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. Economics (from the Greek οίκος [oikos], house, and νÎμω [nemo], rules, hence household management) is the social science that studies the production, distribution, trade and consumption of goods and services in the context of the competing alternative allocations of goods and courses of action. ... // Headline text Link titleBold textBold textBold textBold textBold textThey are often represented by a certificate. ... Program trading is the use of computers in stock markets to engage in arbitrage and portfolio insurance strategies. ...
Specific types of baskets
Certain specific products can be seen as specialized "baskets".
Index funds are a basket for all the securities in a particular exchange, weighted appropriately.
Market baskets are baskets for all the securities on a particular market, weighted appropriately.
It's important to distinguish between true baskets, in which the derivative depends only on the total price of the basket, and multi-underlying derivatives, in which the derivative depends on individual components (for example, a first-to-default basket swap).
Baskets are always traded over-the-counter, but that doesn't mean you can enter into a deal through an agent or broker.
I have never personally seen a basket in the narrow sense of derivatives, that is a security that pays off based solely on the return of a portfolio of derivatives.
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