Options
InfrastructureOptions7 min read

Assignment, Exercise, and the Plumbing Nobody Backtests

Options strategies fail operationally more often than they fail analytically.

What goes wrong

Early assignment on a short leg, a dividend that makes exercise rational before expiry, pin risk at the strike on expiry day, and a broker auto-liquidating a position whose margin requirement changed overnight. None of these appear in a backtest and all of them appear in a live account.

Why this resists automation

Handling assignment requires knowing what the resulting position is, whether it breaches margin, and what to do about it before the market opens. That logic is bespoke to the broker's rules, and broker rules are documented inconsistently and change without notice.

The practical response

Run every structure on paper through at least one full expiry cycle including an in-the-money expiry before committing capital. The purpose is not to validate the edge — it is to discover which parts of the plumbing you have not built yet.

Educational, not directive. This is analysis of how a market behaves, not a recommendation to act in it. Strategy detail with conviction scoring and live sample sizes lives in the vault.
More on Options