exercise and assignment

Mike Martin

Option exercise and assignment explained w/ visuals.

Categories: Options Trading

Last updated on February 11th, 2022 , 06:38 am

Buyers of options have the right to exercise their option at or before the option’s expiration. When an option is exercised, the option holder will buy (for exercised calls) or sell (for exercised puts) 100 shares of stock per contract at the option’s strike price.

Conversely, when an option is exercised, a trader who is short the option will be assigned 100 long (for short puts) or short (for short calls) shares per contract.

Long American style options can exercise their contract at any time.
Long calls transfer to +100 shares of stock
Long puts transfer to -100 shares of stock
Short calls are assigned -100 shares of stock.
Short puts are assigned +100 shares of stock.
Options are typically only exercised and thus assigned when extrinsic value is very low.
Approximately only 7% of options are exercised.

The following sequences summarize exercise and assignment for calls and puts (assuming one option contract ):

Call Buyer Exercises Option ➜ Purchases 100 shares at the call’s strike price.

Call Seller Assigned ➜ Sells/shorts 100 shares at the call’s strike price.

Put Buyer Exercises Option ➜ Sells/shorts 100 shares at the put’s strike price.

Put Seller Assigned ➜ Purchases 100 shares at the put’s strike price.

Let’s look at some specific examples to drill down on this concept.

New to options trading? Learn the essential concepts of options trading with our FREE 160+ page Options Trading for Beginners PDF.

Exercise and Assignment Examples

In the following table, we’ll examine how various options convert to stock positions for the option buyer and seller:

As you can see, exercise and assignment is pretty straightforward: when an option buyer exercises their option, they purchase (calls) or sell (puts) 100 shares of stock at the strike price . A trader who is short the assigned option is obligated to fulfill the opposite position as the option exerciser.

Automatic Exercise at Expiration

Another important thing to know about exercise and assignment is that standard in-the-money equity options are automatically exercised at expiration. So, traders may end up with stock positions by letting their options expire in-the-money.

An in-the-money option is defined as any option with at least $0.01 of intrinsic value at expiration . For example, a standard equity call option with a strike price of 100 would be automatically exercised into 100 shares of stock if the stock price is at $100.01 or higher at expiration.

What if You Don't Have Enough Available Capital?

Even if you don’t have enough capital in your account, you can still be assigned or automatically exercised into a stock position. For example, if you only have $10,000 in your account but you let one 500 call expire in-the-money, you’ll be long 100 shares of a $500 stock, which is a $50,000 position. Clearly, the $10,000 in your account isn’t enough to buy $50,000 worth of stock, even on 4:1 margin.

If you find yourself in a situation like this, your brokerage firm will come knocking almost instantaneously. In fact, your brokerage firm will close the position for you if you don’t close the position quickly enough.

Why Options are Rarely Exercised

At this point, you understand the basics of exercise and assignment. Now, let’s dive a little deeper and discuss what an option buyer forfeits when they exercise their option.

When an option is exercised, the option is converted into long or short shares of stock. However, it’s important to note that the option buyer will lose the extrinsic value of the option when they exercise the option. Because of this, options with lots of extrinsic value remaining are unlikely to be exercised. Conversely, options consisting of all intrinsic value and very little extrinsic value are more likely to be exercised.

The following table demonstrates the losses from exercising an option with various amounts of extrinsic value:

As we can see here, exercising options with lots of extrinsic value is not favorable.

Why? Consider the 95 call trading for $7. Exercising the call would result in an effective purchase price of $102 because shares are bought at $95, but $7 was paid for the right to buy shares at $95.

With an effective purchase price of $102 and the stock trading for $100, exercising the option results in a loss of $2 per share, or $200 on 100 shares.

Even if the 95 call was previously purchased for less than $7, exercising an option with $2 of extrinsic value will always result in a P/L that’s $200 lower (per contract) than the current P/L. F

or example, if the trader initially purchased the 95 call for $2, their P/L with the option at $7 would be $500 per contract. However, if the trader decided to exercise the 95 call with $2 of extrinsic value, their P/L would drop to +$300 because they just gave up $200 by exercising.

7% Of Options Are Exercised

Because of the fact that traders give up money by exercising an option with extrinsic value, most options are not exercised. In fact, according to the Options Clearing Corporation, only 7% of options were exercised in 2017 . Of course, this may not factor in all brokerage firms and customer accounts, but it still demonstrates a low exercise rate from a large sample size of trading accounts.

So, in almost all cases, it’s more beneficial to sell the long option and buy or sell shares instead of exercising. We like to call this approach a “synthetic exercise.”

Congrats! You’ve learned the basics of exercise and assignment. If you’d like to know how the exercise and assignment process actually works, continue to the next section!

Who Gets Assigned When an Option is Exercised?

With thousands of traders long and short options in the market, who actually gets assigned when one of the traders exercises their option?

In this section, we’ll run through the exercise and assignment process for options so you know how the assignment decision occurs.

If a trader is short a single option, how do they get assigned if one of a thousand other traders exercises that option?

The short answer is that the process is random. For example, if there are 5,000 traders who are long a call option and 5,000 traders who are short that call option, an account with the short option will be randomly assigned the exercise notice. The random process ensures that the option assignment system is fair

Visualizing Assignment and Exercise

The following visual describes the general process of exercise and assignment:

If you’d like, you can read the OCC’s detailed assignment procedure here (warning: it’s intense!).

Now you know how the assignment procedure works. In the final section, we’ll discuss how to quickly gauge the likelihood of early assignment on short options.

Assessing Early Option Assignment Risk

The final piece of understanding exercise and assignment is gauging the risk of early assignment on a short option.

As mentioned early, only 7% of options were exercised in 2017 (according to the OCC). So, being assigned on short options is rare, but it does happen. While a specific probability of getting assigned early can’t be determined, there are scenarios in which assignment is more or less likely.

The following scenarios summarize broad generalizations of early assignment probabilities in various scenarios:

In regards to the dividend scenario, early assignment on in-the-money short calls with less extrinsic value than the dividend is more likely because the dividend payment covers the loss from the extrinsic value when exercising the option.

All in all, the risk of being assigned early on a short option is typically very low for the reasons discussed in this guide. However, it’s likely that you will be assigned on a short option at some point while trading options (unless you don’t sell options!), but at least now you’ll be prepared!

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➥ Bearish Strategies

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☆ Options Trading for Beginners ☆

➥ Basics of Calls and Puts

➥ What is a Strike Price?

➥ Option Expiration

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➥ Exercise and Assignment

➥ The Bid-Ask Spread

➥ Volume and Open Interest

➥ Option Chain Explained

➥ Option Greeks 101

➥ Delta Explained

➥ Gamma Explained

➥ Theta Explained

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Chris Butler received his Bachelor’s degree in Finance from DePaul University and has nine years of experience in the financial markets.

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The Risks of Options Assignment

Any trader holding a short option position should understand the risks of early assignment. An early assignment occurs when a trader is forced to buy or sell stock when the short option is exercised by the long option holder. Understanding how assignment works can help a trader take steps to reduce their potential losses.

Understanding the basics of assignment

An option gives the owner the right but not the obligation to buy or sell stock at a set price. An assignment forces the short options seller to take action. Here are the main actions that can result from an assignment notice:

Short call assignment: The option seller must sell shares of the underlying stock at the strike price.
Short put assignment: The option seller must buy shares of the underlying stock at the strike price.

For traders with long options positions, it's possible to choose to exercise the option, buying or selling according to the contract before it expires. With a long call exercise, shares of the underlying stock are bought at the strike price while a long put exercise results in selling shares of the underlying stock at the strike price.

When a trader might get assigned

There are two components to the price of an option: intrinsic 1 and extrinsic 2 value. In the case of exercising an in-the-money 3 (ITM) long call, a trader would buy the stock at the strike price, which is lower than its prevailing price. In the case of a long put that isn't being used as a hedge for a long stock position, the trader shorts the stock for a price higher than its prevailing price. A trader only captures an ITM option's intrinsic value if they sell the stock (after exercising a long call) or buy the stock (after exercising a long put) immediately upon exercise.

Without taking these actions, a trader takes on the risks associated with holding a long or short stock position. The question of whether a short option might be assigned depends on if there's a perceived benefit to a trader exercising a long option that another trader has short. One way to attempt to gauge if an option could be potentially assigned is to consider the associated dividend. An options seller might be more likely to get assigned on a short call for an upcoming ex-dividend if its time value is less than the dividend. It's more likely to get assigned holding a short put if the time value has mostly decayed or if the put is deep ITM and close to expiration with a wide bid/ask spread on the stock.

It's possible to view this information on the Trade page of the thinkorswim ® trading platform. Review past dividends, the price of the short call, and the price of the put at the call's strike price. While past performance cannot be relied upon to continue, this information can help a trader determine whether assignment is more or less likely.

Reducing the risk associated with assignment

If a trader has a covered call that's ITM and it's assigned, the trader will deliver the long stock out of their account to cover the assignment.

A trader with a call vertical spread 4 where both options are ITM and the ex-dividend date is approaching may want to exercise the long option component before the ex-dividend date to have long stock to deliver against the potential assignment of the short call. The trader could also close the ITM call vertical spread before the ex-dividend date. It might be cheaper to pay the fees to close the trade.

Another scenario is a call vertical spread where the ITM option is short and the out-of-the-money (OTM) option is long. In this case, the trader may consider closing the position or rolling it to a further expiration before the ex-dividend date. This move can possibly help the trader avoid having short stock on the ex-dividend date and being liable for the dividend.

Depending on the situation, a trader long an ITM call might decide it's better to close the trade ahead of the ex-dividend date. On the ex-dividend date, the price of the stock drops by the amount of the dividend. The drop in the stock price offsets what a trader would've earned on the dividend and there would still be fees on top of the price of the put.

Assess the risk

When an option is converted to stock through exercise or assignment, the position's risk profile changes. This change could increase the margin requirements, or subject a trader to a margin call, 5 or both. This can happen at or before expiration during early assignment. The exercise of a long option position can be more likely to trigger a margin call since naked short option trades typically carry substantial margin requirements.

Even with early exercise, a trader can still be assigned on a short option any time prior to the option's expiration.

1 The intrinsic value of an options contract is determined based on whether it's in the money if it were to be exercised immediately. It is a measure of the strike price as compared to the underlying security's market price. For a call option, the strike price should be lower than the underlying's market price to have intrinsic value. For a put option the strike price should be higher than underlying's market price to have intrinsic value.

2 The extrinsic value of an options contract is determined by factors other than the price of the underlying security, such as the dividend rate of the underlying, time remaining on the contract, and the volatility of the underlying. Sometimes it's referred to as the time value or premium value.

3 Describes an option with intrinsic value (not just time value). A call option is in the money (ITM) if the underlying asset's price is above the strike price. A put option is ITM if the underlying asset's price is below the strike price. For calls, it's any strike lower than the price of the underlying asset. For puts, it's any strike that's higher.

4 The simultaneous purchase of one call option and sale of another call option at a different strike price, in the same underlying, in the same expiration month.

