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Options fees for sellers: what really adds up?

Sellers pay three costs: a fee per contract, sometimes a fee on assignment, and the bid-ask spread every time they trade. On a cheap stock with a tiny premium, those costs can swallow the whole trade.

Options guide · 9-minute read · Updated 2026-10-26

The short answer

When you sell options, three costs add up:

1. A per-contract fee each time you open or close. Many brokers charge somewhere under a dollar per contract; some charge nothing.
2. An assignment or exercise fee at some brokers, charged when you're assigned.
3. The bid-ask spread, which isn't on your statement but costs you on every trade.

On a $50 stock, these are usually small next to the premium. On a $5 stock, they can be most of it. That's why cheap stocks hurt most, and the example below shows it happening.

Each cost, explained

Per-contract fees. You pay this on each contract you sell to open, and again if you buy it back. Some brokers waive it on very cheap buybacks; check your broker's current fee page.

Small regulatory fees. Sales of options and stocks carry tiny regulatory and exchange charges, usually cents. They're on your trade confirmation.

Assignment and exercise fees. When you're assigned on a put or a call, some brokers charge a flat fee. Others charge nothing. It varies a lot, so look it up before you start. See assignment fees and commissions.

The spread. Every option has a bid (what buyers pay) and an ask (what sellers want). If you sell at the bid, you give up the gap between the bid and the middle. You'll often pay it again when you buy back. On thin options, this is the biggest cost of all.

Interest, if you borrow. In a margin account, if an assignment pushes your cash below zero, the broker charges interest. Cash-secured trades avoid this.

A worked example where costs win (an illustration, not a trade idea)

A made-up stock, XYZ, trades at $5. You'd own it at $4.50. Say your broker charges $0.65 per contract and a $5 assignment fee (both made up; yours may differ).

Step 1. The 30-day $4.50 put shows a bid of $0.10 and an ask of $0.20. The middle is $0.15. You place a market order, and it fills at the bid: $10 collected, minus $0.65.

Step 2. XYZ dips to $4.30 at expiry. You're assigned. You pay $450 for 100 shares worth $430. The broker charges the $5 assignment fee.

Step 3. You sell a 30-day $4.50 call. Bid $0.05, ask $0.15. Another market order fills at $0.05: $5, minus $0.65.

Step 4. XYZ ends at $4.40. The call expires. You sell the shares at $4.40 and stop.

If XYZ had fallen to $3.50 instead, the share loss would be −$100. With $15 of premium and $6.30 in fees, the net is −$91.30. The costs don't cause the big loss, but they make sure the small wins don't add up.

Why cheap stocks hurt most

Fees are mostly flat. Premiums grow with the stock price. So the same fee is a much bigger slice of a small premium.

Cheap options also tend to have wider spreads compared with their price. A spread of $0.10 on a $0.15 option is two-thirds of the price. The same $0.10 on a $1.00 option is a tenth.

This doesn't mean you can't sell options on cheap stocks. It means the premium has to be worth the costs, and you need to count them before the trade. See the cheapest way to start selling options and the wheel with $1,000.

How to cut what you pay

1. Use limit orders. Set your price near the middle of the bid and ask. You may wait a bit for a fill. That's usually worth it. See how to read an options chain.
2. Pick options with tight spreads. Busy options, with high Open interest and volume, usually have narrower gaps.
3. Know your broker's assignment fee. If it's high, it changes whether assignment is worth accepting on a cheap stock.
4. Trade less often. Each open and close costs a fee and a spread. Weekly trades pay them four times as often as monthly ones. See weekly vs monthly cash-secured puts.
5. Don't buy back for pennies if it costs more than it saves. Compare the buyback price plus fee with the risk left. See closing options before expiration.
6. Avoid borrowing. Margin interest is a quiet cost that adds up.

For running the wheel strategy, keep a "costs" column in your journal. Add every fee and the spread you gave up. After ten trades, look at the total next to your premiums. That number tells you whether your stocks are priced high enough to be worth the effort.

A note on accounts. Fees can differ by account type at the same broker. In Canada, covered calls are widely allowed in a TFSA or RRSP, while cash-secured puts depend on the broker, and Canadian brokers often charge differently for options than US ones. Check your broker's current fee page.

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