they may get assigned. The option assignment process means that the option writer is obligated to deliver on the terms specified in a contract.

For example, if a put option is assigned, the options writer would need to buy the underlying security at the strike price dictated in the contract.

Likewise for a call option, the options write would need to sell the underlying security at the strike price dictated in the contract.

As an options trader you’re usually seeking to make a profit from directional bets or to hedge your portfolio.

You’re rarely, if ever, looking to actually buy or sell the underlying security so being assigned can sound like a scary prospect.

This article will explore the option assignment process so you can understand how it works and how you can prevent yourself getting stuck with buying or selling an underlying security.

When Assignment Occurs

Assignment occurs when an option holder exercises an option. Exercising an option simply means that the option holder executes the terms in the options contract.

So for example if you are holding a call option, you have the right, but not the obligation to buy the underlying security at the agreed strike price.

When you exercise the option, the option holder will need to sell the underlying security at the agreed strike price and for the agreed quantity.

If you’re dealing with European style options, you will know when expiration is possible because they can only be exercised on the expiration date itself.

For American style options, which is what most people trade, options can be exercised at any time before the expiration date.

This means that if you are an options writer of American style options, you could theoretically be asked at any time to comply with the terms of the contract.

Unfortunately, there is no knowing when an assignment will take place.

However, generally options are not exercised prior to expiration as it is usually much more profitable to sell the option instead.

It’s worth noting that this will only happen to you if you’re an options seller. Option buyers can never be assigned.

There are two key steps to assignment and to make it fair, the process of selecting who is assigned is random.

In the first step, the Options Clearing Corporation (OCC) will issue an exercise notice to a randomly selected Clearing Member who maintains an account with the OCC.

In the second step, the Clearing Member then assigns the exercise notice to an individual account.

When You Are Most At Risk

There are several situations that can dramatically increase the risk that you will be assigned:

Situation 1: Your option is In The Money (ITM)

When an option is ITM, an option holder would stand to profit if they exercised the option.

The deeper the option is ITM, the greater the profit for the option holder and therefore the higher risk they may exercise the option and you will be assigned.

Situation 2: The option has an upcoming dividend

An ITM call buyer can profit from exercising an option before its ex-dividend date if the extrinsic value of the call is less than the amount of the dividend.

Situation 3: There is no extrinsic value left

If there is no extrinsic value left, an option buyer could be tempted to exercise the option.

If there is extrinsic value, an option buyer would typically make a bigger profit by selling the option and buying/selling shares of the underlying asset.

How You Can Avoid The Risk Of Being Assigned

There are several steps you can take to avoid, or at the very least minimise, your risk of being assigned.

The first step to consider is avoiding selling any options that have an upcoming dividend.

Before selling any option, first check that the underlying security doesn’t have an upcoming dividend and if it does, consider waiting until after the dividend has occurred (i.e. the stock has gone ex-dividend).

If you do end up selling an option with an upcoming dividend, then the second step to protecting yourself is to close your position early as your risk begins to increase.

For example, if you are short an option with an extrinsic value less than the dividend amount and the ex-dividend of the underlying security is not too far away, close your position.

Otherwise you risk being assigned and being forced to pay the dividend as well!

To completely avoid early assignment risk, you could always sell only European style options which are cash settled at expiration. You can read more that here and here .

The final way to manage your risk is to close positions well before expiration date approaches.

As the time left to expiration decreases, so too does the extrinsic value. For option buyers, it means they could stand to benefit and so there is a risk they may exercise the option.

While this article deals with the process and risks behind being assigned, there will be times when this isn’t an issue for you.

Provided you have enough capital to meet the assignment, you may be fine with being assigned.

If this is the case, you would simply have a new stock position added which you could hold onto or immediately liquidate.

In the event that you don’t have enough capital, your broker will issue you with a margin call and the position should be automatically closed.

As the process of assignment can differ between brokers, its best you contact your broker to check the specific process they use when issuing assignments to individual accounts.

In general, provided you take a few key steps to mitigate your risks, particularly around dividend issuing securities, the chances of assignment are very low.

Trade safe!

Disclaimer: The information above is for  educational purposes only and should not be treated as investment advice . The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.

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Closed my Oct BB (a few moments ago) for 34% profit…that is the best of the 3 BBs I traded since Gav taught us the strategy…so, the next coffee or beer on me, Gav 🙂

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Options Assignment

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How to Use Stock Price Alerts to Improve Your Investing Strategy

Table of contents

Price trigger alerts

Economic news alerts, company news alerts, technical patterns alerts, portfolio alerts, stock alarm, how to benefit from stock notifications, are stock price alerts always a good idea.

• Frequently Asked Questions

In theory, you could watch the prices of all stocks you own (and those you want to buy) by staring at your brokerage app all day. However, that's impractical for most people who aren’t die-hard traders, not to mention exhausting. 

Fortunately, many platforms offer stock alerts that keep you updated should anything important related to the stock's underlying price change. This way, you can stay informed without the need to constantly monitor your trading account.

