Weaving a basket strategy

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,