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Why does a covered call need exactly 100 shares?

One US stock option contract covers 100 shares. So to sell one covered call, you need 100 whole shares in the same account. With 150 shares you can sell one call, and the other 50 shares stay uncapped.

Options guide · 7-minute read · Updated 2026-10-26

The contract multiplier

Every standard US stock option is a contract for 100 shares. That number is called the Contract multiplier. It's why a premium quoted as $1.00 pays you $100: $1.00 per share × 100 shares.

When you sell a call, you promise to sell 100 shares at the Strike price if the buyer asks. To be "covered," you must already own those 100 shares. Your broker holds them as backing until the call is gone.

While the call is open, those 100 shares are tied up. Most brokers won't let you sell them on their own, because that would leave the call naked. To sell the shares, you first buy back the call, or close both in one order. The other shares you own, above the 100, stay free to sell.

So the share count isn't a broker rule you can talk your way around. It comes from the contract itself. New to contracts? See options trading basics.

What different share counts let you do

Notice 99. One share short is the same as having none, as far as calls go.

What 150 shares looks like (an illustration, not a trade idea)

You own 150 shares of a made-up stock, XYZ, bought at $40. That's $6,000. You sell one 30-day $44 call for $0.80 and collect $80. It covers 100 of your shares. The other 50 are free to rise.

Two things to see:

1. All 150 shares fall together. The call covers 100 shares on the upside only. On the downside, there's one $80 premium against a 150-share loss.
2. The free 50 keep the upside. At $60, they add $1,000 that a fully covered position would have missed.

Some people like that mix: a premium on part of the position, and some room left to ride. It's one simple way to hold a stock you want to keep while still selling calls. See laddering covered calls for splitting larger positions.

Why you can't sell two calls on 150 shares

A second call would promise another 100 shares. You'd own only 50 of them. Those 50 missing shares make the second call partly uncovered, or "naked."

If XYZ jumped to $60 and both calls were assigned, you'd have to deliver 200 shares. You own 150. You'd have to buy 50 more at $60 to sell them at $44: a loss of $800 on those 50 shares, and it grows the higher the stock goes.

Most brokers block this unless you have the highest options approval level and a margin account. See options approval levels.

Fractions and odd-sized contracts

Fractional shares don't count

Many apps let you buy a slice of a share. Those slices don't count toward the 100. If you hold 100.4 shares, you can sell one call on 100 of them. If you hold 99.8, you can sell none.

Some brokers also hold fractional shares in a way that can't be used as option backing at all. See can I sell a covered call on fractional shares.

When a contract isn't 100 shares

Sometimes a company splits its stock or merges with another. Existing options are then adjusted so the deal stays fair. After a 3-for-2 split, for example, an old contract may cover 150 shares instead of 100.

These adjusted contracts often show a different symbol on the chain. Check the "deliverable" before you trade one. If you're not sure, use only standard contracts. See I sold options on a stock about to split.

If 100 shares costs too much

On a $300 stock, 100 shares is $30,000. That's out of reach for many accounts. A few options:

• Pick a lower-priced stock you'd still want to own.
• A Poor man's covered call uses a long-dated call instead of shares. It needs less cash, but it's a different trade with its own risks. See covered call vs poor man's covered call.

Starting on the put side of the wheel strategy doesn't get around it. A put still needs the cash for 100 shares at the strike.

In Canada, covered calls on 100 shares are widely allowed in a TFSA or RRSP, but options permissions differ by broker.

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