Definitions for "Basket option"
A type of option, which pays out on the basis of the aggregate value of a specified basket of financial assets (underlying basket).
An option with an underlying asset made up of a basket of securities (stocks or commodities).
Package that involve the exchange of more than two currencies against a base currency at expiration. The basket option buyer purchases the right, but not the obligation, to receive designated currencies in exchange for a base currency, either at the prevailing foreign exchange market rate or at a prearranged rate of exchange. Multinational corporations with multi currency cash flows frequently use basket options because it is generally cheaper to buy an option on a basket of currencies than to buy individual options on each of the currencies that make up the basket.