5 A margin call is issued when the account value drops below the maintenance requirements on a security or securities due to a drop in the market value of a security or when buying power is exceeded. Margin calls may be met by depositing funds, selling stock, or depositing securities. A broker may forcibly liquidate all or part of the account without prior notice, regardless of intent to satisfy a margin call, in the interests of both parties.

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New to Futures?

This brochure provides an in-depth description of the exercise and assignment process for options on futures that trade on CME Group-designated contract markets:

Chicago Board of Trade (CBOT)
Chicago Mercantile Exchange (CME)
Commodity Exchange (COMEX)
New York Mercantile Exchange (NYMEX)

Contents include:

Preliminaries
Random Assignment
Pro Rata Assignment
The Role of the Clearing Member Firm
Timetables for Option Exercise and Assignment
Overview of contrary options exercise

Options on Futures

Information about the exercise and assignment process for options on futures on CME Group designated contract markets.

All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.

CME Group is the world’s leading derivatives marketplace. The company is comprised of four Designated Contract Markets (DCMs). Further information on each exchange's rules and product listings can be found by clicking on the links to CME , CBOT , NYMEX and COMEX .

The Mechanics of Option Trading, Exercise, and Assignment

Options were originally traded in the over-the-counter ( OTC ) market , where the terms of the contract were negotiated. The advantage of the OTC market over the exchanges is that the option contracts can be tailored: strike prices, expiration dates, and the number of shares can be specified to meet the needs of the option buyer. However, transaction costs are greater and liquidity is less.

Option trading really took off when the first listed option exchange — the Chicago Board Options Exchange ( CBOE )— was organized in 1973 to trade standardized contracts, greatly increasing the market and liquidity of options. The CBOE was the original exchange for options, but, by 2003, it has been superseded in size by the electronic International Securities Exchange (ISE), based in New York. Most options sold in Europe are traded through electronic exchanges. Other exchanges for options in the United States include: NYSE Euronext ( NYX ), and the NASDAQtrader.com .

Option exchanges are central to the trading of options:

they establish the terms of the standardized contracts
they provide the infrastructure — both hardware and software — to facilitate trading, which is increasingly computerized
they link together investors, brokers, and dealers on a centralized system, so that traders can from the best bid and ask prices
they guarantee trades by taking the opposite side of each transaction
they establish the trading rules and procedures

Options are traded just like stocks — the buyer buys at the ask price and the seller sells at the bid price . The settlement time for option trades is 1 business day ( T+1 ). However, to trade options, an investor must have a brokerage account and be approved for trading options and must also receive a copy of the booklet Characteristics and Risks of Standardized Options .

The option holder, unlike the holder of the underlying stock, has no voting rights in the corporation, and is not entitled to any dividends. Brokerage commissions , which are a little higher for options than for stocks, must also be paid to buy or sell options, and for the exercise and assignment of option contracts. Prices are usually quoted with a base price plus cost per contract, usually ranging from $5 to $15 minimum charge for up to 10 contracts, with a lower per contract charge, typically $0.50 to $1.50 per contract, for more than 10 contracts. Most brokerages offer lower prices to active traders. Here are some examples of how option prices are quoted:

$9.99 + $0.75 per contract for online option trades
$9.99 + $0.75 per contract for online option trades; phone trades are $5 more, and broker-assisted trades are $25 more
$1.50 per contract with a minimum standard rate of $14.95, with several discounts for active traders
Sliding commission scale ranging from $6.99 + $0.75 per contract for traders making at least 1500 trades per quarter to $12.99 + $1.25 per contract for investors with less than $50,000 in assets and making fewer than 30 trades per quarter. $19.99 for exercise and assignments.

The Options Clearing Corporation (OCC)

The Options Clearing Corporation ( OCC ) is the counterparty to all option trades. The OCC issues, guarantees, and clears all option trades involving its member firms, including all U.S. option exchanges, and ensures that sales are transacted according to the current rules. The OCC is jointly owned by its member firms — the exchanges that trade options — and issues all listed options, and controls and effects all exercises and assignments. To provide a liquid market, the OCC guarantees all trades by acting as the other party to all purchases and sales of options.

The OCC, like other clearing companies, is the direct participant in every purchase and sale of an option contract. When an option writer or holder sells his contracts to someone else, the OCC serves as an intermediary in the transaction. The option writer sells his contract to the OCC and the option buyer buys it from the OCC.

The OCC publishes, at optionsclearing.com , statistics, news on options, and any notifications about changes in the trading rules, or the adjustment of certain option contracts because of a stock split or that were subjected to unusual circumstances, such as a merger of companies whose stock was the underlying security to the option contracts.

The OCC operates under the jurisdiction of both the Securities and Exchange Commission ( SEC ) and the Commodities Futures Trading Commission ( CFTC ). Under its SEC jurisdiction, OCC clears transactions for put and call options on common stocks and other equity issues, stock indexes, foreign currencies, interest rate composites and single-stock futures . As a registered Derivatives Clearing Organization ( DCO ) under CFTC jurisdiction, the OCC clears and settles transactions in futures and options on futures .

The Exercise of Options by Option Holders and the Assignment to Fulfill the Contract to Option Writers

When an option holder wants to exercise his option, he must notify his broker of the exercise, and if it is the last trading day for the option, the broker must be notified before the exercise cut-off time , which will probably be earlier than on trading days before the last day, and the cut-off time may differ for different option classes or for index options. Although policies differ among brokerages, it is the duty of the option holder to notify his broker to exercise the option before the cut-off time.

When the broker is notified, then the exercise instructions are sent to the OCC, which then assigns the exercise to one of its Clearing Members who are short in the same option series as is being exercised. The Clearing Member will then assign the exercise to one of its customers who is short in the option. The customer is selected by a specific procedure, usually on a first-in, first-out basis, or some other fair procedure approved by the exchanges. Thus, there is no direct connection between an option writer and a buyer.

To ensure contract performance, option writers are required to post margin, the amount depending on how much the option is in the money. If the margin is deemed insufficient, then the option writer will be subjected to a margin call. Option holders don't need to post margin because they will only exercise the option if it is in the money. Options, unlike stocks, cannot be bought on margin.

Because the OCC is always a party to an option transaction, an option writer can close out his position by buying the same contract back, even while the contract buyer retains his position, because the OCC draws from a pool of contracts with no connection to the original contract writer and buyer.

A diagram outlining the exercise and assignment of a call.

Example: No Direct Connection between Investors Who Write Options and those Who Buy Them

John Call-Writer writes an option that legally obligates him to provide 100 shares of Microsoft for the price of $30 until April, 2007. The OCC buys the contract, adding it to the millions of other option contracts in its pool. Sarah Call-Buyer buys a contract that has the same terms that John Call-Writer wrote — in other words, it belongs to the same option series . However, option contracts have no name on them. Sarah buys from the OCC, just as John sold to the OCC, and she just gets a contract giving her the right to buy 100 shares of Microsoft for $30 per share until April, 2007.

Scenario 1 — Exercises of Options are Assigned According to Specific Procedures

In February, the price of Microsoft rises to $35, and Sarah thinks it might go higher in the long run, but since March and April generally are volatile times for most stocks, she decides to exercise her call (sometimes called calling the stock ) to buy Microsoft stock at $30 per share to be able to hold the stock indefinitely. She instructs her broker to exercise her call; her broker forwards the instructions to the OCC, which then assigns the exercise to one of its participating members who provided the call for sale; the participating member, in turn, assigns it to an investor who wrote such a call; in this case, it happened to be John's brother, Sam Call-Writer. John got lucky this time. Sam, unfortunately, either must turn over his appreciated shares of Microsoft, or he'll have to buy them in the open market to provide them. This is the risk that an option writer must take — an option writer never knows when he'll be assigned an exercise when the option is in the money.

Scenario 2 — Closing Out an Option Position by Buying Back the Contract

John Call-Writer decides that Microsoft might climb higher in the coming months, and so decides to close out his short position by buying a call contract with the same terms that he wrote — one that is in the same option series. Sarah, on the other hand, decides to maintain her long position by keeping her call contract until April. This can happen because there are no names on the option contracts. John closes his short position by buying the call back from the OCC at the current market price, which may be higher or lower than what he paid, resulting in either a profit or a loss. Sarah can keep her contract because when she sells or exercises her contract, it will be with the OCC, not with John, and Sarah can be sure that the OCC will fulfill the terms of the contract if she should decide to exercise it later on.

Thus, the OCC allows each investor to act independently of the other .

When the assigned option writer must deliver stock, she can deliver stock already owned, buy it on the market for delivery, or ask her broker to go short on the stock and deliver the borrowed shares. However, finding borrowed shares to short may not always be possible, so this method may not be available.

If the assigned call writer buys the stock in the market for delivery, the writer only needs the cash in his brokerage account to pay for the difference between what the stock cost and the strike price of the call, since the writer will immediately receive cash from the call holder for the strike price. Similarly, if the writer is using margin, then the margin requirements apply only to the difference between the purchase price and the strike price of the option. Full margin requirements, however, apply to shorted stock.

An assigned put writer will need either the cash or the margin to buy the stock at the strike price, even if he intends to sell the stock immediately after the exercise of the put. When the call holder exercises, he can keep the stock or immediately sell it. However, he must have the margin, if he has a margin account, or cash, for a cash account, to pay for the stock, even if he sells it immediately. He can also use the delivered stock to cover a short in the stock. (Note: equity requirements differ because an assigned call writer immediately receives the cash upon delivery of the shares, whereas a put writer or a call holder who purchased the shares may decide to keep the stock.)

Example: Fulfilling a Naked Call Exercise

A call writer receives an exercise notice on 10 call contracts with a strike of $30 per share on XYZ stock on which she is still short. The stock currently trades at $35 per share. She does not own the stock, so, to fulfill her contract, she must buy 1,000 shares of stock in the market for $35,000 then sell it for $30,000, resulting in an immediate loss of $5,000 minus the commissions of the stock purchase and assignment.

Both the exercise and assignment incur brokerage commissions for both holder and assigned writer. Generally, the commission is smaller to sell the option than it is to exercise it. However, there may be no choice if it is the last day of trading before expiration. Although the buying and selling of options is settled in 1 business day after the trade, settlement for an exercise or assignment occurs on the 3 rd business day after the exercise or assignment ( T+3 ), since it involves the purchase of the underlying stock.

Often, a writer will want to cover his short by buying the written option back on the open market. However, once he receives an assignment, then it is too late to cover his short position by closing the position with a purchase. Assignment is usually selected from writers still short at the end of the trading day. A possible assignment can be anticipated if the option is in the money at expiration, the option is trading at a discount, or the underlying stock is about to pay a large dividend.

The OCC automatically exercises any option that is in the money by at least $0.50 ( automatic exercise , Exercise-by-Exception , Ex-by-Ex ), unless notified by the broker not to. A customer may not want to exercise an option that is only slightly in the money if the transaction costs would exceed the net profit from the exercise. In spite of the automatic exercise by the OCC, the option holder should notify his broker by the exercise cut-off time , which may be before the end of the trading day, of an intention to exercise. Exact procedures will depend on the broker.

