Covered Basket Call
Options strategy · Level 1 · Options basics
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Hold a basket of stocks that replicates an index or ETF, and sell calls on that index against it. A covered call at portfolio scale.
Where Tradecraft teaches it
Level 1 · Options basics, in the lesson “Managing covered calls, buy-writes & baskets”: Getting called away, dividend assignment, rolling, buy-writes and covered basket calls.
Related terms
- Buy WriteBuy the shares and sell the call at the same time, as one order at one net price.
- Covered CallOwn 100 shares and sell one call against them.
- Basis risk (tracking risk)Risk that a hedge or replicating basket doesn’t move one-for-one with the exposure or index it is meant to offset, so gains and losses fail to…
- Called awayHaving your shares sold at the strike because a short call written against them was exercised and assigned to you.
- Legging riskThe chance that prices move between separately executed parts of a multi-leg trade, worsening the net price or leaving an unhedged leg.
- RollingClosing an existing option and opening a similar one at a later expiry (out) and/or a different strike (up or down), usually as one spread order…