To execute an option is to execute the right to buy or sell.[i] Assignment takes place when the written option is exercised by the option holder.[ii] In Dahl v. Zabriskie, 249 Iowa 584, 586 (Iowa 1958), the court held that if there are no words in the option agreement forbidding an assignment, then the option holder can assign the option.
Assignment of an option occurs when an option holder exercises his option by notifying his broker, who then notifies the Options Clearing Corporation (OCC).[iii] The OCC fulfills the contract, then randomly selects a member firm who was short on the same option contract, and then notifies the firm. The firm then selects a customer who was short on the option, either randomly or by some other equitable method, for assignment. “That customer is assigned the exercise requiring him to fulfill the obligation that he agreed to when he wrote the option.”[iv]
However, in Fulton v. Messenger, 61 W. Va. 477, 483 (W. Va. 1907), the court held that an optional contract, giving the right to purchase property within a certain time, is a valuable right and a personal privilege limited to the optionee, if it lacks an assignment provision. But if the parties have expressly specified that the option can be assigned, then it cannot be considered as personal to the optionee. This is because by the express terms of the contract, the optionor has agreed to sell and convey to the optionee or his assigns.[v]
Further, where the options are assignable, the interest under such an option to purchase real property is also assignable.[vi] This is also applicable where the option runs to the person named and his/her assigns.
[ii] Id. See also USA Interactive v. Dow Lohnes & Albertson, P.L.L.C., 328 F. Supp. 2d 1294, 1301 (M.D. Fla. 2004)
[v] Fulton v. Messenger, 61 W. Va. 477, 483 (W. Va. 1907)
[vi] See, Winslow v. Dundom, 46 Mont. 71 (Mont. 1912)