Any option that is sold on the last trading day before expiration would likely be bought by a market maker. Because a market maker's transaction costs are lower than for retail customers, a market maker may exercise an option even if it is only a few cents in the money. Thus, any option writer who does not want to be assigned should close out his position before expiration day if there is any chance that it will be in the money even by a few pennies.

Early Exercise

Sometimes, an option will be exercised before its expiration day — called early exercise , or premature exercise . Because options have a time value in addition to intrinsic value, most options are not exercised early. However, there is nothing to prevent someone from exercising an option, even if it is not profitable to do so, and sometimes it does occur, which is why anyone who is short an option should expect the possibility of being assigned early.

When an option is trading below parity (below its intrinsic value), then arbitrageurs can take advantage of the discount to profit from the difference, because their transaction costs are very low. An option with a high intrinsic value will have little time value, and so, because of the difference between supply and demand in the market at any given moment, the option could be trading for less than its true worth. An arbitrageur will almost certainly take advantage of the price discrepancy for an instant profit. Anyone who is short an option with a high intrinsic value should expect a good possibility of being assigned an exercise.

Example: Early Exercise by Arbitrageurs Profiting from an Option Discount

XYZ stock is currently at $40 per share. Calls on the stock with a strike of $30 are selling for $9.80. This is a difference of $0.20 per share, enough of a difference for an arbitrageur, whose transaction costs are typically much lower than for a retail customer, to profit immediately by selling short the stock at $40 per share, then covering his short by exercising the call for a net of $0.20 per share minus the arbitrageur's small transaction costs.

Option discounts will only occur when the time value of the option is small, because either it is deep in the money or the option will soon expire.

Option Discounts Arising from an Imminent Dividend Payment on the Underlying Stock

When a large dividend is paid by the underlying stock, its price drops on the ex-dividend date, resulting in a lower value for the calls. The stock price may remain lower after the payment, because the dividend payment lowers the book value of the company. This causes many call holders to either exercise early to collect the dividend, or to sell the call before the drop in stock price. When many call holders sell at the same time, it causes the call to sell at a discount to the underlying, thereby creating opportunities for arbitrageurs to profit from the price difference. However, there is some risk that the transaction will lose money, because the dividend payment and drop in stock price may not equal the premium paid for the call, even if the dividend is more than the time value of the call.

Example: Arbitrage Profit/Loss Scenario for a Dividend-Paying Stock

XYZ stock is currently trading at $40 per share and will pay a dividend of $1 the next day. A call with a $30 strike is selling for $10.20, the $0.20 being the time value of the premium. So an arbitrageur decides to buy the call and exercise it to collect the dividend. Since the dividend is $1, but the time value is only $0.20, this could lead to a profit of $0.80 per share, but on the ex-dividend date, the stock drops to $39. Adding the $1 dividend to the share price yields $40, which is still less than buying the stock for $30 plus $10.20 for the call. It might be profitable if the stock does not drop as much on the ex-date or it recovers after the ex-date sufficiently to make it profitable. But this is a risk for the arbitrageur, and this transaction is, thus, known as risk arbitrage , because the profit is not guaranteed.

2019 Statistics for the Fate of Options

Data Source: https://www.optionseducation.org/referencelibrary/faq/options-exercise

All option writers who didn't close out their position earlier by buying an offsetting contract made the maximum profit — the premium — on those contracts that expired. Option writers have lost at least something when the option is exercised, because the option holder wouldn't exercise it unless it was in the money. The more the exercised option was in the money, the greater the loss is for the assigned option writer and the greater the profits for the option holder. A closed out transaction could be at a profit or a loss for both holders and writers of options, but closing out a transaction is usually done either to maximize profits or to minimize losses, based on expected changes in the price of the underlying security until expiration.

The main ways you can close your Option position(s) is by trading your contract, exercising it, letting it expire, or having your contract assigned.

Buying back a short position or selling a long position is the most common way investors choose to close out of their Option positions, especially if they are in-the-money. Because of the capital required to exercise an Options contract, many choose to close the contract before expiration, allowing them to realize any remaining time value left in the contract, and for those contracts in-the-money, any profits from the increase in the Option's intrinsic value without the need for additional capital or the worry about being short cash or shares.

When can I trade options?

The majority of Options contracts trade Monday - Friday from 9:30am to 4pm ET.

On the day of expiration, you’ll have until 1pm to open a same-day expiring contract, and until 3:30pm to close a same-day expiring contract. At 3:30pm ET, Public will automatically cancel any pending orders for same-day expiring contracts. Additionally, Public may start attempting to close out any same-day expiring positions that are at risk.

To understand at risk positions, refer to the ‘ What happens if I don’t have the shares or buying power to exercise? ‘ section below.

What does exercise mean?

Exercising essentially means executing your right to buy or sell the underlying equity at the strike price. You can choose to exercise your right any day up to or on the expiration date, which is called “early exercise.” Or, if you don’t take action, your Option contract will be automatically exercised at expiration if it is at least one penny in-the-money—a process referred to as the "exercise by exception" by the Options Clearing Corporation.

What happens if I exercise?

Exercising an Options contract depends on the type of Option you own. If you own a call Option, by exercising the contract, you agree to buy shares at the strike price. If you own a put Option, by exercising, you agree to sell shares you own at the strike price. For example, if you’re exercising a call Option that involves buying $10,000 worth of stock, you’ll need $10,000 in your buying power to complete the trade—even if you plan to immediately sell the stock. For a put Option, you would need to own the shares you are obliged to deliver or else you would wind up short all of those shares and be in a precarious situation, forced to buy them back at a future price.

How do I exercise?

If your Option is in-the-money at expiration - even if only by one penny - your contract will automatically exercise at expiration, except in certain circumstances where Public must get involved to mitigate risk.

You can also exercise your Options early, prior to expiration. To exercise early, reach out to Public’s customer support team either via the Chat or by emailing [email protected] , who will submit the exercise request on your behalf. Please include:

Action statement: “I would like to exercise the following Options:”

Followed by:

Contract (Symbol, Strike price, Expiration date, Call/Put)

Quantity you wish to exercise

Your account number

Any exercise requests after 4pm will be automatically queued for the next trading day, unless it’s on the day of expiration. The exercise request is processed overnight, and your position and balances will be updated on the next business day. Coming soon, you’ll be able to directly exercise your Option in the app.

What happens if I don’t have the shares or buying power to exercise?

It is important to remember that contracts at least one penny in-the-money will automatically exercise at expiration. Given this, if you do not have the necessary buying power or shares, it’s important that you attempt to close that position prior to 3:30pm ET on day of expiration. Remember, it is your responsibility to actively manage the risks associated with your Options positions.

At 3:30pm ET on the day of expiration, if your contract is in-the-money and you do not have the necessary buying power or shares, Public will attempt to liquidate the position on your behalf to prevent you from going into a negative debit balance or being short shares. If for any reason we can’t sell your contract, and you don’t have the necessary buying power or shares to exercise the contract, Public may attempt to submit a Do Not Exercise request to the Options Clearing Corporation (OCC).

What is a do not exercise (“DNE”) request?

A DNE request is when you ask the OCC to not exercise your Options contract - having it expire worthless. You may ask Public to submit a DNE request on your behalf, or in certain instances, Public may submit one of your behalf as a last resort. DNE requests are typically used by investors as a last resort after they’ve had other failed attempts to close out their in-the-money long Option position, and do not want the contract to exercise.

To submit a do not exercise request, email [email protected] with the subject ‘DNE request’ on the day of expiration. In the email, please include:

Action statement: “I would like to submit a do not exercise for the following Options:”

Public’s cut-off time for submitting a do not exercise request on your behalf is 4:30pm ET on the day of expiration. All requests submitted are processed on a best-effort basis. Failure to submit a DNE request before our cutoff time may result in in-the-money contract(s) being exercised automatically.

It’s also important to note that even if you submit a DNE request, your position may still be liquidated on the day of expiration.

What is expiration?

Each Option contract comes with an expiration date that is determined at the creation of the contract itself. An Option’s expiration date is the last day you can exercise your right to buy or sell the underlying stock at the agreed-upon strike price. If you hold your contract until expiration, and it is either out-of-the-money or in-the-money but you submitted a DNE, the Option will expire worthless. Or in other terms, after the expiration date, the Option contract becomes null and void (has zero value) and is no longer tradeable.

How would my contract expire?

Contracts typically expire in two scenarios. The first, if you (or in select circumstances, Public) submit a do not exercise request. Or, the second, when a contract becomes essentially worthless - the open interest and price drop close to 0.

What does assignment mean?

Assignment refers to the obligation of an Option seller to fulfill the contract's terms when the option holder, or buyer, chooses to exercise their right. Option sellers are often referred to as option writers, or being short the contract.

When an option holder chooses to early exercise, what are the steps to assignment?

Decision to exercise: Option holders may choose to exercise early when market conditions align, potentially fearing a reversal in stock prices that could erode profits, or wanting to capitalize on an upcoming dividend.

Initial notification: The Options Clearing Corporation is informed upon early exercise, randomly assigning a brokerage client who is short a matching Option.

Assignment notification: The short Option holder is notified by their brokerage about being assigned and is now responsible for meeting the Option contract's terms.

Fulfilling the obligation: Option writers must deliver the underlying asset for call Options or pay for the underlying asset for put Options. This is typically an automated process carried out by brokerages.

Aside from early exercise, when else can assignment happen?

As an Option writer, there is risk of assignment up until expiration. This is because any Option contract that is in-the-money at the time of expiration will be automatically exercised, even if it is only in the money by $0.01, unless the Option owner specifically requests to have it not exercised.

Can you provide an example of an assignment?

Let’s take a basic example. Say you've sold a call Option on FlyFit at $50, and sometime after the stock rises to $60. Seeing this favorable condition, a person who bought an Option with the same conditions decides to exercise their right to buy FlyFit shares at $50.

This triggers a notification to the Options Clearing Corporation, which randomly selects a member brokerage, who then randomly nominates you as the Option writer, as you’re short this specific type of contact.

From there, we’ll get in touch and notify you that you’ve been assigned and are now responsible for delivering FlyFit shares at the agreed $50 strike price to the Options holder. In exchange for delivering the shares, you will be paid $50 per share from the Options holder.

When am I at risk of assignment?

Selling Options always carries the possibility of assignment, which is particularly risky if you lack the necessary shares or capital. Preparedness is crucial to navigate potential challenges.

As an investor, you can mitigate assignment risks by buying to close out your positions well before expiration, particularly if the Option is approaching an in-the-money status, providing more control and potential savings.

Additionally, it is important to pay attention to a company’s earnings and dividend dates, as during those times, the risk of assignment may be heightened.

For further questions contact Member Support via in-app chat or email at [email protected] .

Options University 10: Spreads – Exercise and Assignment

Video summary (1 and a half minutes).

