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My reverse split left me with odd shares. Can I still sell calls?

No, not a normal covered call. A standard contract covers 100 shares, and after a 1-for-10 reverse split your 100 shares are now 10. You can hold, sell, or buy back up to 100. Each choice costs something different.

Options guide · 8-minute read · Updated 2026-10-28

Where you are right now

You were running the wheel strategy. You sold a put, got assigned, and now own 100 shares. The stock kept falling. Then the company did a reverse split.

Now your account shows 10 shares where 100 used to be. The price per share is ten times higher. The total value is the same as the day before. But your plan just stopped working, because the next step of the wheel is selling a Covered call, and that needs 100 shares.

You didn't do anything wrong by holding through a reverse split. It happens to anyone who owns a stock that has fallen a long way. The question now is what to do with the shares you have.

For how the split changed any option you had open, see what happens to options in a reverse split. For the full list of events, see my hub on corporate actions and your options.

Why you can't sell a normal covered call

A standard listed option delivers 100 shares. To be "covered," you must own all 100.

With 10 shares, a new call on the new stock would be covered for 10 shares and uncovered for 90. Most brokers won't allow that at basic approval levels. Where they do, the 90 uncovered shares carry the risk of a naked call. That is not the wheel any more. Don't do it to "keep the premium coming."

Your 10 shares are an Odd lot: fewer than a round 100. You can still hold them, sell them, or add to them.

What about a call you already had open when the split happened? That contract was adjusted to deliver 10 new shares. Your 10 shares still cover it. Let it run its course. You'll land in this same spot when it ends.

Your numbers (hypothetical)

This is an illustration, not a trade idea. XYZ is a made-up stock.

• You sold a $5 put and collected $40.
• You were assigned 100 shares at $5. Cost: $500.
• XYZ fell to $3. Your shares were worth $300.
• XYZ did a 1-for-10 reverse split. You now hold 10 shares near $30.

Your Cost basis moves with the split. Counting the $40 premium, it was $4.60 a share on 100 shares. Now it is $46 a share on 10 shares. The total is still $460.

You are down $200 on the shares, or −$160 after the $40 premium.

Your three choices, side by side

All rows include the $40 premium you already collected.

Choice A: buy back to 100. You'd spend $2,700 for 90 more shares. Your 100 shares would cost $3,200 in total, an average of $32 each. Then you could sell calls again. But your position is now more than six times bigger, on a stock that just needed a reverse split to stay afloat. If it slides to $20, the loss grows from $160 to $1,160.

Choice B: sell the 10 shares. You take the $160 loss today. Your $300 goes back to cash, toward a put on a stock you'd rather own. Nothing more can go wrong with XYZ.

Choice C: hold and wait. No new cash and no new risk added. But no premium either. You're just a shareholder in 10 shares, and the wheel is paused on this stock.

The trap in choice A

Choice A feels like getting back on plan. It is really a new decision: "Would I put $2,700 into this stock today, at this price?"

If you'd say yes to that question with fresh money, A can make sense. If the only reason is to sell calls again, that's the premium leading the decision. That is how small losses turn large.

Here is the losing case worked out. You buy 90 shares at $30 for $2,700. New XYZ drifts down to $20.

Even if you sold a call each month while it fell, a few small premiums would barely dent a $1,200 drop.

What if the ratio left a fraction?

Some ratios don't divide 100 evenly. In a 1-for-15 split, 100 shares become 6.67. Brokers usually give you 6 shares plus cash for the 0.67. That "cash in lieu" can count as a small sale. How it is reported for tax depends on your broker, so check its statement.

If you trade in Canada, the same 100-share rule applies in a TFSA or RRSP. Covered calls are widely allowed there, but options permissions differ by broker.

The rule for next time

• Watch for the warning signs. A stock trading near $1, or a notice from the exchange about its price, often comes before a reverse split. If the company plans one, the shareholder vote or filing is usually public.
• Sell puts only on stocks you'd own after bad news. A stock that needs a reverse split has usually had a lot of bad news.
• Size so you never need to double down. If a full 100-share lot is the most you'd ever want, you won't be tempted by choice A.
• Decide your exit before you sell the put. Write down the price where you'd stop wheeling this stock.

Questions