How To Set A Sell Price On Robinhood

Selling a telephone call option is one of the easiest ways to lock in a turn a profit in the stock market. But with and then many trading platforms, you'll desire to choose the 1 that not simply protects your money but likewise allows for seamless transactions such as selling a telephone call pick. That's precisely what Robinhood offers.

In this commodity, nosotros're going to show you how you can sell a call choice on Robinhood and give you tips and tricks that volition help improve your trading skills and ultimately boost your returns.

What is a Call Option?

The basic idea of selling a call pick is this: you sell someone else the right to buy a stock from you at a predetermined price (the strike price) by a predetermined appointment (the expiration). You receive cash upfront for this understanding, called the "premium." If the stock cost is less than the strike price at the expiration date, the heir-apparent has no incentive to assign (exercise) the choice, and you get to keep the premium. On the other paw, if the stock toll is greater than the strike price, the buyer exercises the option, and you lot have an obligation to sell the stock at the strike price.

Selling a telephone call option is an splendid strategy if y'all believe that the price of the underlying asset will ascension.

How to Sell a Telephone call Choice in RobinHood

It's never been easier to go started in the options trading market place. Robinhood has put a convenient interface on an otherwise complicated procedure. To sell a call option on a stock of your choice:

1. Open the Robinhood app and enter your credentials to sign in.
2. Discover the stock you'd like to sell a call option for. To do so, tap the magnifying glass in the tiptop right corner of your home screen.
3. One time you lot've picked a stock, a new page volition open, giving more than details about the stock, such as its spot toll.
4.  In the bottom correct corner of the stock's particular folio, tap "Trade."
   
5. Tap "Trade Options" and and so select "Call Choice."
   

Factors to Consider Earlier Selling a Call Option

Selling a phone call option can be a great style to generate some greenbacks when the underlying stock's price is trading below the strike price. Withal, it'southward important to make sure you have considered all of the following earlier making the last decision:

• Expiration Engagement: The premium received by the seller of a phone call option increases as the time to expiration increases. The overriding statement is simple: as the fourth dimension to expiration increases, the underlying stock's potential to motion into an in-the-money position increases. If that happens, the telephone call will be assigned. So, to start the higher risk, the premium increases.
  The expiration engagement is fifty-fifty more important if you own the underlying stock. If you sell a covered phone call option with a longer time to expiration, y'all'll be increasing the firm frame in which you're capping whatsoever gains that may materialize following a rally.
• Premium: This is the payment you receive upfront for selling a call pick. The premium depends on the gap betwixt the spot price and the strike cost. It volition decrease as the strike price rises further abroad from the spot price. Only a call with a lower premium is also less likely to be assigned.
• Strike Cost: This is the price at which you're obligated to sell the underlying stock if the call is assigned. Calls with a higher strike toll are less probable to be assigned and therefore generate a lower premium. Conversely, those with a lower strike price are more likely to motion into an in-the-coin position, and therefore more likely to exist assigned. If all other factors are constant, yous should go for a call option with a higher strike price because it gives you more than leeway to proceeds from an increment in the underlying stock'due south cost.
• The Number of Contracts: Each options contract has 100 shares. You'll receive a higher full premium if yous sell a college number of contracts. Just to sell more than contracts, you must own more shares of the underlying stock.

How Many Types of Telephone call Options Can Y'all Sell?

Y'all can sell either a covered call or a naked call. To sell a covered call, you accept to own plenty units of the underlying stock to cover the brusque position. For example, to enter into a phone call selection contract to sell 100 shares of a stock, you must ain at least 100 shares of that item stock in your portfolio. To sell a naked telephone call, y'all don't need to have the underlying stock in your portfolio. However, the funds in your account must be enough to cover the brusque position if the telephone call is assigned.

When'south the All-time Fourth dimension to Sell a Telephone call Option?

Selling a call option can be lucrative if you think the underlying stock'southward toll volition stay relatively stable or rise somewhat in the near future. You lot'll exist betting that the underlying stock'due south price will not ascent in a higher place the choice'south strike toll.

Ane of the benefits of selling a telephone call option is that information technology gives you a chance to earn an income on stocks already in your portfolio. Yous'll receive a premium for each stock pledged in the contract. Just the strategy comes with a catch: you give up the potential to brand profits if the stock cost increases in a higher place the strike price because the call will be assigned. Of course, y'all have to remember that you'll have an obligation to sell the underlying stock to the buyer if the phone call is assigned.

You can also sell a phone call option when you're pessimistic almost a stock'southward near-term prospects. If y'all sell a covered call and the toll of the underlying falls, the premium received volition slightly kickoff your losses. Selling a telephone call doesn't protect you from losing cash.

Merchandise Options Like a Pro

Robinhood has many great features that make trading simple and easy. The app contains all the information you need, including the premium, expiration engagement, and strike price. If you're new to this type of trading, the information we've shared in this article should give you an edge over other traders.

Have y'all sold whatever calls on Robinhood? What was your experience? Let usa know in the comments department.

Source: https://www.alphr.com/sell-call-robinhood/

Share this post