The closing price of the stock on expiry establishes which options finish in the money and subject to exercise or assignment or those that finish out of the money, and worthless. Because option spreads involve both buying and selling of options, if the entire spread finishes out of the money, it either expires worthless, with nothing exercised or assigned. If a spread finishes completely in the money, it expires at its max value, with the options exercised and assigned, canceling each other out, and profits or losses determined. However, if only part of a spread is in the money, the position runs the risk of being assigned or auto-exercised and a resulting stock position may occur. Therefore many investors close spreads before expiry, if only part of the spread is in the money, or if the stock is close enough to the spread that that may occur.

COMPLEMENTARY READING

Glossary of Options Trading Terms
6 Option Spreads Explained (Videos)

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Expiration, exercise, and assignment

Unlike stocks, options have set expiration , exercise , and assignment dates.

Each option contract has a set expiration date. This date significantly impacts the value of the option contract because it limits the time you can buy, sell, or exercise the option contract. Once an option contract expires, it will stop trading and either be exercised or expire worthless.

The following are a few important things to keep in mind as the expiration date of an option contract approaches:

We’ll attempt to exercise any option you own that is $0.01 or more in-the-money, as long as your investment account has the required buying power, such as for a call option, or the necessary underlying shares to sell, such as for a put option. Keep in mind that managing your options positions, including taking proactive steps to mitigate risk, is ultimately your responsibility.
If you don’t have enough buying power or underlying shares to exercise your option, we may attempt to sell the contract in the market for you within the last 30 minutes before the market closes on the options' expiration date.
Robinhood’s risk checks are designed to close positions based on the position’s value, the implied risk, and your current account portfolio and value, among other things.

Moneyness of an option

In-the-money, at-the-money, and out-of-the-money refer to the position of the underlying security’s price relative to the strike price of the option. They’re also sometimes referred to as the moneyness of an option.

To learn more, check out Options trading from the pros .

If your option is in-the-money at the market’s close, Robinhood will attempt to exercise it for you at expiration unless:

You don’t have sufficient buying power.
The exercise would result in a short stock position.
You’ve asked Robinhood to submit a Do Not Exercise (DNE) request on your behalf. Keep in mind, the cut-off time for submitting a DNE request is 5 PM ET.

Once your contract expires, it’ll move to your expired contracts in your account History .

After-hours price movements can change the in-the-money or out-the-money status of an options contract.

If for any reason we can't sell your contract, and you don’t have the necessary buying power or shares to exercise it, we may attempt to submit a DNE request to the Options Clearing Corporation (OCC), and your contract should expire worthless.

To determine if an option position is “at risk of being in-the-money,” Robinhood will calculate an estimated upper and lower bound for the underlying security’s close price on the expiration date. If your option’s strike price falls within these parameters, we may place an order to close your position.

If your option is in-the-money, Robinhood will typically exercise it for you at expiration automatically. However, you can also exercise your options contract early in the app:

Navigate to the options position detail screen
Select Exercise

You’ll then be guided through steps to exercise your contract.

Before expiration day, an early exercise request will be submitted immediately if it’s placed during regular market hours (9 AM-4 PM ET) and trading days. Contact us before 5 PM ET if you’d like to cancel an exercise request.

Early exercise requests submitted after 4 PM ET will be queued for the next trading day. You can cancel a pending exercise request until 11:59 PM ET.

On expiration day, you won’t be able to submit an early exercise request in the app or on the web after 4 PM ET. Contact us to request an exercise request after 4 PM ET. We’ll try to accommodate exercise requests until 5 PM ET on a best-effort basis.

How to confirm

After you exercise an option, you’ll get an in-app confirmation that your option was exercised and that the associated shares are pending. You’ll also get an email and an in-app notification before the next trading day confirming that your option was exercised or assigned (after we receive confirmation from the OCC).

How to submit a DNE

If your option is out-of-the-money, Robinhood will take no action and the contract will typically expire. If you’d like to submit a DNE request, you must contact us before 5 PM on the expiration date .

When you are assigned, you have the obligation to fulfill the terms of the contract. When you sell-to-open an options contract, you can be assigned at any point prior to expiration (regardless of the underlying share price).

Depending on the collateral held for a short contract, a few different things can occur. For more details, check out Navigating exercise & assignment .

Check out Advanced options strategies (Level 3) to learn more about calls, puts, and multi-leg options strategies.

Unassigned anticipated assignment

On rare occasions, the in-the-money short option of a spread won’t get assigned. This happens when the counterparty files a DNE request for their in-the-money option, or a post-market movement shifts the option from in-the-money to out-of-the-money (and the contract holder decides not to exercise). In this scenario, you’ll likely be long or short the stock the following trading day, potentially resulting in an account deficit or margin call.

All resulting short stock positions must be covered the following trading day.

The scenario listed above could result in a gain or loss that’s greater than theoretical max gain or loss on the position.

Early assignment

If you’re trading a multi-leg options strategy and are assigned a short position before expiration, keep the following in mind, such as any account deficits or margin calls .

Decreased buying power

Early assignment may result in decreased buying power. This is because the positions you hold are used to calculate your buying power, and at the time you’re assigned, you may not have the shares (for call spreads) or the buying power (for put spreads) needed to cover the deficit in your account. If you have an account deficit, you can’t open new positions until the deficit is resolved.

Account deficits

Early assignment may also result in an account deficit if it causes you to use more buying power than you have available. When you have an account deficit, there are a few potential actions that you can take, including exercising your long contract or buying/selling shares. If you have an account deficit and choose to exercise your long contract to increase your buying power, you will not be able to open new positions while your exercise is pending. But you should be able to open new positions once your exercise has been processed if exercising your long contract is sufficient to cover your account deficit.

Margin calls

Early assignment may also result in margin call if it causes your account value to fall below your margin maintenance requirement. When you have a margin call, there are a few potential actions that you can take: exercising your long contract, buying/selling shares by placing orders, or depositing enough funds to cover the margin call. If you have a margin call and choose to exercise your long contract to decrease your margin deficiency, your margin call may persist while your exercise is pending or, further, if the exercise was not sufficient enough to cover your margin deficit. If exercising your long contract is sufficient to cover your margin deficiency, any margin calls should be satisfied once your exercise is processed.

Early assignment and exercise

Keep in mind that we can’t process an early assignment before the end of the trading day and, so we can’t exercise the long leg until the next trading day (at the earliest). That’s because the Options Clearing Corporation (OCC) doesn’t notify us of your assignment until after the market closes (when they process assignments). While funds and shares that result from exercises are made available immediately during market hours, positions exercised after market hours are queued and credited to your account the next trading day.

Pending shares

If an option is exercised before expiration.

A few things can happen if your option is exercised early (also known as an early-exercise), depending on the time of day.

If the early exercise occurs during market hours (9 AM-4 PM ET), the associated shares will show in your account immediately, and will no longer show as a pending exercise in your account.

If the early exercise occurs after 4 PM ET, it’ll be queued for the next trading day, and the associated shares will remain pending until the exercise has cleared.

Some underlying assets (like exchange-traded products) are eligible for late-close options trading until 4:15 PM ET. Check out Options trading hours for details.

If a long option exercised or assigned at expiration

Once your contract has been exercised or assigned, we’ll hold the associated shares or cash collateral until we receive confirmation from the OCC that all aspects of the exercise or assignment have cleared. This process typically takes 1 business day. Once completed, the pending state of the exercise or assignment will be removed and your account will be updated accordingly.

Finding your trade details

Select Account (person icon) → in the app, Menu (3 bars)
Select History
Select the option you’re looking for (e.g. XYZ $1,200 Call Oct. 21 Exercise)

Options dividend risk

Dividend risk is the risk that you’ll get assigned on a short call position (either as part of a covered call or spread) the trading day before the underlying security’s ex-dividend date. If this happens and you don’t own 100 shares of the stock, you’ll open the ex-date with a short stock position and actually be responsible for paying that dividend yourself. You can potentially avoid this by closing any position that includes a short call option at any time before the end of regular market hours on the trading day before the ex-date.

Robinhood may take action in your brokerage account to close any positions that have dividend risk the trading day before an ex-dividend date. Generally, we’ll only take action if the dividend that would be owed upon assignment represents a large portion of your total account value, which we’ll try to do on a best-effort basis.

Options dividend example

Let’s say, XYZ is going to pay a dividend as follows:

Ex-date: October 1
Record date: October 3
Pay date: October 31

If you’re short, or you’ve sold an option call contract for XYZ that’s expiring on or after October 1, you’re at risk of an assignment.

For example, if you get assigned on September 30, you’d have a short position of 100 shares that were exercised by the counterparty (a person who bought and exercised the call option) when the market opens on October 1. If this occurs, you’ll have to deliver the underlying shares and pay the counterparty the dividend that is associated with these shares.

In this example, you’d owe a dividend of $100, which is $1 x 100 shares. We’d automatically deduct the dividend amount from your account, even if it causes you to have a negative balance.

You can avoid this dividend risk by closing your option before the market closes on any trading day before the ex-dividend date.

The day before the ex-dividend, we’ll try to prevent you from selling to open new short call options that are likely to be assigned that same night if the underlying symbol ex-dividend date occurs on the next trading day. This is only temporary, and you can open new short call positions on or after the ex-dividend date.

Disclosures

Any hypothetical examples are provided for illustrative purposes only. Actual results will vary.

Content is provided for educational purposes only, doesn't constitute tax or investment advice, and isn't a recommendation for any security or trading strategy. All investments involve risk, including the possible loss of capital. Past performance doesn't guarantee future results.

If multiple options positions or strategies are established in the same underlying symbol, Robinhood Financial may deem it necessary to pair or re-pair the separately established options positions or strategies together as part of its risk management process.

Robinhood Financial doesn't guarantee favorable investment outcomes. The past performance of a security or financial product doesn't guarantee future results or returns.

Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy.

Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Before using margin, customers must determine whether this type of trading strategy is right for them given their specific investment objectives, experience, risk tolerance, and financial situation. For more information, review Robinhood Financial’s Margin Disclosure Statement , Margin Agreement and FINRA Investor Information . These disclosures have information on Robinhood Financial’s lending policies, interest charges, and the risks associated with margin accounts.

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Assignment: Definition in Finance, How It Works, and Examples

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

What Is an Assignment?

Assignment most often refers to one of two definitions in the financial world:

The transfer of an individual's rights or property to another person or business. This concept exists in a variety of business transactions and is often spelled out contractually.
In trading, assignment occurs when an option contract is exercised. The owner of the contract exercises the contract and assigns the option writer to an obligation to complete the requirements of the contract.

Key Takeaways

Assignment is a transfer of rights or property from one party to another.
Options assignments occur when option buyers exercise their rights to a position in a security.
Other examples of assignments can be found in wages, mortgages, and leases.

Uses For Assignments

Assignment refers to the transfer of some or all property rights and obligations associated with an asset, property, contract, or other asset of value. to another entity through a written agreement.

Assignment rights happen every day in many different situations. A payee, like a utility or a merchant, assigns the right to collect payment from a written check to a bank. A merchant can assign the funds from a line of credit to a manufacturing third party that makes a product that the merchant will eventually sell. A trademark owner can transfer, sell, or give another person interest in the trademark or logo. A homeowner who sells their house assigns the deed to the new buyer.

