I'm experimenting with short strangles and have what is probably a very basic question, but can't seem to confirm what I believe to be the answer. If I sell a call and own the underlying shares, are those shares liquidated if the call option is exercised, or will I be assigned a short position in the stock? I'm assuming my shares would be liquidated. The reason I'm asking is that I have long-term gains in the stock that I want to preserve, but want to enter into short-term short strangles to play sideways movement. I entered a short strangle recently and the stock price was hovering too close to the call strike price on expiration date for me to be comfortable with having my long shares sold (and long-term gains realized), so I closed out the call for a small loss. It would have been acceptable to me to hold on to the call and taking a small loss if the option was exercised through assignment of short shares, but wanted to avoid my long shares being sold. Is there any way to avoid your shares being liquidated if you sell a call option and it is exercised? Can you specify that you want to have short shares assigned instead?