To sell covered calls on Robinhood, you need Level 2 options approval and at least 100 shares of the stock you want to sell calls against. The entire process takes under two minutes once you're set up.

Step 1: Enable Options Trading

Open Robinhood → tap your profile icon → Settings → Options Trading. If you haven't applied, Robinhood asks a few questions about your trading experience and income. Level 2 is required for covered calls (Sell to Open). Most accounts get approved within minutes.

Step 2: Own 100 Shares

You must own at least 100 shares of the underlying stock. Fractional shares don't count. If you own 250 shares of AMD, you can sell up to 2 covered call contracts (each contract covers 100 shares; the remaining 50 shares stay uncovered).

Step 3: Place the Covered Call Order

Here's the exact navigation:

  • Go to the stock's page (e.g., AAPL)
  • Tap Trade → Trade Options
  • Select an expiration date (start with 30-45 days out)
  • Tap a Call option at your chosen strike price
  • Tap Sell at the top of the order ticket
  • Robinhood automatically recognizes you own shares and labels it a Covered Call
  • Set quantity (1 contract per 100 shares)
  • Choose Limit Order and set your price (use the mid price between bid and ask)
  • Review and Submit

    • Choosing Your Strike Price

    For beginners on Robinhood, stick with strikes 5-10% above the current stock price with 30-45 days to expiration. Example: AAPL trading at $200 → sell the $215 or $220 call expiring in 5-6 weeks.

    This gives your stock room to appreciate before it gets called away while still collecting meaningful premium.

    What Happens After You Sell

    Your 100 shares are now "locked" as collateral — you can't sell them while the call is open. Three outcomes at expiration:

  • Stock below strike — The call expires worthless. You keep the premium and your shares. Sell another call.
  • Stock above strike — Your shares get sold at the strike price. You keep the premium plus any gains up to the strike.
  • Stock drops significantly — The call expires worthless (good) but your shares lost value (bad). The premium partially offsets the loss.

    • Robinhood-Specific Tips

  • No commissions — Robinhood charges $0 per contract, which is a genuine advantage for small accounts
  • Early assignment — Robinhood handles this automatically. Your shares are sold and cash appears in your account
  • Rolling — Robinhood doesn't have a dedicated roll button. To roll, buy back the current call (Buy to Close) and sell a new one (Sell to Open) as two separate orders
  • Collateral display — Check your positions tab to confirm the call shows as "covered" rather than "naked"

    • Common Robinhood Mistakes

    Selling calls on shares you want to keep long-term. If AAPL rips past your strike, your shares are gone. Only sell covered calls on stocks you're comfortable potentially selling.

    Using market orders for options. Always use limit orders. Options spreads can be wide on Robinhood, and market orders may fill at unfavorable prices.

    Forgetting about ex-dividend dates. If you sell a call on a dividend stock and the call goes in the money before the ex-date, you might get assigned early. The buyer exercises to capture the dividend.

    Tracking Your Trades

    Robinhood's built-in tracking is minimal. Many traders use OptionsPilot alongside Robinhood to log trades, track cumulative premium income, and identify which stocks and strike prices produce the best returns over time.

    Starting Small

    Begin with one contract on a lower-priced stock. Something like F (Ford) at ~$11/share requires only $1,100 in stock to sell one covered call. This lets you learn the mechanics with limited capital before scaling up to higher-priced names.