To be effective, an assignment must involve parties with legal capacity, consideration, consent, and legality of the object.

A wage assignment is a forced payment of an obligation by automatic withholding from an employee’s pay. Courts issue wage assignments for people late with child or spousal support, taxes, loans, or other obligations. Money is automatically subtracted from a worker's paycheck without consent if they have a history of nonpayment. For example, a person delinquent on $100 monthly loan payments has a wage assignment deducting the money from their paycheck and sent to the lender. Wage assignments are helpful in paying back long-term debts.

Another instance can be found in a mortgage assignment. This is where a mortgage deed gives a lender interest in a mortgaged property in return for payments received. Lenders often sell mortgages to third parties, such as other lenders. A mortgage assignment document clarifies the assignment of contract and instructs the borrower in making future mortgage payments, and potentially modifies the mortgage terms.

A final example involves a lease assignment. This benefits a relocating tenant wanting to end a lease early or a landlord looking for rent payments to pay creditors. Once the new tenant signs the lease, taking over responsibility for rent payments and other obligations, the previous tenant is released from those responsibilities. In a separate lease assignment, a landlord agrees to pay a creditor through an assignment of rent due under rental property leases. The agreement is used to pay a mortgage lender if the landlord defaults on the loan or files for bankruptcy . Any rental income would then be paid directly to the lender.

Options Assignment

Options can be assigned when a buyer decides to exercise their right to buy (or sell) stock at a particular strike price . The corresponding seller of the option is not determined when a buyer opens an option trade, but only at the time that an option holder decides to exercise their right to buy stock. So an option seller with open positions is matched with the exercising buyer via automated lottery. The randomly selected seller is then assigned to fulfill the buyer's rights. This is known as an option assignment.

Once assigned, the writer (seller) of the option will have the obligation to sell (if a call option ) or buy (if a put option ) the designated number of shares of stock at the agreed-upon price (the strike price). For instance, if the writer sold calls they would be obligated to sell the stock, and the process is often referred to as having the stock called away . For puts, the buyer of the option sells stock (puts stock shares) to the writer in the form of a short-sold position.

Suppose a trader owns 100 call options on company ABC's stock with a strike price of $10 per share. The stock is now trading at $30 and ABC is due to pay a dividend shortly. As a result, the trader exercises the options early and receives 10,000 shares of ABC paid at $10. At the same time, the other side of the long call (the short call) is assigned the contract and must deliver the shares to the long.

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Premium Content

An illustration of a transparent woman doing biceps curls. Her large intestines are highlighted.

MIND, BODY, WONDER

How exercise can help—or hurt—your digestion

Your workout can have profound impacts on digestion. In rare instances, these effects can be dangerous but experts say a few tweaks can help most of us perform and feel better.

Ricardo Da Costa’s first job out of high school in the 1990s in Portugal was as a professional triathlete—competing in races that required him to swim, then bike, then run. One of the biggest problems he and his fellow athletes shared was gastrointestinal issues, but no one was doing anything about it.

Some athletes experienced nausea and stomach pain so severe they couldn’t drink water or take in nutrients during races, forcing them to drop out. While light or moderate exercise can enhance our digestion, our stomachs and intestines aren’t designed for high-intensity workouts. That means that athletes don’t just need to train their muscles; they also need to train their guts to process the water and food they need to stay hydrated and fueled during a long race.

“They thought, ‘Oh it’s just part of the sport,’” says Costa. But that answer didn’t satisfy him. To figure out the root of the problem, he decided to pursue an academic career and now, as an associate professor at Monash University in Australia, he explores how food and nutrition influence performance in sports.

Costa studies how exercise interferes with digestion, and how athletes can calm their guts and compete to the best of their ability. He’s become a sought-after expert with amateur and professional athletes from around the world visiting his laboratory for assessment and treatment.

He’s learned a lot over the past 15 years. Even if you’re not a professional endurance athlete, exercise can have profound impacts on digestion, which depend on the timing and intensity of your workout. In rare instances, these effects can be dangerous, but for most of us, a few tweaks to our routines can help.

How digestion works

Digestion begins before you even open your mouth, explains Arafa Djalal , a gastroenterologist at the Icahn School of Medicine at Mount Sinai in New York.

Just thinking about food signals the brain to fill your mouth with saliva and digestive enzymes. When food enters the mouth, those enzymes—together with chewing—break it down so you can swallow it. It travels through the esophagus into the stomach. For the next two to five hours the stomach relaxes and contracts while releasing digestive enzymes that break down the food until it slides down into the small intestine, then the large intestine and finally, one to three days after eating, the undigestible remnants are excreted.

When the food enters your intestines, your body can sense it pushing on the walls, which stimulates the secretion of more digestive enzymes and peristalsis—the wave-like contractions that gradually move food through the intestines. The process requires energy, blood flow, and communication between cells.

Moderate exercise

If you go for a walk or do a low intensity workout while your digestive system is working, the exercise may help move things along. Contracting your abdominal muscles, for example, can help stimulate peristalsis in your intestines.

"Your biceps or your triceps, that's skeletal muscle, and that's on a voluntary control, which means that you can flex your bicep or you can contract your hamstring voluntarily,” says Robynn Chutkan , a gastroenterologist in Washington DC and author of four books on gut health. “While the GI tract [gastrointestinal tract] is smooth muscle. It's under involuntary control.” But physical activity can still speed up the process by getting your blood flowing and helping to contract and relax these smooth muscles that serve as the passageway of the digestive system.

Over the long term, exercise helps maintain a healthy gut, allowing you to better absorb nutrients, says Florence-Damilola Odufalu , a gastroenterologist at the University of Southern California’s Keck School of Medicine. Physical activity increases our production of a chemical called nitric oxide, which helps relax the muscles in our intestines and prevents inflammation.

Working out also is well-known to promote mental health. Your intestines are lined with nerve cells that communicate with your brain and respond to stress via neurotransmitters . Many researchers now consider irritable bowel syndrome (IBS) a disorder of the gut-brain interaction that is frequently triggered or exacerbated by stress, anxiety, or depression.

While people with digestive disorders may not be able to exercise comfortably during flare ups, when they can get physical activity in, it’s likely to be beneficial. It can reduce symptoms of depression and anxiety that trigger digestive flares.

“It should really be emphasized that there are a lot of beneficial effects on the body, the bones, mental health,” of exercise, says Djalal, all of which can improve outcomes in digestive disorders such as IBS and inflammatory bowel disease (IBD).

High intensity exercise

While light or moderate exercise is almost always helpful for digestion, intense exercise requires some caution.

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“There's an increase of blood flow all along the GI tract to allow the digestion to happen,” explains Djalal, and “when you exercise, the demand is elsewhere. It's in your muscles, it's in your lungs and it's in your heart.” Essentially, your digestive system, your muscles and respiratory system start competing for blood flow.

When you’re exercising at a lower intensity, all the systems can share your blood flow and function effectively at the same time, but as the workout becomes more intense, your muscles, lungs and heart require more and more blood, leaving little for your digestive system. This makes it difficult for your body to digest anything during your workout.

When you’re exercising at a high intensity, your body is processing the oxygen from your heavy breaths to create energy, or ATP. In doing so, it also creates metabolic byproducts such as lactate and hydrogen ions . During light exercise, your body can easily clear these byproducts before they cause any problems, but as you start pushing yourself harder, eventually your body can’t keep up. Your digestive system might try to get rid of these byproducts by making you vomit. Costa explains that’s why you might see someone throw up even after a very short, but very intense, sprint race or you might feel nauseous after a particularly challenging workout.

Heat, dehydration, and bacteria

Heat can exacerbate digestive problems brought on by exercise. As your core temperature rises, blood flows away from your internal organs and out toward your skin to help cool you down.

Plus, any hard workout will make you sweat. If you’re unable to replenish the fluid and electrolytes you’re losing quickly enough, you’ll end up under-hydrated. This thickens your blood, slowing its movement and worsening digestive symptoms, explains Costa.

Costa also has found that exercise can damage the lining of your intestines . Usually, if the exercise is not overly intense for the individual, it’s not a serious problem.

“It’s similar to your muscles. You do exercise. The muscles get microtears. After 24 to 48 hours you recover,” he says. If you exercise so intensely that there’s too much damage for your intestines to repair quickly, you can start to have more serious problems such as gut bacteria escaping into your bloodstream.

The immune system can handle a few rogue bacteria in the blood stream that escape during exercise. But, if you have a weak immune system or you work out at higher intensity than your body is accustomed to for hours (as you might when competing in an ultra-distance triathlon, for example), the bacterial leakage could make you extremely sick or even kill you.

What you can do

Most people know it’s usually a bad idea to eat a large meal immediately before exercising, but contrary to what you might expect, Costa and Djalal say that for most people, the easiest solution is making sure you eat something small 30-60 minutes before your workout, such as a banana, a piece of toast, or a carbohydrate drink.

Carbohydrates and sugars are ideal, explains Djalal because they’re rapidly absorbed as fuel. As those nutrients move through your system, they’ll send signals to your stomach and intestines that they need to keep working and recruiting a bit of blood flow.

For endurance athletes, it’s important not only to eat and drink before exercise, but during it as well.

Costa once worked with a professional triathlete from Spain. He’d been racing shorter triathlons for years, but when he decided to take on the classic Ironman Distance (a 2.4-mile swim, 112-mile bike, 26-mile run), his digestive distress got so bad throughout the race that he could no longer keep any water in his stomach. He’d have to drop out of the race due to dehydration.

He flew to Australia to work with Costa, who found that the athlete was losing far more fluid through his sweat than his stomach could handle taking in while he was racing. Whenever he got close to drinking enough liquid, he’d full feel and regurgitate some. Over the next three months, Costa guided him to gradually increase the amount of fluids and fuel he took in while training. He wasn’t just training his muscles, but his digestive system.

At the end of those three months, he completed in an ironman triathlon . Another three months after that, he competed again. He not only finished but placed third in his race.

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What Can You Do With an Exercise Science Degree?

Published on: February 21, 2024

Male fitness instructor teaching a client.

Your passion for physical activity and fitness can be more than just a hobby or a pastime; with the right degree program, you could embark on an active career path in the field of exercise science. Whether you want to specialize in sports medicine or personal training, you may find that the health and fitness degree program is the perfect choice for you.

Get Your Health and Fitness Degree

What Is Exercise Science?

Defined by Coursera as the study of movement, exercise science is an invigorating field that allows students to explore how exercise impacts human health and physical capability. This field relies on other disciplines to zero in on the impact of exercise on the body, including physiology, psychology, anatomy and biomechanics. Although it's commonly interchanged with the field of kinesiology, it's key to keep in mind that exercise science is actually a subfield under the umbrella of kinesiology. It is a hyper-focused realm that takes a scientific approach to the impact of exercise activities on the body.

The Importance of Exercise Science in Today's World

In an era when humans are leading increasingly sedentary lives, the field of exercise science plays a critical role in our modern world. According to the Centers for Disease Control , half of adults do not get an adequate amount of physical activity or exercise on a daily basis, and as a result, people suffer from chronic health issues such as obesity, diabetes and heart disease. The CDC also notes that healthcare costs related to physical inactivity hover higher than $117 billion, highlighting the growing impact of this health crisis.