What Types of Stock Price Alerts Are There?

Stock market alerts keep you apprised of factors that relate to the value of securities in your portfolio. 

Common types of market alerts include:

These tell you if a stock value goes above or below a certain price point. Alerts may also tell you if the price changes by more than a certain percentage.

Alerts can contain economic news likely to affect the prices of securities, such as central banks changing interest rates or changes in inflation rates. 

You can get stock notifications about individual companies. For instance, alerts can be set up to tell you when a company is going to release its quarterly performance results or when analysts “buy”, “hold”, or “sell” ratings change. 

Traders sometimes set up alerts to tell them about the specific short-term price movement of a stock, such as when it exhibits a head and shoulders pattern. 

Lastly, platforms may send you alerts if there are material changes to your portfolio, such as changes in the overall value or trends during the last quarter.

How to Set Up Stock Alerts

How you set up stock alerts depends on the trading platform of your choice . Each offers slightly different tools.

Robinhood offers stock price alerts and notifications about securities, including those you do not own. To set alerts on Robinhood, go to the Account tab >> Settings >> Notifications & Messages. Then tap Push Notifications. 

Robinhood provides notifications when options go in and out of the money, price movements, gain and loss movements, dividend updates, and options expiration reminders.

Fidelity lets you set up alerts on both its mobile app and desktop version. Messages can arrive as push notifications, emails, and text messages. You can set alerts for stocks, options, ETFs, and mutual funds.

To set alerts on Fidelity, go to the Action menu and then Set Alert. Fidelity will then let you set various types of price alerts, including basic price movement, the percentage change in price since close, 52-week high or low, and exponential moving averages. Account alerts are also available, including account balances, positions, trade notifications, options assignments, corporate actions, and investment ideas. 

Vanguard sends email alerts to brokerage clients who are registered users. To request alerts, simply tell Vanguard which alerts you would like. Alerts include news headlines related to your investments, price and volume information about specific securities, daily closing price summary, performance summaries for the week, month, or year, or various market updates. You can also get account-specific alerts. 

The Stock Alarm app is not a brokerage platform. Instead, it’s a tool that day traders can use to set various conditions for alarms from live stock price movements. Alerts are available by email, phone, text, and push notification, with custom sounds available for each alert type. Stock Alarm continually scans publicly-available market data and then issues alerts when the specified conditions are met. 

Stock market alerts are valuable because they provide you with up-to-the-minute information about trading conditions as soon as the news breaks. They’re extremely helpful for following financial news and letting you spot opportunities to buy and sell. 

When you trade with alerts, you gain an advantage over other market participants. If you are the first to receive news, you can react to it quickly, finding better trades than you would have otherwise. 

There are several alert types that might help you: 

• 52-week high/low: If you notice that a stock has reached a 52-week high, it could be a sign that it has momentum and that it will go higher in the coming months. Likewise, if it hits a 52-week low, it could suggest that the company is in a bear market and the price may dip further, which means you should sell. 
• Exponential moving average: Exponential moving averages show you whether the stock is above its average defined over a certain number of preceding days, usually 50, 100, or 200. If the stock rises above its moving average, it suggests that it has either turned a corner or its performance is accelerating. Likewise, if it dips below, it can signal a good time to buy (if you are bullish) or sell (if you are bearish)
• Percentage change since close: Lastly, you might want to keep tabs on how much a security changes since the previous day’s close. For instance, events that occur after trading hours could impact the 4.

Stock price alerts are valuable for investors and traders because they provide up-to-date information that allows them to make more informed trades. They’re particularly valuable for traders who want to avoid missing buying and selling opportunities. 

However, there are some reasons why free stock alerts might not be such a good idea. For instance, constantly receiving alerts during market volatility may encourage excessive selling and making decisions based on your emotions, not the underlying financial realities of the securities that you hold. 

Furthermore, long-term “buy and hold” investors are unlikely to find market alerts very helpful. While they can be useful for reacting to short-term volatility, they don’t always tell you a great deal about the long-term fundamentals driving the price of a particular stock or security. 

Lastly, stock price alerts don’t tell you why the price of a particular stock is moving. Sure, it can be going up and down, but there’s no context or analysis telling you the factors driving it. In the past, for instance, stock prices have collapsed because of computer glitches – hardly a compelling reason to sell. To make good trading decisions, you still need information about the underlying asset.

The Bottom Line

Stock alerts are a powerful tool for traders who want to stay up to date about the latest developments in the securities they trade. However, they may have limited value for long-term “buy and hold investors” looking for payoffs over five-, ten-, and twenty-year horizons.

How do I get stock alerts?

To set up a stock price alert, you will need to follow the instructions provided by your trading platform. Each vendor has a different system. Some offer apps that send push notifications to your phone or tablet, while others work on an email-based system, providing you with timely updates to your inbox when new information becomes available. 

What app gives stock alerts?

