Getting Assigned — Now What?

Phase 2: You Got Assigned

Assignment is not a failure — it is a planned outcome in the wheel strategy. When the stock closes below your put strike at expiration, your broker automatically purchases 100 shares at the strike price. Because you already collected premium, your true cost basis is lower than the strike. This is the moment when the wheel transitions from Phase 1 (selling puts) to Phase 2 (holding shares).

Calculating Your True Cost Basis

What to Do After Assignment

1. Do not panic. Assignment was always part of the plan. You chose this stock because you wanted to own it.
2. Calculate your effective cost basis by subtracting all premiums collected from the strike price.
3. Assess the current market conditions: Is the stock in a temporary dip or a fundamental breakdown?
4. If conditions are stable, begin Phase 3 immediately by selling a covered call on your new shares.
5. If the stock has dropped significantly, you may want to wait for a bounce before selling a call at a strike you are comfortable with.

Some traders accumulate additional shares by continuing to sell puts after assignment, building a larger position at even lower prices. This is known as "scaling in" and can be effective in a slow decline — but only if you have the capital and conviction. For most new wheel traders, transitioning directly to covered calls after the first assignment is the simplest approach.