What Jobs Can You Get With an Exercise Science Degree?

A health and fitness degree program rooted in the principles of exercise science can allow you to pursue an exciting career path that is based on sports, nutrition and physical health. Below are several types of exercise science careers you may be able to pursue:

Fitness Trainer and Instructor

Fitness trainers and instructors are exercise specialists who help lead individuals or groups in structured physical activity. Oftentimes, fitness trainers and instructors create personalized exercise programs to address the unique needs of their clients. According to the United States Bureau of Labor Statistics (BLS), fitness trainers and instructors may be responsible for:

Demonstrating exercise activities.
Monitoring exercise performance and making adjustments as necessary.
Evaluating progress and tailoring the exercise program to help an individual or group meet their goals.

Fitness trainers and instructors should be able to demonstrate a wide range of exercises, including cardiovascular exercises, strength training activities and stretches.

Strength and Conditioning Specialist

A strength and conditioning specialist is an exercise science professional who deals directly with athletes to design a strength and conditioning program intended to improve their overall athletic performance. These specialists are responsible for creating sport-centric programs, adhering to all safety guidelines and offering supplemental information to help improve results (such as nutritional and dietary advice).

Exercise Physiologist

Exercise physiologists are healthcare professionals who plan programs for individual patients to improve a particular aspect of their health, such as mobility, muscle strength or cardiovascular function. Per the BLS , exercise physiologists generally work closely with patients who are managing chronic conditions, and they must account for the patient's medical history to develop an effective and safe exercise strategy. They take a data-based approach to exercise and monitor key health indicators while patients work through their exercise routines to make sure the desired results are achieved.

Sports Coach

Sports coaches work with sports teams to help them develop the skills required to succeed in a specific sport, according to the BLS . Coaches may specialize in a sport or age group. While some may work primarily with young athletes who are in elementary, middle or high school, other coaches may prefer working with collegiate or amateur athletes. The most elite coaches typically work at the professional level. Coaches need a background in exercise science in order to create skills-based development programs that are both safe and effective.

Kinesiologist

A kinesiologist is an exercise science professional who works with injured individuals —primarily athletes — to help them recover from an injury and restore full functionality. As indicated by Indeed , kinesiologists use a wide range of exercise therapy activities and stretching techniques that help the body heal fully and completely. The primary responsibilities of kinesiologists include:

Identifying movement goals for the individual client.
Developing a personalized exercise therapy treatment program.
Offering information and resources designed to promote preventive care.
Showcasing proper muscle movements to protect the injured area and promote healing.
Monitoring progress to ensure the patient is healing properly in the wake of an injury.

Wellness Coordinator

As health education professionals who design innovative and engaging programs to support whole-body health and well-being, wellness coordinators often work for individual corporations, gyms or community centers. They are responsible for creating programs, presentations and classes providing people with actionable information about how they can improve their personal health and well-being. Some duties and responsibilities of wellness coordinators include:

Evaluating the needs of individual participants and designing custom wellness programs.
Arranging workshops and classes about specific topics that will benefit their target demographic.
Working to promote wellness programs within their community and improve accessibility.

Occupational/Physical Therapist Assistant

Occupational and physical therapist assistants work alongside occupational and physical therapists to support individual patients and help them achieve their goals. Occupational and physical therapist assistants are licensed clinical professionals who must work under the supervision of an occupational therapist or physical therapist. According to the American Physical Therapy Association , the primary responsibilities of occupational and physical therapy assistants include:

Assisting with patient care, sometimes supporting them as they complete exercise programs.
Collecting data for the therapist.
Collaborating with the healthcare team to modify the program and improve results.

Skills Needed for a Successful Career

In order to successfully launch a career in health and fitness, you need a well-developed set of industry-specific skills, including practical and soft skills. The practical skills required within the field of exercise science include:

Exercise techniques – You should have a universal foundation in the best and most effective exercise techniques. Additionally, you must be able to use a scientific approach when developing exercise programs, as you need to consider the impact those movements will have on the body.
Data and analysis skills – You will need to know how to collect data throughout the duration of an exercise program — and use that data to refine and improve the program for the individual client.

The soft skills that can help enhance your career in exercise science include:

Communication – Being able to clearly, effectively communicate the components and effects of an exercise regimen allows you to have a greater impact on your clients.
Critical thinking – Developing innovative and creative exercise programs designed to meet the unique needs of your patients will allow you to be more successful in the industry.
Empathy – Above all else, you must remain compassionate toward the challenges your clients are facing. Developing a balanced plan that takes their feelings into consideration helps them feel more empowered to continue working toward their goals.

Future of Exercise Science Careers

According to the BLS , the job outlook for the health, recreation and fitness industry is positive, as more people continue to recognize the importance of physical fitness. For example, demand for fitness trainers and instructors is projected to increase by 14% over the next decade, and demand for coaches is expected to rise by about 9% by 2032.

Earn Your Health and Fitness Degree From Husson University

At Husson University, our health and fitness degree program is designed to provide you with a universal foundation in exercise science as well as a developed, industry-particular skill set. With an emphasis on sports medicine and exercise principles, this degree program could prepare you to pursue one of the leading exercise science careers.

Request more information about our online degree programs today.

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S.p.i.c.e of causal inference.

Posted on April 6, 2024 by r on Everyday Is A School Day in R bloggers | 0 Comments

The S UTVA, P ositivity, I dentifiability, C onsistency, E xchangeability of Causal Inference, the essential ingredients that helps us bring out the true flavor of the causal model. Here is my understanding of each assumptions (main course) with examples (side dish) and accompanied by simulation (paired with beverages). Bon Appétit!

Since the multiple readings of The Book of Why which piqued my interest in causal inference, and then further layperson’s language and knowledge provided by Causal Inference and Discovery in Python , I am very motivated in learning more about causal inference. Judea Pearl is right, our brain is wired to think causally.

Almost all research questions I have encountered since medical school we’re always interested in causality. Even when we’re actually using descriptive statistics to describe something, we never failed to use causal language to “conclude” or “infer” our findings. E.g. We see a positive asociation between X and Y , hence we think X may be causing Y , and then buffer it with language of uncertainty e.g. a larger, randomized experiment should be conducted to further answer the question of interest. 🤷‍♂️

And of course the phrase Correlation does not imply causation has been ingrained in our heads (of course for a good heuristic reason), but also constrained our thinking that causation cannot be identified with observational studies. Please do not get me wong, 🤣, the extreme end of the other side, e.g., we can identify everything with causal inference, is also a danger zone, just like the retropharyngeal space . Nonetheless, if one were to use causal inference as a tool, one MUST understand the fundamentals of its assumptions, just like any other statistical tools. With that in mind, this is my watered-down version of CI assumption notes, mainly for me to review in the future whenever I forget what each of these terminology means.

FYI, I will continue to modify, edit, and revise anything wrong in order for me to continue to learn and grow in this wonderful CI world. From my learning, I figured a mnemonic that would work for me is SPICE ! No, I’m not talking about amp-c, that mneumonic no longer follows the recent guideline anyway. But I meant S UTVA, P ositivity, I dentifiability, C onsistency, E xchangeability.

From the languages and terminology that I used or perhaps misused, it is clear that I am a beginner in this topic. If you noticed any inconsistency, insufficiency, non-identifiability, non-transportability of the information I have presented. Please guide me to the truth. I am happy to revisit the topic, revise, and learn! As usual, this is not a medical or statistical advice, please consult your physician and statistician.

Positivity Assumption

Identifiability

Consistency

Exchangeability

Cheat sheet.

Lessons Learnt

The Stable Unit Treatment Value Assumption (SUTVA) is a fundamental principle in causal inference, particularly in the context of randomized experiments and observational studies. It asserts two main conditions for the analysis of causal effects.

First, the treatment assigned to one unit does not affect the outcome of another unit, meaning there are no interference or spillover effects between units. This aspect is often summarized as “no interference.”. This is the one we will simulate below.

Second, the potential outcomes for any unit are the same under the same treatment level, regardless of the mechanism or path through which the unit received the treatment. This means that the treatment effect is consistent across different units and there’s no variation in treatment effects based on how the treatment is administered. This is the C in SPICE .

The DAG above depicts an unblinded random assignment (50%) of treatment to X1 . However, X1 resides in groups . And for some reason, if each group contains more than 30% treatment, then the treatment is no longer 50% but 80%. The outcome then will be influenced by the new treatment assignment X2 instead, which is not observed or measured in reality. And we will erroneously estimate the treatment effect of X1 instead. Several examples would be exercise vs no exercise or coaching vs no-coaching.

In the exercise example, imagine exercises and no-exercises were assigned to certain people through the school as treatment and control group, since this is unblinded, the exercise group may share that they’re going to gym more often, influencing their classmates to join them as well. When all school mates were assessed for certain outcome, say, happiness/wellness score, we estimated the treatment effect with the orginal treatment assignment group, which can also be known as total effect. However, remember only if the class contains more than 30% of exercise-prescribed students will it have mediating effect to the rest of the class, otherwise it won’t. Now this is a violation of SUTVA #1. We can apply this to coaching vs no-coaching as well. Imagine if more than 30% of students in the classed were coached and produced a more positive perspective of life and future, which then spreads throughout the class.

Wow, OK, let’s break down the codes in a bit.

We simulated x1 with a random assignment with probability of 50% of control (0) vs treatment (1).
We then randomly sample from 1 to 50, nth time, to allocate groups for each observation / subject and save it in group .
Create a dataframe with both xq and group variable.
Group our groups and then calculate mean of x1 and save it under x1_mean .
if x1_mean is > 30% and x1 is not a 1, then randomly sample with probability of 20% for 0 and 80% for 1.
if x1 is already 1, then x2 should also be 1
everything else, randomly sample 50-50
Assign y with a random variable from binomial distribution of inverse logit of 2*x2 . Our coefficient of interest should be 2 .
Regress y with x1 to false estimate our coefficient.

Interpretation:

As we can see, our wrong model estimated that x1 has positive effect on y , when in fact it shouldn’t have any direct effect on y . We know this because we generated the data that way mutate(y = map_dbl(.x=x2, .f=~rbinom(n=1, size=1, plogis(2*.x)))) . Looking at the last line of data generating process in the code above. Otherwise, see below for y regressing on x1 and x2 :

Remember that x2 and group technically were not measured or observed, hypothetically. The violation of SUTVA here is because the treatment unit is not stable, it actually may lead to control group “getting treatment”, here could be exercise, when proportion of treatment exceeds a certain hypothetical threshold, it changes the initial randomization of treatment.

The positivity assumption states that there is a nonzero (ie, positive) probability of receiving every level of exposure for every combination of values of exposure and confounders that occur among individuals in the population - Cole SR Epidemiology 20(1):p 3-5, January 2009.

In short, $P(Treatment=treatment|Confounders=confounders) > 0$ . Which means after adjustment, we should observe all treatments (control vs treatment) in all strata. Below is an example of violation of non-zero probability

Noticed that glm did not like the way we regress x with z , giving warning that algorithm did not converge? That’s a hint of posivitivity violation. Also, notice that the estimates are all wrong!?

