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Can I sell covered calls on fractional shares?
No. A covered call needs 100 whole shares per contract. Fractional shares, and any count under 100, can't be used to cover a call at any broker we know of. Your choices are to get to 100 or to wait.
The short answer
No. One Options contract covers 100 shares, and a Covered call needs all 100 in your account as whole shares. Owning 99.5 shares is the same as owning 0 for this purpose. So is 60, or 12.3.
That's not a broker policy that might change. It's how the contract is written. The clearing house moves shares in blocks of 100, and fractional shares exist only inside your broker's books.
Why 100 is the number
When a call is exercised, 100 shares move from the seller to the buyer through the clearing house. Fractions can't be delivered that way. So brokers only count whole shares, and only if you have 100 of them. See what does 100 shares per contract mean?
If you own 250 shares, you can sell 2 calls. The extra 50 stay uncovered and can't be used. If you own 100.7, you can sell 1 and the 0.7 is just a fraction of a share you own.
Your real choices with less than 100
| Where you are | What you can do | What to watch |
|---|---|---|
| 60 shares, want to sell calls | Buy 40 more to reach 100 | You now own more of the stock, for the option's sake |
| 60 shares, don't want more | Wait; hold the shares plainly | No premium, no cap, same downside |
| Cash, no shares | Sell a cash-secured put instead | Needs the full strike × 100 in cash |
| Small account, pricey stock | Pick a lower-priced stock or ETF | Lower price means cheaper to reach 100 |
| Small account, any stock | Paper trade until the account fits | The honest option for most |
A "poor man's covered call" uses a long-dated call instead of shares. It isn't a covered call, it has its own risks, and it's not a beginner trade. We mention it only so you know what the name means.
A worked example (an illustration, not a trade idea)
You own 60 shares of a made-up stock, XYZ, bought at $50. You want to sell calls, so you buy 40 more at $50 to reach 100. Now you have $5,000 in XYZ instead of $3,000. You sell a 30-day $55 call for $1.00, collecting $100.
| XYZ at expiry | 60 shares, no call | 100 shares + $55 call |
|---|---|---|
| $60 | +$600 | +$500 + $100 = +$600 (capped) |
| $55 | +$300 | +$500 + $100 = +$600 |
| $50 | $0 | +$100 |
| $44 | −$360 | −$600 + $100 = −$500 |
| $38 | −$720 | −$1,200 + $100 = −$1,100 |
Look at the bottom two rows. At $38, you'd have lost $720 holding your original 60 shares. Because you bought 40 more to make the call possible, you lost $1,100. Those 40 shares lost $480 on their own, and the $100 premium covered only about a fifth of that. The call didn't cause the loss. Buying shares you didn't otherwise want did.
Reaching 100 shares is a stock decision. If you wouldn't buy the extra 40 without the call, don't buy them for the call.
The better question to ask
Not "how do I get to 100?" but "would I own 100 shares of this at today's price?" If yes, buying the rest is fine and the call is a bonus. If no, you've found a stock you don't want to wheel, and that's useful to know before you start the wheel strategy.
If you have the cash but not the shares, selling a put is the other door in. It needs the strike times 100 in cash, which for a $50 stock is about $5,000. See should I start with covered calls or puts? and, if the account is small, can I sell options with $500?
Canada note: the 100-share rule is the same in a TFSA or RRSP, and covered calls are widely allowed in both.
Questions
Can I sell a covered call with 99 shares?
No. You need 100 whole shares per contract. With 99 you can't sell one contract; buying one more share would make it possible.
Can I sell a covered call on fractional shares at Robinhood or Fidelity?
No. Brokers that offer fractional shares still require 100 whole shares to cover a call. Fractions don't count toward the 100.
Does the broker round up my fractional shares?
No. 99.9 shares stays 99.9. You'd buy the missing fraction, and the broker may require you to buy a whole share to do it.
What can I do with 60 shares and no spare cash?
Hold them plainly, or sell them and secure a put on a lower-priced stock. Or paper trade until the account can cover 100 shares of something you'd want.
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