Selling Covered Calls - do I need to own 100 shares to do this?

Question

I sort of understand how selling covered-calls work -- selling the potential upside of your stocks for a premium. However, it seems like the buyer needs to buy these in 100-share "chunks". Let's say I own 55 shares of GE, is that enough shares to sell covered-calls?

Answer 1

Yes, you need to have 100 shares. If your brokerage company allows you to sell the calls on Margin, you could still sell a Call, owning less than 100 underlying shares. But, in that situation, your trade will no longer be a covered call.

Answer 2

1 Contract = 100 Shares, so yes, if you want to write covered calls you need to own 100 shares. You cannot buy 1/2 of a contract.  Hope that helps!

Answer 3

Covered calls means that you have enough shares to cover the call in case of exercise.  Since you do not have 100 shares that can be called away, your call is not covered.  Since you do have 55 shares, it would be partially covered.

I suggest you read "Getting Started in Options" by Michael Thomsett.