Imagine you’re going to the dentist and they score periodontal chart to document your gum health. Typically score the health of your gums from 0–4, with 0 representing health and 4 representing advanced disease. And we have some kind of tooth paste product x that possibly could increase ⬆️ some sort of arbitrary holistic dental health y score, and the higher ⬆️ periodontal score you had z , the better response y you get. Let’s say for people who don’t have teeth, their periodontal score would be 0 (I believe technically they won’t do one if there is no teeth, so this is all just for example sake, not reality), and they would also won’t be using any tooth paste product either. Which is going to be a problem because regardless of how much data we have, we cannot calculate the propensity score of treatment given the confounder. We’ll also be assuming that people with peri score of at least 1 or higher will only seek out this product advertise online.

Let’s break it down how we simulated this in the extreme.

Simulate z as 0 to 4 uniformly, n times.
Assign x as 1 (use this special product) if peri chart score is 1 or higher, otherwise if z is 0 (people who don’t have teeth) then x will be 0.
Generate y , our holistic arbitrary dental health score based on 0.5*.x + 0.6*.y + rnorm(n)

Let’s visualize it

Modelling P(X=x|Z=z)

With the above logistic function, notice how z of 0 will have 0% probability of receiving treatment, and z >= 1 will have 0% probability of NOT having treatment either. That’s a no-no!

Same here, looking at the colors, we clearly see that all red is in Z=0, and all blue/turqoise are in 1,2,3,4. Positivity assumption violation to the extreme!

Observe that we’ve used so many different characters to represent treatment/exposure, outcome, and confounders. This is something I do find frustrating and confusing. To be clear, in this positivity section, Y is always the outcome, X or T is always the eXposure/Treatment, and W or Z is always the Confounders.

Identifiability refers to the possibility of estimating causal effects from observational data based on specified assumptions, such as the absence of unmeasured confounders and the structure of the causal model. It’s crucial for ensuring that the causal relationships inferred from the data are valid and not confounded by external variables.

For example, with this DAG below, due to the unobserved or unmeasured nature of confounder Z, we cannot identify causal relationship between X and Y.

Hence, the violation of identifiability assumption. Regardless of how fancy a method we use for complex data X and Y, we will not be able to draw any useful conclusion of effect X on Y. Unless of course if one can find an instrumental variable IV , magic can occur! See DAG below.

We can estimate the direct effect of X to Y but calculating the total effect and then with some arithmatics, we can identify the direct effect. See here for more total effect = direct effect + indirect effect explaination .

Of course IV is far and few between. It’s more like IV mining! You’ll never know when you can find it. If you did, it’s precious!

Consistency (aka SUTVA 2)

The second assumption of SUTVA, the potential outcomes for any unit are the same under the same treatment level, regardless of the mechanism or path through which the unit received the treatment. This means that the treatment effect is consistent across different units and there’s no variation in treatment effects based on how the treatment is administered.

For example, imagine there is a study that assesses the efficacy of a medication that requires 2 tablets/capsules in order to be the correct dosage for therapeutic effect, but there are some people who took 1 tablet instead of 2. When 1 unit is taken, it may not be as effective. Below we will simulate such scenario.

OK, let’s break down the code:

x : We randomly assign treatment and control group
The reason for this is to emulate the inconsistency of treatment. Imagine 30% of the treatment group took single tablet (inappropriately low dose) which shouldn’t give a therapeutic effect
Of course, this is an unobserved variable
y : This is the outcome. And the true effect should be 0.5 .

However, when we regress y with x , we incorrectly estimated the treatment effect of the medication since 30% of treatment group technically didn’t get a therapeutic dose. This is a hidden variation of treatment, violation of consistency assumption.

The exchangeability (or ‘no confounding’) assumption requires that individuals who were exposed and unexposed have the same potential outcomes on average. This allows the observed outcomes in an unexposed group to be used as a proxy for the counterfactual (unobservable) outcomes in an exposed group. RCTs strive to achieve exchangeability by randomly assigning the exposure, while observational studies often rely on achieving conditional exchangeability (or ‘no unmeasured confounding’), which means that exchangeability holds after conditioning on some set of variables. - Causal inference and effect estimation using observational data

For further readings on other discussions/videos I found helpful:

Difference between exchangeability and independence in causal inference .
Ignorability/exchangeability .

Essentially, the reason that RCT has ignorability is because the outcome is independent of treatment (notation: $\newcommand{\indep}{\perp \!\!\! \perp} \text{Y} \indep T$ ), which also means that we can estimate treatment effect through association of Y and T. If independence can be achieved via closing the backdoor (adjusting for a vector of ALL confounders) (notation: $\newcommand{\indep}{\perp \!\!\! \perp} \text{Y} \indep \text{T} | \text{X}$ ), then same as RCT, we can estimate treatment effect through association of Y and T given X. This concept is more intuitively known as ignorability. But because we can ignore them, we can then have the ability to “exchange” them. Let’s visualize.

Visualizing RCT Exchangeability Table

What we have done above is we have simulated a causal relationship of X on Y . Assuming X as treatment (0=control,1=treatment), Y is some sort of favorable outcome (0=no good outcome,1=good outcome). Notice that we use the notation y1 an y0 . The notation indicates what the outcome looks like under treatment assignment (e.g., y0 is the outcome when x is 0, y1 is the outcome when x is 1). We sometimes see these nototations (e.g. $\text{Y}_{(1)}$ , or $\text{Y}^{(1)}$ for observed outcome given treatment=1)

Notice that there are NA s? Of course, we cannot observe these outcomes since the subjects were not given the opposite treatment. However, given ignorability and exchangeability, if treatment were to be swapped, it would be the same as expected outcome of the treatment group like so:

Because this is an RCT, meaning treatment assignment were randomized, assuming blinded as well or at least outcome is not affected by treatment observation, then the average treatment effect is essentially mean(y1) - mean(y0) .

Now what about observational study?

OK, what have we done here? We simulated data where Z influences both X and Y . Let’s give an example of say, we use some kind of fixed dose herbal supplement and we want to observe if the herbal supplement will affect outcome (e.g., happiness, if yes then return a 1 if no then 0 ). And Z is a blood pressure baseline. For some irrational reason, higher blood pressure increases the probability of taking the herbal supplement, and higher blood pressure decreases happiness score. Here, we simulated that the herbal supplement will have an effect to happiness score. Disclaimer: this is all hypothetical, unrealistic & exaggerated examples are given in order for me to make sense of the DAG. Let’s estimate this incorrectly first.

Wrong estimation ❌

Here, we wrongly estimated effect of X on Y . Observe that we had simulated a positive effect and yet our wrong model estimated it negatively. Let’s look at ATE.

wrong, wrong, and wong🤣! ❌ But how on earth are we going to deconfounder this and get the right estimates? Enter propensity score stratification (PSS)! Well, there are a lot of other methods, here we’ll be using PSS because it’s more intuitive for this setting. But before we do that, let’s estimate it with our good old logistic regression friend with Z included in our adjustment and estimate our ATE through G-estimation.

Right Model ✅

Alright, let’s look at our model. Yup, accurate statistics! Now we know that on average, our treatment effect is 0.125. Meaning, on average, when a person took the herbal supplement, had a 12.5% increase of happiness outcome (remember, this is binary, not a score) when blood pressure is taken into account. I’d like to emphasize and re-emphasize the word “ON AVERAGE”. If we bin the “blood pressure” / Z variable, you will most likely see difference in ATE (in this case, more so Conditional ATE (CATE)) accross ell strata. Remember this Ken! OK, now let’s check out PSS.

Estimating Propensity Score

We essentially want to model X from Z to give rise to propensity score of X (e(X)), we shall use logistic regression for this. And then cut e(X), our in case, ps variable, into 10 bins.

Now let’s group by bin and then estimate our mean outcome for both treatment and control, like so

Let’s then ungroup them and calculate ATE .

Not too shabby! Quite close to the g-estimation ATE! Let’s take a look at CATE as well.

Notice how the CATE is different across all strata? It doesn’t look too helpful for stratum 1 and 10. Looks like the most helpful in stratum 9.

When we visualize Z (blood pressure) with x (treatment groups), looks like the median blood pressure between both groups has a difference of ~0.4 mm Hg, even though if we were to use t test or wilcoxan rank , it will be “statisticall significant”, but clinically it’s really not that different and these two groups stratified by propensity of treatment may give us a true estimate of CATE in this stratum.

Notice how we didn’t model this with glm at all and we’re basically stratified 10 groups from the propensity of treatment. This “stratification” is a form os “adjustment”, or should I say is “adjustment”. We basically trying to reduce / minimize variation of the variable, in this case “propensity of treatment”.

I found this article Causal inference and effect estimation using observational data is super concise and helpful!

Google sheet . I will continue to revise these for accuracy.

Things We Can Improve on:

All the above only estimated single point. We can greatly improve our understanding of uncertainty by bootstrapping to get the 95% confidence interval of ATE, CATE and coefficients.
Our PSS contained stratum 1 and 10 which essentially has very little variation and almost always favors 0 or 1 for treatment propensity, one could trim the edges of propensity scores to get a more realistic ATE and CATE.
Did I get some of these wrong? Please drop a comment or send me a message, and educate me!

Lessons learnt

SPICE, the fundation of causal inference. I think I have a better understanding of the assumptions behind CI. I do feel quite a few of the above examples are not too satisfying, but this will do for now and use this as a framework to build further.
SUTVA teaches us that our treatment cannot influence control group and also has to be consistent (treatment cannot vary).
Positivity assumption: P(Treatment|Confounder) cannot be ZERO ! Otherwise there is no variation.
Identifiability: Basically we have to ensure confounders are all adjusted for in order to identify the relationship of interest.
Consistency is SUTVA 2
Exchangeability (or ‘no confounding’) assumption requires that individuals who were exposed and unexposed have the same potential outcomes on average

If you like this article:

please feel free to send me a comment or visit my other blogs
please feel free to follow me on twitter , GitHub or Mastodon
if you would like collaborate please feel free to contact me

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New Cold-Assignment Incentive Pay Coming for Airmen and Guardians at 7 Bases

Members of the 3rd Wing and 90th Fighter Generation Squadron conduct a missing man formation flyover in remembrance of Staff Sgt. Charles A. Crumlett at Joint Base Elmendorf-Richardson, Alaska.

In a move aimed at incentivizing airmen and Guardians stationed in the remotest and coldest parts of the country, the Department of the Air Force has finally approved cold weather pay for troops at seven bases.

As of April 1, airmen and Guardians stationed at U.S. bases where temperatures sometimes drop 20 degrees below zero will earn the new lump-sum payment if they agree to serve at least a yearlong tour.

Locations that qualify for the incentive include North Dakota's Cavalier Space Force Station and Minot and Grand Forks Air Force Bases ; Alaska's Clear Space Force Station, Eielson Air Force Base and Joint Base Elmendorf-Richardson ; and Malmstrom Air Force Base in Montana.

