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 ?
Tom's basket was weighed and approved; and he looked, with an anxious glance, for the success of the woman he had befriended.
We sat on the ferny bank of the pool and ate of the generous basket Aunt Janet had provided, with appetites sharpened by the keen spring air and our wilderness rovings.
He took a tremendous jump off the top of the wall on to the top of the cat, and cuffed it off the basket, and kicked it into the garden-house, scratching off a handful of fur.
Again I thought of abandoning that basket, but did not.
She got up as she was speaking, and put her hands to her bonnet to adjust it, and then laid hold of her basket.
Grimaud put his basket on the ground and sat down with a shake of the head.
She bade me follow her to various shops, and when my basket was quite full we returned to this house, when you had the goodness to permit me to remain, for which I shall be eternally grateful.
Only Beaudelet remained behind, tinkering at his boat, and Mariequita walked away with her basket of shrimps, casting a look of childish ill humor and reproach at Robert from the corner of her eye.
My poor little girl would be sadly disappointed, I know, if the basket was not finished tomorrow, for though I told her it certainly would not, I am sure she depends upon having it done."
"And then I can tell whether that crooked wizard has fairly traded secrets, or whether he has fooled me as wickedly as I fooled him." So she set down her basket and began fumbling in it for one of the precious powders she had obtained.
The youngest of the two had got into a waste-paper basket. The eldest had found an old bottle of gum, with a brush fixed in the cork, and was gravely painting the face of the smaller child with what little remained of the contents of the bottle.
The baby in the cradle woke up and cried; the boy in the clothes-basket fell over on his back with the basket upon him, and was seen no more; the mother wept louder yet and rocked faster; but Kit, insensible to all the din and tumult, remained in a state of utter stupefaction.