When you sell cash-secured puts as part of the wheel strategy, you collect premium upfront in exchange for the obligation to buy shares at a predetermined strike price. Most of the time, these puts expire worthless and you keep the premium free and clear. But when the stock price falls below your strike price at expiration, you'll be assigned the shares.
Assignment isn't necessarily a bad outcome—it's simply the next phase of the wheel strategy. You now own shares at a potentially attractive price (especially when you factor in the premium you collected), and you can begin selling covered calls to generate additional income. The key is proper tracking and position management to ensure you maintain accurate cost basis calculations.
In this comprehensive guide, we'll walk through three real put assignments on Novavax Inc. (NVAX), Clover Health Investments Corp (CLOV), and Tilray Inc. (TLRY), demonstrating the complete process of updating positions, calculating adjusted cost basis, and preparing to continue generating premium income.
The first assignment we'll review involves Clover Health (CLOV). After filtering positions in the cost basis screen, we identified three cash-secured put contracts at the $1.50 strike that were assigned. Since CLOV's closing price on expiration Friday was $1.08—well below our $1.50 strike—we were obligated to purchase the shares.
Here's what made this assignment straightforward to identify: the stock closed significantly below our strike price, triggering automatic assignment. The $2.00 strike put was not assigned (stock price stayed above that level), but the $1.50 contracts fell in-the-money.
When you're assigned on a cash-secured put position, you need to properly document this transition from option obligation to stock ownership. The process involves several key steps:
After assignment, you may have multiple stock position entries at the same price from different assignment dates. While you can keep them separate to track individual purchase dates, many traders prefer to consolidate positions at the same cost basis for cleaner portfolio management.
In this case, we had two separate CLOV stock entries, both at $1.50 per share—one from November 18th and one from December 17th. By consolidating these into a single 700-share position, we simplify our tracking while maintaining accurate cost basis information. You can always reference your transaction history to see the specific purchase dates if needed.
This is where proper tracking becomes incredibly valuable. After consolidation, CLOV's metrics looked like this:
Notice the significant difference between cost basis calculations. The premium you've collected from selling puts has already reduced your effective cost by approximately $0.29 per share. This reduced cost basis gives you strategic flexibility—you could potentially sell covered calls below your original purchase price and still break even or profit when factoring in all the premium collected.
The second assignment involves Tilray (TLRY), where two cash-secured put contracts at the $3.50 strike were assigned. Following the same systematic process:
After clicking submit, the system generates a new stock position record. Clicking save creates the proposed record, which can be reviewed and edited before final confirmation. Once you move it down to the staging area and save to retain it, you can remove the old put position to clean up your tracking.
An interesting aspect of the wheel strategy is that you can be assigned back into a stock you previously owned and were called away from. This cyclical nature is actually the essence of the "wheel"—you rotate between owning shares and being in cash, continuously collecting premium at each stage.
With TLRY, being assigned means we now hold 200 shares and can begin selling covered calls again. The premium collected from the put will lower our effective cost basis, positioning us to generate additional income through call premium while we hold the shares.
Before processing the NVAX put assignment, we first cleaned up two covered call contracts that expired worthless. These calls were out-of-the-money at expiration, so we kept the full premium and the underlying shares. This is an ideal outcome for covered call positions—you generate income without being called away from your shares.
The NVAX put assignment followed the same structured process:
After generating the new position record and moving it through the staging process, we removed the expired put position to maintain clean records.
After this assignment, NVAX shows four separate stock purchase entries at different prices. This illustrates the dollar cost averaging effect that naturally occurs when you're repeatedly assigned on puts at various strikes. Scrolling to the position summary reveals the aggregate metrics:
It's important to maintain perspective when you see significant unrealized losses in your positions. The purpose of selling options for premium is to generate consistent cash flow while building stock positions at attractive prices. As long as you continue selling premium on these shares through covered calls, several positive outcomes can occur:
In the NVAX example, premium has already reduced the cost basis from $25 to $20 per share—a 20% reduction. That $5 per share cushion means the stock only needs to recover to $20 (instead of $25) for you to break even, and every covered call sold between now and then further improves your position.
After assignment, the next day presents an opportunity to evaluate available option premiums and determine your strategy moving forward. With 400 shares of NVAX, you have several strategic choices:
The key is to evaluate the premiums available, compare them to your cost basis targets, and select strikes and expirations that align with your income goals and risk tolerance.
Proper position tracking becomes increasingly important as you build multiple positions across different tickers. Key organizational practices include:
Understanding your true cost basis—including all premium collected—is essential for making informed trading decisions. Your tracking system should clearly show:
After assignment, take time to evaluate the available premiums before jumping into your next trade. Consider factors like:
Managing multiple put assignments across different tickers, tracking adjusted cost basis, and maintaining clean position records can become overwhelming with spreadsheets. MyATMM provides purpose-built tools designed specifically for option sellers who use the wheel strategy.
MyATMM automatically calculates your cost basis both with and without premium, giving you instant clarity on where each position stands. When you process an assignment, the system:
The guided assignment process demonstrated in this tutorial helps ensure you don't miss critical steps or make calculation errors. The system prompts you for:
Features like position consolidation, expired contract cleanup, and proposed record staging give you control over how you organize your portfolio. You can maintain the level of detail that works for your trading style while keeping your main view clean and actionable.
When managing positions like CLOV, TLRY, and NVAX simultaneously, having portfolio-wide visibility becomes essential. MyATMM lets you quickly filter to see:
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Being assigned on cash-secured puts isn't a failure of your strategy—it's an expected and manageable outcome when you're selling premium consistently. The key to long-term success with the wheel strategy is proper tracking and position management, ensuring you always know your true cost basis and can make informed decisions about your next moves.
As demonstrated through the CLOV, TLRY, and NVAX assignments, maintaining organized records and accurately calculating cost basis with premium allows you to:
Whether you're tracking three assignments like in this tutorial or managing dozens of positions across multiple tickers, having a systematic approach to recording assignments, updating cost basis, and planning your next trades makes all the difference between a successful wheel strategy and a confusing mess of positions.
Take the time after each assignment to properly update your tracking, clean up expired positions, and evaluate the available premiums. This disciplined approach—combined with tools built specifically for option sellers—will help you build sustainable income streams through the wheel strategy.
Options trading involves significant risk and is not suitable for all investors. Selling cash-secured puts obligates you to purchase shares at the strike price, which could result in substantial losses if the underlying stock declines significantly. Past performance does not guarantee future results.
When you are assigned on puts, you assume ownership of shares that may continue to decline in value, resulting in unrealized or realized losses. The premium collected provides only partial downside protection. The wheel strategy requires sufficient capital to be assigned on positions and may tie up substantial funds for extended periods.
This content is for educational purposes only and should not be considered financial advice. Every trader's situation is unique. Always conduct your own research, understand the risks involved, and consider consulting with a qualified financial advisor before implementing any options trading strategy.
The examples in this article are for educational purposes and do not constitute recommendations to buy or sell any specific securities.