Basket(redirected from Baskets)
Also found in: Dictionary, Thesaurus, Medical, Idioms, Encyclopedia.
2. See: Currency 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.