Basket Option

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Dictionary Says

Definition of 'Basket Option'

A type of financial derivative where the underlying asset is a group of commodities, securities or currencies. Like other options, a basket option gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specific price, on or before a certain date (the holder has the option to buy or sell, or to let the option expire worthless). With a basket option, however, the holder has the right, but not the obligation, to buy or sell a group of underlying assets. A basket option is considered an exotic option.
Investopedia Says

Investopedia explains 'Basket Option'

A currency basket option provides a more cost effective method for multinational corporations to manage multi-currency exposures on a consolidated basis. For example, a global corporation such as McDonald's might buy a basket option involving Indian rupees and British pounds, in exchange for U.S. dollars.

The currency basket option has all the characteristics of a standard option, but the strike price is based on the weighted value of the component currencies (calculated in the holder's base currency). A basket option often costs less than multiple single options.

Search results for

'Basket Option'

  • How do I use a "basket" option?

    http://www.investopedia.com/ask/answers/08/basket-option.asp
    A basket option is an option with an underlying asset "basket" of securities,
    currencies or commodities. ... How do I use a "basket" option? ...

  • CFA Level 1 Study Guide - Derivatives - What is a Derivative? ...

    http://www.investopedia.com/exam-guide/cfa-level-1/derivatives/what-is-a-derivative.asp
    ... Values for Options; 15.32 Straddles and Strangles; 15.33 Option Prices and
    the Time to Expiration; 15.34 Put-Call Parity; 15.35 Effect ...

  • Options And Futures Frequently Asked Questions | Investopedia

    http://www.investopedia.com/ask/options-and-futures/
    ... I am the beneficiary of an IRA and a Keogh. Can I combine them into one plan? View
    Answer; How do I use a "basket" option? View Answer; How does pyramiding work ...

  • Active Trading Frequently Asked Questions | Investopedia

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    ... I am the beneficiary of an IRA and a Keogh. Can I combine them into one plan? View
    Answer; How do I use a "basket" option? View Answer; How does pyramiding work ...

  • Active Trading Frequently Asked Questions | Investopedia

    http://www.investopedia.com/ask/trading
    ... I am the beneficiary of an IRA and a Keogh. Can I combine them into one plan? View
    Answer; How do I use a "basket" option? View Answer; How does pyramiding work ...

  • Active Trading Frequently Asked Questions | Investopedia

    http://www.investopedia.com/ask/shortselling.asp
    ... I am the beneficiary of an IRA and a Keogh. Can I combine them into one plan? View
    Answer; How do I use a "basket" option? View Answer; How does pyramiding work ...

  • Active Trading Frequently Asked Questions | Investopedia

    http://www.investopedia.com/ask/active.asp
    ... I am the beneficiary of an IRA and a Keogh. Can I combine them into one plan? View
    Answer; How do I use a "basket" option? View Answer; How does pyramiding work ...

  • Another Option For Income

    http://stocks.investopedia.com/stock-analysis/2012/Another-Option-For-Income-PBP-BDJ-INB-IGD-SDY0215.aspx
    ... approach where the investor buys a stock or a basket of stocks tied to an index
    and writes call options that cover the stock position. A call option gives its ...

  • Series 7 Study Guide - Portfolio Management - Market Indexes and ...

    http://www.investopedia.com/exam-guide/series-7/portfolio-management/market-index-averages.asp
    ... averages exist. Both of these terms refer to ways of measuring how the value
    of a basket of selected stocks changes over time. Strictly ...

  • Summertime Hedges

    http://stocks.investopedia.com/stock-analysis/2011/Summer-Time-Hedges-GLTR-GLD-PBP-BWV-FXY-FXF-DOG0613.aspx
    ... simplest form, a buy-write option strategy is where an investor buys a basket of
    stocks tied to an index and writes call options that cover the stock position. ...

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