Options assignment, time of day

T

tonyf

My understanding is that underlying assignment happens 2 business days after an option is exercised in most cases (T+2).

By way of example say an investor sells an AAPL put expiring on Jun18'21 and is assigned the associated shares on that day, at what time will the put writer be the legal holders of the assigned shares on the June 22nd? Is it at market open or at market close?

Many thanks
 
It’s the same evening, before midnight. Not 2 days.
Interactive Brokers sends me emails all the time to not forget to exercise call options on dividend paying stocks the day before ex-dividend, as well as warns that I may be assigned short shares on short call options the day before ex-dividend.
In practice, you’ll also get the shares in your account overnight or at some point the next morning, depending on the broker.
 
guru said:
It’s the same evening, before midnight. Not 2 days.
Interactive Brokers sends me emails all the time to not forget to exercise call options on dividend paying stocks the day before ex-dividend, as well as warns that I may be assigned short shares on short call options the day before ex-dividend.
In practice, you’ll also get the shares in your account overnight or at some point the next morning, depending on the broker.
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Not sure that what you are saying is correct, or am I missing something?

"Hello,


Thank you for contacting us at OCC. You statement about T+2 is correct, though once the assignment process is complete, OCC is no longer involved. With that in mind, you’ll want to reach out to your trading firm to find out at what time the assignee becomes a stockholder.


Regards,"
 
Strange, but that may be some technicality related to cash accounts, where official transfer or settlement of related funds takes 2 days due to T+2. That’s similar to when you buy or sell shares, but in margin account your broker handles that instantly and you can buy & sell the same day, and no longer deal with those shares. So T+2 may apply to the broker in the background, but you don’t deal with this.
While in terms of legally owning the shares, including being entitled to dividends, it happens instantly when you buy the shares, or same day before midnight in case of assignment.
 
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