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The traditional covered call involves buying 100 shares of stock and selling 1 call option against it. But you don’t need to commit to a full 100 shares to benefit from the strategy. By trading covered calls with fewer than 100 shares, you can lower capital exposure, reduce downside risk, and still collect premium income.

This version of the covered call offers a favorable risk-return profile in neutral or slightly bearish conditions. With our custom scan feature, which is a tool that lets you find trades you can’t find anywhere else, you can easily screen the whole market for this revised covered call version (e.g., 75 shares, 150 shares, etc.) and pick the trade you prefer based on your investment style.

Why Consider Covered Calls with Less Than 100 Shares?

Not everyone has the capital (or the desire) to buy 100 shares of a stock, especially when dealing with high-priced tickers like SPY or QQQ. Traditionally, options are designed to work in blocks of 100 shares, which can limit access to covered call strategies for smaller accounts. But you can still build a similar payoff profile with fewer shares, giving you access to premium income without the full exposure.

This adjusted covered call strategy lets you modify two main parameters:

• The number of shares you hold (less than 100)

• The strike price of the call you sell

By balancing these two elements, you can fine-tune both risk and reward. For example, selling a call 5% out-of-the-money with 70 shares can be more conservative than using 90 shares with an in-the-money call. This flexibility gives you more control over your exposure and expected outcomes.

This modified version of the covered call is ideal for investors who want to:

• Scale into a position gradually

• Limit their downside risk

• Deploy capital more efficiently across multiple stocks or strategies

There are different reasons to consider a covered call with less than 100 shares. Just think of it in a scenario-based way:

Note that, if the stock rallies, a standard 100-share covered call performs better, but the reduced risk of the partial position may justify the trade-off. This strategy is useful when you want more control over position size, or when trading a high-priced stock where 100 shares would tie up too much capital.

Visual Comparison: SPY Covered Call with 100 Shares vs 75 Shares

A cool way to compare the standard and the revised covered call strategies is by looking at two examples on the same underlying with the exact same strikes and expiration dates.

Regular Covered Call - 100 Shares + 1 Call

Let’s start with SPY, with a hypothetical classic covered call strategy at a 2-week expiration date. This could be your P&L chart:

Notice a few things:

• Profit capped at the strike plus premium

• Higher capital requirement, higher risk if the stock price declines

Now let’s look at a revised version strategy, in which you own 75 shares instead of 100:

In this case, it is fairly easy to make a comparison with the previous chart:

• If SPY declines, your losses are more contained than with a full 100-share position

• If SPY does not move much, you will earn more money than you would with the classic 100-shares covered call

• If SPY really starts moving up, you will start losing money

How to Scan for These Trades in Option Samurai

1. Select the Custom strategy

2. In the settings, add a stock leg (setting the stock quantity to less than 100 - e.g., 75), and add an option leg to sell the call contract

3. Configure your filters: Once the structure is defined, move on to filtering for high-quality setups. Here are some commonly used filters:

• Total Option Volume: Above 5,000 (for liquidity)

• Moneyness: From -5% to +5% (captures near-the-money calls)

• Days to Expiration: From 15 to 30 (short-term setups)

• Bid-Ask Spread: Under $1 (helps reduce slippage)

• Delta: Any (or filter based on your risk preference, e.g., 20-40 for out-of-the-money calls)

• Probability of Profit: Above 70

• Open Interest: (optional but recommended, e.g., >1,000 for better liquidity)

• Implied Volatility Rank: (if you're targeting high premium setups, e.g., IV Rank > 50%)

4. Use the scenario engine to simulate behavior under different stock moves

When This Strategy Doesn't Work

This isn’t a strategy for every market condition. If you believe the stock has strong upside potential and could break out significantly, the adjusted covered call can underperform.

In fact, you may end up losing money overall due to the call obligation outweighing your gains on the limited number of shares.

That’s okay - understanding when not to use a strategy is just as important as knowing when to use it. We're not trying to sell you on a specific tactic - we're helping you understand how it works so you can make informed decisions.

Beyond 100 Shares?

While this article focuses on covered calls using fewer than 100 shares, the logic also works in the other direction. For example, you can sell 1 call option against 110 or 150 shares.

This increases your exposure to gains if the stock rallies (since the extra shares aren’t capped), but also increases downside risk and capital commitment. It’s worth considering if you want partial upside uncapped and don’t mind more volatility.

Read More

• Learn how to build and modify custom option strategies in Option Samurai using flexible building blocks, including partial covered calls (Custom options strategy screener)

• A complete overview of the standard covered call strategy - how it works, when to use it, and key risks to consider. Reading this will give you a solid foundation to better understand how partial covered calls differ and when to use each version. (Covered calls)

• Go to the scanner to try it yourself