Read Next : Army Eyes Dramatic Cuts to Key Education Benefits for Soldiers

The announcement comes more than a year after passage of the 2023 National Defense Authorization Act, which included a provision for the services to provide an Arctic incentive pay.

A defense official told Military.com in January that the military's existing programs already compensate service members serving in those areas well enough, but the Department of the Air Force went ahead with its own program.

"Airmen and Guardians living in extremely cold conditions faced unique out-of-pocket costs," Alex Wagner, assistant secretary of the Air Force for manpower and reserve affairs, said in a statement to Military.com. "In addition to the assignment and retention benefits of the pay, it also comes down to making sure we do our best to take care of our service members and their families stationed at these critical installations."

Similar to the Army 's existing Remote and Austere Conditions Assignment Incentive Pay, the Air Force's new Cold Weather Incentive pay program "intends to ease the financial burden of purchasing certain cold weather essentials" like jackets and other Arctic-protective clothes, season-appropriate tires, engine block heaters and emergency roadside kits, the service told Military.com.

The pay ranges from $500 to $5,000 depending on location and how many dependents an airman or Guardian has. Though the program is effective as of April 1, the first pay date is July 1. If a service member moves to one of the seven locations between April 1 and June 30, they will receive the benefit retroactively, the Air Force said.

"We want to ensure airmen, Guardians and their families have the resources needed to safely live and work in an extreme cold-weather environment," Wagner said in the statement.

Notably, two of the nation's nuclear intercontinental ballistic missile bases are on the list: Malmstrom in Montana and Minot in North Dakota.

The announcement of the payment comes as the service's Cold War-era facilities at ICBM bases are being sanitized and investigated for toxins that could lead to cancer. Military.com has reported that both of those bases found levels of polychlorinated biphenyls -- a known carcinogen -- above the Environmental Protection Agency's threshold of 10 micrograms per 100 square centimeters.

Editor's note: This story was corrected to say Cavalier Space Force Station, Minot Air Force Base and Grand Forks Air Force Base are located in North Dakota.

Related : New Arctic Pay for Troops Was Passed by Congress a Year Ago. But the Pentagon Waved It Off.

Thomas Novelly

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IMAGES

Option Exercise and Assignment (Best Guide w/ Examples)
Children doing plank exercise with step platforms
Understanding Options: Exercise & Assignment
Exercise and Assignment
Review Of What Are The Four Types Of Exercise? 2022
What are Exercise & Assignment

VIDEO

Options Education 📈
OPTIONS
Exercise and Assignment
Early Options Assignment Risk (When to Worry & When to Chill)
Exercise & Assignment in Options
Option Expiration, Assignment, and Exercise Explained!

COMMENTS

How to exercise, roll, and assign options
Assignment occurs when the buyer exercises an options contract on or before expiration, and the seller must fulfill the obligation by either buying or selling the underlying security at the exercise price. As a seller of options, you can be assigned at any time prior to expiration regardless of the underlying share price—meaning you might ...
Options Exercise, Assignment, and More: A Beginner's Guide
Learn about options exercise and options assignment before taking a position, not afterward. This guide can help you navigate the dynamics of options expiration. So your trading account has gotten options approval, and you recently made that first trade—say, a long call in XYZ with a strike price of $105. Then expiration day approaches and ...
Learn About Exercise and Assignment
Options owners exercise their contracts when markets move in their favor. Sellers of options accept premium and could be assigned when markets benefit the buyers. Long call option upon exercise results in long futures. Short call option upon assignment results in short futures position (futures called away)
Option Exercise and Assignment Explained w/ Visuals
The final piece of understanding exercise and assignment is gauging the risk of early assignment on a short option. As mentioned early, only 7% of options were exercised in 2017 (according to the OCC). So, being assigned on short options is rare, but it does happen. While a specific probability of getting assigned early can't be determined ...
PDF Options on Futures: The Exercise and Assignment Process
long options being taken to exercise have been assigned. The impact of the counter-instructions from Firms A and E is worth noting. Even though the option series has expired in the money, the exercise assignment process will conclude with 5,750 randomly selected contracts in the short open interest pool expiring unassigned.
The Risks of Options Assignment
When an option is converted to stock through exercise or assignment, the position's risk profile changes. This change could increase the margin requirements, or subject a trader to a margin call, 5 or both. This can happen at or before expiration during early assignment. The exercise of a long option position can be more likely to trigger a ...
Exercise and Assignment
Exercise and Assignment It has been said that for every action (exercise) there is a reaction (assignment). Examine the process of option exercise and assignment. Option Type, Style, Class and Series Explained. There are four aspects of an option—type, style, class and series. Learn what each one means in this video.
Exercising Options: How & When to Exercise Stock Options
Exercising an options contract is irrevocable as exercise begins the process of assignment by the Options Clearing Corporation (OCC). Exercising an option can be done in two ways: Automatic exercise and manual exercise. In automatic exercise, if your option is set to expire in-the-money (ITM), your broker will automatically convert it into ...
Options on Futures: The Exercise and Assignment Process
Brochure describing exercise and assignment process for options trades on CME Group exchanges: Chicago Board of Trade (CBOT), Chicago Mercantile Exchange (CME), Commodity Exchange (COMEX), and New York Mercantile Exchange (NYMEX). Includes an overview of the contrary options exercise process.
Exercise and Assignment
Summary. This chapter discusses the mechanics and consequences of exercise and assignment. The owner of an option may exercise their right to buy or sell the underlying at the option's strike price. The mirror image of exercise is known as assignment. The exercise of a long call position would result in a long underlying position.
Exercise: Definition and How It Works With Options
Exercise means to put into effect the right specified in a contract. In options trading, the option holder has the right, but not the obligation, to buy or sell the underlying instrument at a ...
The Mechanics of Option Trading, Exercise, and Assignment
Money › Options The Mechanics of Option Trading, Exercise, and Assignment. Options were originally traded in the over-the-counter (OTC) market, where the terms of the contract were negotiated.The advantage of the OTC market over the exchanges is that the option contracts can be tailored: strike prices, expiration dates, and the number of shares can be specified to meet the needs of the ...
Understanding Option expiration, exercise, and assignment
An Option's expiration date is the last day you can exercise your right to buy or sell the underlying stock at the agreed-upon strike price. If you hold your contract until expiration, and it is either out-of-the-money or in-the-money but you submitted a DNE, the Option will expire worthless.
What is Option Assignment? How and Why Assignment Happens
Option assignment occurs when the owner of an option exercises their right to buy or sell the underlying asset at a specific price on or before expiration. When a call option is assigned, the owner buys shares at the strike price. For example, if XYZ stock is trading for $45 and you sold one XYZ 50 Put, the put buyer has the right to sell 100 ...
PDF Monitoring your option trades: Exercise and assignment
talk about exercise and assignment, and then position management examples, focus on calls there, buying calls and the covered call, if the stock moves in various ways, what can you do, what are you looking at as far as managing those positions. Options are not set-it-and-forget-it type of investments, you
Exercise & Assignement
A6: Yes! The option buyer can exercise at any time, but the odds of this are very low. Data varies over time, but over 70% of options are closed with 25% expiring worthless and only about 5% of all options being exercised. Of that 5% there are many traders whose strategy is to be assigned and then a lot more where the option is exercised at ...
Options University 10: Spreads
Video Summary (1 and a half minutes) The closing price of the stock on expiry establishes which options finish in the money and subject to exercise or assignment or those that finish out of the money, and worthless. Because option spreads involve both buying and selling of options, if the entire spread finishes out of the money, it either ...
Option Contract Terms: Exercise, Assignment, Delivery, and Settlement
Exercise and assignment—an example Suppose it's 4:01 p.m. ET on the third Friday of the month (which is expiration day for standard monthly equity and ETF options). Two months earlier, you bought a call option on XYZ stock at a $50 strike price that expires today.
Expiration, exercise, and assignment
For more details, check out Navigating exercise & assignment. Check out Advanced options strategies (Level 3) to learn more about calls, puts, and multi-leg options strategies. Unassigned anticipated assignment. Unassigned anticipated assignment. On rare occasions, the in-the-money short option of a spread won't get assigned. This happens ...
Exercise and Assignment
Exercise and Assignment Procedures Final Thoughts The Complete Guide to Option Strategies: Advanced and Basic Strategies on Stocks, ETFs, Indexes, and Stock Index Futures
Deep Dive Into Options Assignment & Exercising
Deep Dive into Options Assignment & Exercising. In this show, we will go through 18 questions to help you prepare for the inevitable moment of options exercise and assignment. Back on Show 187, we tackled the top 15 questions we consistently receive around options expiration. Today, we're taking a slightly different approach and addressing ...
PDF Monitoring Your Option Trades, Exercise and Assignment
Hold in attempt to maximize gain. Close position if maximum gain is almost reached. Accept assignment. Stock unchanged: Evaluate position and implement most prudent strategy - hold shares, sell another call, close position, etc. Stock down: Hold shares in anticipation of share price appreciation. Roll down by selling a lower strike call.
Assignment: Definition in Finance, How It Works, and Examples
Assignment: An assignment is the transfer of an individual's rights or property to another person or business. For example, when an option contract is assigned, an option writer has an obligation ...
Types of Exercise: 4 Workouts Every Runner Needs
Strength training, flexibility work, and balance moves. All four types of exercise help to improve your health and longevity, and while focusing on aerobic training will clearly make you a better ...
How exercise can help—or hurt—your digestion
Moderate exercise. If you go for a walk or do a low intensity workout while your digestive system is working, the exercise may help move things along. Contracting your abdominal muscles, for ...
What Can You Do With an Exercise Science Degree?
Strength and Conditioning Specialist. A strength and conditioning specialist is an exercise science professional who deals directly with athletes to design a strength and conditioning program intended to improve their overall athletic performance. These specialists are responsible for creating sport-centric programs, adhering to all safety ...
S.P.I.C.E of Causal Inference
The outcome then will be influenced by the new treatment assignment X2 instead, which is not observed or measured in reality. And we will erroneously estimate the treatment effect of X1 instead. Several examples would be exercise vs no exercise or coaching vs no-coaching.
New Cold-Assignment Incentive Pay Coming for Airmen and Guardians at 7
The pay ranges from $500 to $5,000 depending on location and how many dependents an airman or Guardian has. Though the program is effective as of April 1, the first pay date is July 1. If a ...
Homework Assignment
Operations Management questions and answers. Homework Assignment - Demand Forecasting & Supply Chain Coordination I From Exercise 9 of Chapter 7of the textbook: (30 points)Quarterly demand for smartphone at a retailer is as shown. After obtaining initial estimates for level, trend, and seasonal factors, forecast quarterly demand ...
Three-Day Nutrition & Exercise Tracker Analysis: Assignment
Three Day Nutrition and Exercise Tracker ANALYSIS Assignment. Step 2: Enter your 3-day food record and exercise loginto the tracker: 1.Log in with the username and password you created. 2.Click on the "Add Exercise" or "Add Food" tab under your Daily Summary to begin tracking. 3.Don't forget to track your water/beverage intake under ...