Basket (finance)
Encyclopedia
A basket is an economic
term for a group of several securities
created for the purpose of simultaneous buying or selling. Baskets are frequently used for program trading
.
Certain specific products can be seen as specialized "baskets".
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
term for a group of several securities
Security (finance)
A security is generally a fungible, negotiable financial instrument representing financial value. Securities are broadly categorized into:* debt securities ,* equity securities, e.g., common stocks; and,...
created for the purpose of simultaneous buying or selling. Baskets are frequently used for program trading
Program trading
Program trading is a generic term used to describe a type of trading in securities, usually consisting of baskets of fifteen stocks or more that are executed by a computer program simultaneously based on predetermined conditions...
.
Certain specific products can be seen as specialized "baskets".
- Index fundIndex fundAn index fund or index tracker is a collective investment scheme that aims to replicate the movements of an index of a specific financial market, or a set of rules of ownership that are held constant, regardless of market conditions.-Tracking:Tracking can be achieved by trying to hold all of the...
s are a basket for all the securities in a particular exchange, weighted appropriately. - Market basketMarket basketThe term market basket or commodity bundle refers to a fixed list of items used specifically to track the progress of inflation in an economy or specific market....
s are baskets for all the securities on a particular market, weighted appropriately. - Basket optionBasket optionA basket option is a financial derivative, more specifically an exotic option, whose underlying is a sum or average of different assets. Examples are index options, options on a portfolio, etc....
s are exotic optionExotic optionIn finance, an exotic option is a derivative which has features making it more complex than commonly traded products . These products are usually traded over-the-counter , or are embedded in structured notes....
s for which the underlyingUnderlyingIn finance, the underlying of a derivative is an asset, basket of assets, index, or even another derivative, such that the cash flows of the derivative depend on the value of this underlying...
is a (weighted) combination of individual assets.