Equity Basket Option Annex

Definition

Equity Basket Option Annex. An annex to an Equities Basket Option, setting out in detail the composition of the Basket.

This consists of a list of the constituents with the composition of each (as a number of shares or as a monetary amount (nominal). More often it would be specified as a weight rather than a notional. If equal weight it would be 1 share of each. Or it could be specified as 20% of this and 30% of that. This is irrelevant to whether it's an index or a single stock that makes up the constituent. Will have a total notional value fo rthe basket, and then the percentage will determine the number of shares that woulb be boiught to make up that basket. These ratios are possibly determine through some negotiation. If a basket changes its constituents then the constituents that would ... Indices (if regared as a type of basket) then when the authority decides to rebase the index, then - this would impact on the original peception of the index. When its rebased, you value the of at that time and work out the ratio of shares that give you the same equivalent value. [move this comment to Index Underlyer] Changes to the basket: This can still change during the life of the option, due to corporate actions.

Disclaimer

This entry annotates a FIBO Ontology Class. FIBO is a trademark and the FIBO Ontology is copyright of the EDM Council, released under the MIT Open Source License. There is no guarantee that the content of this page will remain aligned with, or correctly interprets, the concepts covered by the FIBO ontology.