Basket


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Basket

Applies to derivative products. Group of stocks that is formed with the intention of either being bought or sold all at once, usually to perform index arbitrage or a hedging program.

Basket

1. A group of securities often, but not always, derivatives, bought and sold as a single unit. Institutional investors often purchase baskets in order to pay only a single commission on an exceptionally large transaction. A basket is also useful in an index arbitrage transaction.

2. See: Currency basket.

basket

A preassembled group of securities. Baskets allow individual investors to acquire a group of securities with a single trade while paying one commission.

Basket.

A basket is a group of securities that have been put together for a specific investment purpose and are traded as a unit.

Authorized ETF participants accumulate baskets that include all of the securities tracked by a specific index. The baskets then become creation units for an ETF that tracks that index.

Basket also refers to a group of 15 or more securities with a combined value of $1 million that institutional investors and arbitrageurs assemble to use in program trading. The program trading is driven by sophisticated computer software that may automatically trigger trading when prices, or spreads between prices, hit predetermined levels.

Since baskets represent large values, basket trading can cause abrupt price changes in a stock or group of stocks included in a basket and may even have a dramatic effect on the overall market.

References in classic literature ?
I'll carry your basket a piece," said Tom, compassionately.
Perhaps," continued Elinor, "if I should happen to cut out, I may be of some use to Miss Lucy Steele, in rolling her papers for her; and there is so much still to be done to the basket, that it must be impossible I think for her labour singly, to finish it this evening.
The sun got round behind the wood, and it was quite late in the afternoon; but still the cat sat upon the basket.
Grimaud put his basket on the ground and sat down with a shake of the head.
Bullfrog," said my wife, coolly taking the basket from my hands and replacing it on the front seat.
It was not until the basket had arrived within a few feet of the Gizbarim that a low grunt betrayed to their perception a hog of no common size.
The boy took up the basket, and as he set out the notes of a brass band were heard from the direction of the village.
Good went next, and I came last, carrying the basket, and on reaching the bottom lit one of the two remaining matches.
All the rest have gone except the note taker, the gentleman, and the flower girl, who sits arranging her basket, and still pitying herself in murmurs.
And mind you take the big basket with you for the flowers.
Here he met three pretty lasses, each bearing a basket of eggs to market.
We waited while the basket was packed, and took the boy with us.