One of the most common fears among newer options traders is assignment. Many investors hear that their shares were "called away" and immediately assume something went wrong.
In reality, assignment is often the exact outcome a covered call seller should welcome. That's precisely what happened with my recent Reddit (RDDT) position.
On October 30, 2026, my RDDT $92 covered call was assigned, resulting in the sale of 100 shares at $92 per share. While I gave up future upside beyond the strike price, I achieved what every covered call seller is trying to accomplish:
✅ Collected premium income
✅ Sold shares above my purchase price
✅ Generated a profitable exit
✅ Recycled capital for future opportunities
Trade Timeline
Step 1: Bought 100 Shares of Reddit
On October 30, 2026:
| Action | Price |
| Purchased 100 shares RDDT | $90.66 |
Total Investment: $9,066
Step 2: Sold a Covered Call
Immediately after purchasing shares, I sold:
| Contract | Premium |
| RDDT $92 Call (11/6 Expiration) | $3.80 |
Premium Collected: $380 (Deposited into my account immediately)
Step 3: Assignment Occurred
The option ultimately finished in the money and the shares were called away.
Shares Sold via Assignment: $92.00 per share
Total Sale Proceeds: $9,200
Breaking Down the $514 Profit
Many investors only focus on the stock gain and ignore the option income. Let's look at the complete financial breakdown.
Stock Profit
Purchase Price: $90.66
Sale Price: $92.00
Gain Per Share: $1.34
Stock Gain (100 shares): $134
Total Return
A $514 profit on an initial investment of $9,066 translates to a 5.67% total return over a short holding period.
Many investors become emotionally attached to stocks. They hate seeing shares called away because they focus on what they "could have made." That's the wrong mindset.
When I sold the $92 covered call, I agreed to sell my shares at $92. That was the trade. Everything beyond that is hindsight.
Successful covered call investors focus on:
Defined profit targets
Consistent income generation
Favorable risk-adjusted returns
Capital efficiency
Lessons From This Reddit Trade
Income Matters Most: The option premium ($380) generated nearly three times more profit than the stock appreciation ($134) itself. Without the covered call, this trade would have produced only a modest gain.
Have an Exit Plan: Know your exit point before entering the trade. Exit Price = $92. Once reached, assignment was part of the original strategy, not a surprise.
Don't Fear Assignment: Assignment simply means the trade worked and executed your exact parameters.
Key Numbers at a Glance
| Metric | Amount |
| Shares Purchased | 100 |
| Purchase Price | $90.66 |
| Covered Call Strike | $92.00 |
| Premium Collected | $380 |
| Assignment Sale Price | $92.00 |
| Stock Profit | $134 |
| Option Profit | $380 |
| Total Profit | $514 |
| Total Return | 5.67% |
FAQ Section
Q: Is covered call assignment bad? A: No. Assignment simply means the option buyer exercised their right to purchase your shares. If planned correctly, assignment locks in target profits and frees up capital for new trades.
Q: How much profit did this RDDT trade generate? A: The trade generated $514 total, consisting of $380 in option premium and $134 in stock appreciation.
Q: Why sell a covered call instead of just owning shares? A: Covered calls generate immediate income while setting a clear, disciplined exit target.
Q: What happens after assignment? A: Shares are sold at the strike price, and your principal plus profit is returned as cash to deploy into future opportunities.