Weaving a basket strategy

Basket products are useful tools for those investors seeking to build diversified portfolios to their own specifications

Basket products are widespread in the equity derivatives world, being attractive to investors for a variety of reasons. These include the opportunity to take an option position on a number of indices spread across the world, rather than a single country. In this case the attractiveness of a diversification opportunity is clear.

Alternatively a bank can issue a product on a basket of stocks selected by its research team. In this case the precise composition attracts the investor. For example, an