Why was my spread assigned early?
Equity options are American-style
Whenever you trade long (debit) or short (credit) equity options spread, the short leg can be assigned at any time. Why is this? Well, equity options, for the most part, are American-style. That's not because they trade on American exchanges, but rather, the method in which the owner of the option can choose to exercise their long option, which results in an assignment if you were short the option.
Why was my long leg not exercised after an early assignment?
Accounts are not informed until the morning after
First, long options do not get automatically exercised if you were assigned early because all exercise requests occur overnight. As a result, we (tastytrade) do not know that an account is assigned shares until the morning after the counterparty's exercise request. However, the only time a long option automatically exercises is if it expires ITM.
Furthermore, automatically exercising long options after assignment can potentially cost you more money, and that's because of any residual extrinsic value that the long option may have.
What do I do now?
In most cases, a covered stock order may resolve the assignment
That said, if you are assigned early, then you can perform a covered stock by closing the assigned position and selling the corresponding long call or put. In other words, the theoretical max loss may reduce by performing a covered stock order due to any residual extrinsic value remaining in the long option.
To learn what happens to options spread at expiration, please click here.
To learn about performing a covered stock order after being assigned early, please click here.
To learn about reconciling your profit/loss after an assignment, please click here.