What Is the Difference between Assignment and Novation?

Novation is the legal replacement of the original parties with the CCP at the time of trade. Assignment, in options trading, is the process where the option writer is randomly selected by the OCC to fulfill the obligation when an option buyer chooses to exercise their right.

They are separate legal processes that occur at different times in the trade lifecycle.

What Is the Relationship between the Option Writer’s Risk and the Option Premium?
What Is the Concept of “Assignment” for an Options Seller?
How Does the Staker Selection Process in PoA Enhance Security?
What Is the Process of “Assignment” for a Short Option Position?
How Does Collateralization (Margin) Help Mitigate Delivery Risk?
What Is the Concept of ‘Collateralization’ in a Decentralized Options Vault?
What Is the Risk of Early Exercise for the Writer of an American Option?
What Is ‘Assignment Risk’ for an Option Writer?

Glossar