What is Basket Option?

When the underlying asset for an option is a basket of currencies, securities or commodities, it is known as Basket option.

How Is It Applied in Options Market?
Such an option works out to be a cheaper way for large companies to buy or sell a basket of numerous different currencies for a particular single currency. For example, a buy transaction of United Colors of Benetton involving Britain Pounds and Indian Rupees in exchange of Euro.

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September 17, 2008 · Filed Under Forex Options Trading

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