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Let me tell you about the time I completely forgot I had a Dell Technologies (DELL) credit spread open.
I was out in Florida and put on what I thought was a safe little trade. This was back when DELL was still trading down around the $114 mark before its massive AI-driven rally, so I sold a $95-$90 put credit spread. Nothing fancy. I figured a 19-point cushion gave me plenty of room.
Then I did what you should never do: I forgot about it.
Come the weekend, I get a message from my broker. I’m long 100 shares of DELL. My first thought? I didn’t trade DELL stock. Why do I own 100 shares?
I went back and looked. Sure enough, DELL had dumped off hard that week, and the short put was assigned.
That’s the risk with credit spreads that people don’t always think through — if your short strike goes in-the-money (ITM) and somebody exercises, you’re holding the bag. Or in this case, you’re holding the stock.
What Happens Next
Here’s the part most people don’t realize: When you get assigned stock on the short leg of a spread, you still own the long put. That long put is your safety net.
Because DELL had plummeted below both of my strikes by Friday’s close, the automated clearing process took over.
Your broker will exercise that long put for you to offset the assigned shares, and they’ll charge a small assignment processing fee — usually around $25 or $30.
It’s not free, but it’s a predictable cost and a whole lot better than being stuck with shares you never intended to hold.
I’ve been assigned stock on spreads plenty of times. It comes with selling premium, and once you’ve lived through it a few times, the surprise factor fades.
The assignment fee is just a cost of doing business. You take the small hit, the broker cleans up the position, and you move on.
What you don’t want is to be caught off guard — wondering why you own stock you never planned to buy.
The Real Lesson
This DELL situation wasn’t a disaster. It was a reminder.
Assignments aren’t rare or catastrophic — they’re part of the game when you sell premium. The key is staying aware of your positions so an assignment is just another trade outcome, not a weekend shock.
Keep an eye on what you’ve got open. Know where your short strikes are. And if the stock starts creeping toward your sold strike, decide ahead of time whether you’re going to manage it or let it ride.
Because forgetting about it? That’s how you end up staring at an unexpected email wondering why you own DELL.
Geof Smith
Geof Smith Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. Wall Street’s Dirtiest Secret Yet…
I recently began sharing a secret report with my tight circle of buddies about hidden orders from Wall Street that send stocks higher within days…
Disclaimer: The trades expressed today are based on signals from the Sleeper Cell Scanner with the benefit of 20/20 hindsight unless otherwise stated. According to a backtest of 64 years of data dating back to 1962, the signals pulled by the scanner would have been 81.9% accurate on over 7,300 trade signals… No strategy is perfect, and wins are not guaranteed. There are bound to be winners and losers along the way. Since the Sleeper Cell Scanner is a tool for traders and not a trading service, profits and performance will vary among users.