The vast majority of popular brokerage apps provide stock alerts in one form or another, including Yahoo! Finance, Vanguard, TD Ameritrade, Stock Alarm, Robinhood, and Fidelity. To find the platform with the best stock alerts, you’ll need to do your homework on each of them. 

Does Robinhood provide stock alerts?

Robinhood’s app provides push notification stock alerts, informing users of price changes and market information. Widgets on both Android and iOS can also display price trigger alerts on your device’s home screen. 

Can I get an alert when a stock hits a certain price?

Yes, the vast majority of modern brokerage platforms allow you to set thresholds that will alert you when the price of security breaks a particular price barrier. You can either set up stock alerts to inform you when a stock passes through a numerical threshold or when it changes by a predefined percentage.

I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.

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The importance of managing and monitoring option strategies around expiration

Getting started

Before we dive into the idea of managing options expiration, let's quickly review:

• Call option – the holder of the option has the right to buy stock at the strike price of the option, while the writer of the option has the obligation to sell stock at the strike price.
• Put option – the holder of the option has the right to sell stock at the strike price, while the writer of the option has the obligation to buy stock at the strike price.
• A customer who has sold an option to open is considered to have a short position, while a customer who has bought an option to open is considered to have a long position.

In addition, options on underlying securities that are more than $0.01 in the money are automatically exercised. Most of this is covered in basic options education, but what does this mean to you and how will it affect your trading at your brokerage firm?

Most brokerage firms will only allow you to place option trades that are within your option trading tier, which is determined by your option application that confirms your level of experience, investment objective, financial stability, and obligations. Additionally, many brokerage firms may prevent you from executing an option trade that would exceed the account's buying power. It is important to note that these checks are at the time of order entry for the option, and not based on the resulting buying or selling of the underlying stock. If you have ever received an error message when trading options, it is usually the result of the option tier or buying power being exceeded by the desired trade. See how to Evaluate your options account to find your non-margin buying power and approved option trading tier.

Learning by example

Follow the example below to learn more about John, a hypothetical customer, and the actions he took both before and after placing an options trade.

What's the outcome?

In this example the 55 strike calls that John had sold expired worthless, and the 50 strike calls that John owned were in the money. As a result, the calls were exercised and John bought 5,000 shares of TQE, even though he did not have sufficient buying power to cover the transaction.

At this point there are 2 choices: He can make a deposit or sell the shares to cover the cost of the purchase of TQE. He doesn't have the ability to make a deposit to cover the shares, so John is left to cover the outstanding balance by selling shares of TQE. The sale that John is forced to transact to pay for the purchase of TQE shares could potentially lead to a trading violation. To add insult to injury, shares of TQE were down after expiration, which reduced his overall profit on the trade.

Looking back it could have been different, if John had closed the option prior to expiration. He would've had the peace of mind knowing that he locked in his profit, his positions would not be liquidated by the brokerage firm because he was overleveraged, and his account would not be restricted from trading.

Mitigating risk

In some situations, a brokerage firm will take proactive steps to mitigate risk. These steps may include liquidating positions or blocking an exercise entirely by entering Do Not Exercise instructions on the position. It is important to note that Do Not Exercise instructions can only be entered on long options! If short options are in the money, you can't block assignment due to the obligation and terms of the option contract. If the brokerage firm blocks exercise, the intrinsic value of the option is forfeited, resulting in a total loss on the value of the option if the contract is not closed by the customer prior to expiration. To help customers from having these actions taken in their account, some brokerage firms will send out alerts by phone, email, or text to warn customers that they need to take action prior to expiration. Every brokerage firm is different and it is ultimately the customer's responsibility to know if/how their brokerage firm handles options expiration risk and if they need to take action on or before expiration.

It is a common misconception that when equity option contracts have intrinsic value, this amount is multiplied by the number of contracts, then added or subtracted from the account. Equity options are not and cannot be cash settled. The gain or loss for options that are not closed on or before expiration is realized through the resulting equity trades of exercise or assignment.

Take advantage of the right tools along the way

Fidelity offers a variety of tools and resources to help you along the way. Use the 5 steps to develop an options trading plan as a guide. Here are a few highlights:

• Refine your strategy using the Probability Calculator
• Model option strategies with the Profit & Loss Calculator
• Plan an exit strategy with Trade Armor ®
• Set price alerts

The Option Summary in Fidelity's Active Trader Pro ® is a great tool to help manage and modify your option positions. One view in particular, Options by Expiration, allows you to easily see the days to expiration on each contract and answer questions such as: Do I have contracts expiring this week that may require action? Do I have in-the-money contracts with a high probability of exercise or assignment?

Trading options can be quite complicated and every brokerage firm approaches option expiration a little differently. It is extremely important to educate yourself about how your firm's process will complement your trading strategy. Don't forget that your brokerage firm is there to help and provide suggestions! While option trading can be complex, it can also be very rewarding if you know what to expect throughout the life of an option strategy to option expiration.

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Free riding violation

A free riding violation occurs when a customer purchases securities and then pays for the cost of those securities by selling the very same securities.