Interested in learning how to sell a call option on Robinhood? In this tutorial, we’ll walk you through the easy steps.
Selling a call option can be a great way to generate income, and it’s a strategy that many experienced investors use. So if you’re looking to add some extra income to your portfolio, continue reading.
Login To Robinhood On Your Respective Device
To sell a Call option on Robinhood, you need to have an account with the broker and be logged in. You can also use your phone or tablet to trade options. You may want to consider using Robinhood’s mobile app for this purpose.
To begin with, you will need to open up an account with Robinhood. This is free of charge and takes only a few minutes. The process is very simple and straightforward.
Once you are done opening up your account, you will see that it has two tabs: Account Settings and My Orders.
- Account Settings
The ”Account Settings” tab allows you to change settings such as your security pin code, email address, and password.
- My Orders
On the other hand, the “My Orders” tab shows all of your orders. It includes both buying and selling orders.
How To Sell Call Options On Robinhood?
Steps to Sell Call Options on Robinhood:
Step 1: Login into Robinhood Account.
Step 2: If you want to sell calls, you will first need to select the type of call you would like to sell. There are three types of calls:
- Covered Calls: These are covered calls where the underlying asset (stock) goes down in value.
- Naked Calls: These are naked calls where the underlying asset does not go down in value.
- Butterfly Spreads: These are butterfly spreads where the stock price moves from one side of the spread to another.
Step 3: After selecting the type of call you wish to sell, you will then enter the strike price. Strike prices are the prices at which you are willing to sell the option. For example, if you want to sell a $100 call option, you would set the strike price to 100.
Step 4: Next, you will choose whether you want to sell “out-of-the-money” or “in-the-money“. Out-of-the-money means that the option is currently below its current market price. In-the-money means that the option is above its current market price.
Step 5: Now, click on Sell Order.
Step 6: Next, you will see the order form. Here, you will fill out the details about the option you wish to sell. You will need to provide information regarding the expiration date, the number of shares, and the strike price.
Step 7: When you are ready, click on Submit.
Step 8: Your order will now be submitted. Once completed, you will receive a confirmation screen stating that your order was successfully processed.
Also Read: How to Enable Dark Mode in Robinhood?
Why Can’t I Sell My Call Option On Robinhood?
There are various reasons why one may experience problems when selling Call Options on Robinhood.
Some of the reasons why you can not sell options on Robinhood:
- Your account is not verified
- You do not have enough funds in your account
- You do not have a sufficient credit card balance
- Your order is too large
- Your order is not filled yet
- Your order is already pending
- Your order cannot be filled due to restrictions
- Your order is canceled by Robinhood
How To Buy A Call Option On Robinhood?
Steps to Buy a Call Option on Robinhood:
Step 1: Login into Robinhood Account with your credentials.
Step 2: Go to the My Orders page.
Step 3: Choose Sell Order.
Step 4: Enter the number of shares you wish to purchase.
Step 5: Select the strike price.
Step 6: Click on Submit.
Step 7: A confirmation screen will appear informing you that your order was successfully placed.
Also Read: Robinhood Margin Requirements
How Long Does It Take To Sell A Call Option On Robinhood?
The period taken to sell a Call Option on Robinhood is dependent upon several factors. This includes the type of call you are trying to sell, the strike price, and the size of the trade.
For example, if you were attempting to sell a $100 put option, it would take approximately 1 hour for your order to be filled.
However, if you were trying to sell a $100 Call option, it could take anywhere between 2 hours to 3 days before your order is filled.
What Happens If I Am Unable To Sell My Call Option On Robinhood?
If you are unable to sell your call option on Robinhood, there are two options available. The first is to wait until the option expires.
If this is the case, you can cancel your order and place a new one once the option has expired.
The second option is to close your position through a margin call. A margin call occurs when your account balance falls below a certain level. When this happens, Robinhood will ask you to deposit more capital into your account.
Once you have deposited the required amount, they will allow you to continue trading. However, you must make sure that you maintain a minimum balance in your account.
Can I Sell A Call Option Before It Expires On Robinhood?
Yes, you can! But, there are some things you should know. For instance, if you try to sell a call option before its expiration, you will incur a penalty fee.
Also, you will lose the opportunity to profit from the difference between the current market value and the strike price. Therefore, it is best to wait until after the option expires.
Also Read: Does Robinhood Have Custodial Accounts?
Is There Any Way To Get Around The Fact That I Can’t Sell My Call Option On Robinhood?
Yes, there is. One way to avoid losing money is to sell a covered call. In other words, you sell a call option but also purchase a stock at the same time.
Once the stock rises above the strike price, you will receive the profits from both the sale of the call option as well as the purchase of the stock.
Is There Any Risk Involved When Selling Call Option?
There is always a small chance that you may end up losing money. However, since you are buying a stock, there is no guarantee that the stock will rise or fall.
Therefore, it is important to understand that there is always a risk associated with selling a Call Option.
Can You Sell Call Option Before It Hits The Strike Price?
Selling a call option on Robin Hood is very simple. All you need to do is select the strike price and then click submit. You will see a message confirming that your order was submitted. Your order will be processed within an hour.
However, you will not be able to sell a call option if the stock price is lower than the strike price.
Conclusion
In conclusion, selling a call option on Robinhood is easy. However, it does come with risks. Therefore, it is important to fully understand all the terms and conditions prior to making a trade.
