Robinhood made options trading accessible to millions of retail traders who never would have touched it otherwise. The platform is clean, the interface is fast, and placing a covered call takes about 30 seconds once you know where to look.
The problem isn't the platform. The problem is that Robinhood shows you every available contract without telling you which ones are actually worth selling. That part is on you — and most traders either guess or pick based on round numbers and gut feel.
Here's how to sell covered calls on Robinhood step by step, and more importantly, how to figure out which contracts are worth selling before you ever open the app.
What a Covered Call Is — One Paragraph
You own 100 shares of a stock. You sell someone else the right to buy those shares from you at a specific price (the strike) before a specific date (the expiration). In exchange, they pay you a premium upfront — and you keep that premium no matter what happens. If the stock stays below your strike at expiration, the option expires worthless and you keep the premium and your shares. If the stock rises above your strike, your shares get called away at the strike price — you still keep the premium, plus whatever gain you had from your purchase price to the strike. Either way, you collected income you wouldn't have had otherwise.
How to Sell a Covered Call on Robinhood — Step by Step
Before you can sell covered calls on Robinhood, you need options Level 2 approval. If you haven't applied yet, go to Account → Settings → Options Trading and apply. You'll answer a few questions about your trading experience. Most people get approved within a day or two.
Once you have approval and own at least 100 shares of the stock you want to sell calls against, here's exactly how to place the trade:
Step 1. Open Robinhood and navigate to the stock you own 100 shares of. Tap the stock to open its detail page.
Step 2. Tap Trade at the bottom of the screen, then select Trade Options.
Step 3. You'll see a list of expiration dates. Select the expiration you want — typically 2 to 6 weeks out for most covered call strategies. We'll talk more about expiration selection below.
Step 4. You'll see a chain of available strikes. Tap on the strike price you want to sell. Select Sell when prompted for the direction.
Step 5. Robinhood will show you a preview of the trade — the premium you'll collect, the expiration date, and your maximum gain and loss. Review it carefully. The premium shown is per share — multiply by 100 to get your actual dollar amount.
Step 6. Set your order type. Use a Limit order at the mid price between the bid and ask — never use a market order on options. The bid-ask spread on options can be wide, and a market order will fill you at the worst possible price.
Step 7. Tap Review and then Submit. Your covered call is now live.
That's the mechanical process. It takes about 30 seconds once you've done it a few times. The hard part — which Robinhood doesn't help with at all — is figuring out which strike and expiration to choose in the first place.
Where Most People Go Wrong
Walk into any options trading community and ask how people pick their covered call strikes. You'll get answers like "I go about 5% out of the money," "I always sell the 30 delta," or "I just pick a round number that feels safe."
None of these are based on anything real. They're rules of thumb that sound logical but don't account for the specific stock's actual behavior, the current IV environment, or the real probability of the call expiring worthless.
The result: traders systematically either sell too close to the money (collecting more premium but getting called away constantly) or too far out of the money (so little premium that it barely compensates for the downside risk they're carrying on the shares). Neither extreme is a strategy. It's guessing with extra steps.
Strike selection is where covered call income strategies succeed or fail. Robinhood shows you the strikes. It doesn't tell you which ones make sense for this stock, in this IV environment, with these market conditions.
What to Actually Look For in a Contract
Three numbers matter more than anything else when you're evaluating a covered call contract.
IV rank. Implied volatility rank tells you whether options on this stock are currently expensive or cheap relative to the stock's own history. IV rank of 70 means options are in the 70th percentile of their historical range — expensive. IV rank of 15 means they're cheap. You want to sell covered calls when IV rank is elevated — you're collecting more premium per unit of upside you're giving up. Robinhood doesn't show you IV rank. You have to find it elsewhere.
Probability of expiring worthless. This is the single most important number for a covered call seller. What is the real chance that this stock stays below your strike between now and expiration? Robinhood shows you delta, which is a rough theoretical approximation of this probability — but it's based on Black-Scholes assumptions that frequently don't match real stock behavior. Historical back-tested probability — how often this specific stock has actually stayed below a comparable strike over comparable timeframes — is a more grounded measure. Robinhood doesn't show you this either.
Premium relative to capital at risk. A $1.20 premium on a $200 stock is a very different trade than $1.20 on a $30 stock. Annualized ROI normalizes for the capital you're putting up so you can compare trades across different price points. Set a minimum threshold — 10% annualized is a reasonable floor — and skip contracts that don't clear it. Thin premium in exchange for full downside exposure on the shares isn't a trade worth taking.
The Part Robinhood Doesn't Help With
Robinhood is a great execution platform. It is not a research platform. It shows you all available contracts on a stock you're already looking at — it doesn't help you find which stocks have elevated IV right now, which contracts have strong historical probability of expiring worthless, or which expirations are clear of upcoming earnings announcements.
That research gap is where most retail covered call sellers leave money on the table. They open Robinhood, look at a stock they already own, pick a strike that feels right, and execute. They never checked whether IV was elevated or depressed. They never looked at historical probability. They may not even know if there's an earnings announcement inside their expiration window.
This is exactly why I built StrikeScan. It scans 60,000+ live contracts and surfaces the ones with strong premium, high probability of expiring worthless, elevated IV rank, and no earnings before expiration — across 5,000+ tickers, updated every 15 minutes. You find the trade there, then execute it wherever you want — Robinhood included. Free to use during beta.
A Quick Example
Here's what this looks like in practice. Say you own 100 shares of a stock trading at $47. You're considering selling a covered call.
You open StrikeScan and pull up the stock. IV rank is 58 — elevated, good time to sell. No earnings for 40 days — safely outside most expiration windows. You look at the $50 strike expiring in 21 days. Historical probability of expiring worthless: 76%. Monte Carlo probability: 72%. Premium: $0.85. Annualized ROI: 24.7%.
That's a setup worth evaluating seriously. 76% historical probability, 24% annualized ROI, no earnings risk, elevated IV. You take those numbers to Robinhood, find the $50 strike on the 21-day expiration, set a limit order at the mid price, and submit.
The execution took 30 seconds. The research — knowing this specific contract made sense before you sold it — is what actually matters.
The Bottom Line
Robinhood makes it easy to sell covered calls. Finding covered calls worth selling is a different problem — one that the platform doesn't solve for you. IV rank, historical probability of expiring worthless, and annualized ROI relative to capital at risk are the three numbers you want before you choose a strike. None of them are in Robinhood.
Do the research first. Execute on Robinhood. That's the workflow that separates traders who consistently collect premium from traders who just pick round numbers and hope for the best.
Disclosure: I am the founder of StrikeScan, the platform referenced in this article. This is not financial advice.