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Exercise is the buyer's action; assignment is what happens to a seller as a result. In India, both are largely automatic at expiry — understanding exactly how removes a lot of the mystery (and anxiety) around what happens when a position finishes in-the-money.

• Exercise is the option buyer's action — using their right to buy (for a call) or sell (for a put) the underlying at the strike price.
• Assignment is what happens to a seller when a buyer's option is exercised — the seller is obligated to fulfil the other side: deliver the underlying (for an assigned call) or buy it (for an assigned put), at the strike price.

A seller never chooses whether to be assigned — it's the direct consequence of the buyer's exercise, entirely outside the seller's control once the option finishes in-the-money at expiry.

NSE options — both index and stock — are European-style, meaning they can only be exercised at expiry, never early. On top of that, exercise itself is automatic: any option that finishes in-the-money at the close of trading on expiry day is automatically exercised by the clearing corporation. No button-press, notice, or action is required from the option holder — it simply happens.

On the assignment side, the clearing corporation allocates the resulting obligation to short positions through a random process — first to clearing members holding short positions in that contract, who in turn randomly allocate the obligation among their own clients holding short positions. There's no way for a seller to volunteer to be assigned first, or to avoid it once their position is ITM at the close on expiry day.

What actually happens on exercise depends on what the option is written on:

• Index options (Nifty, Bank Nifty, and similar) are cash-settled. The buyer's account is credited with the intrinsic value, and the assigned seller's account is debited by the same amount — no shares change hands at all.
• Stock options are physically settled, following a SEBI mandate implemented in October 2019. An exercised call results in the buyer receiving shares and the assigned seller delivering them; an exercised put results in the buyer delivering shares and the assigned seller buying them.

This distinction is exactly why every strategy example on this site (built around Nifty, an index) settles in cash, with no delivery obligation to plan for — a stock options position carries a meaningfully different set of practical considerations.

Suppose Nifty settles at 24,100 at expiry, and you're long 1 lot (65) of the 24,000 call — 100 points in-the-money.

1. At the close on expiry day, the exchange sees your call is 100 points ITM and automatically exercises it — you don't need to do anything.
2. Your account is credited with the intrinsic value: (24,100 − 24,000) × 65 = ₹6,500, since Nifty options are cash-settled.
3. On the other side, whoever sold you that call — or, more precisely, whichever short position the clearing corporation's random allocation lands on — is assigned, and their account is debited the same ₹6,500.
4. Separately, the same exercise event triggers STT on the intrinsic value, a small additional cost covered in full on that page.

• Every short leg on this site's multi-leg strategies carries assignment risk in principle — for index options, the practical impact is simply a cash debit at settlement, not a scramble to deliver shares.
• Stock option positions need more active management heading into expiry, since an ITM stock option carries a real delivery obligation, not just a cash entry.
• Multi-leg strategies with both long and short legs at similar strikes (like an Iron Condor or Bull Call Spread) can see both legs settle simultaneously at expiry, with the exercised long leg's credit and the assigned short leg's debit largely offsetting each other.

• A seller cannot refuse or delay assignment once an option is ITM at the close on expiry day — this is fully automatic and outside the seller's control.
• Stock options carry real delivery risk that index options don't — insufficient funds or shares to meet a delivery obligation is a genuine practical problem, not just a bookkeeping entry.
• Brokers often square off positions ahead of expiry to manage this risk on their end — worth checking your own broker's specific cutoff times and policies around expiry day.