Commodity Basket Options

Master Complex Financial Derivative Contracts

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A Commodity Basket Option is a type of financial derivative that provides the holder the right, but not the obligation, to buy or sell a predefined basket of commodities at a specified strike price on or before a specific expiration date. Instead of focusing on a single commodity, this option is linked to a portfolio of commodities, such as energy products, metals, or agricultural goods. The payoff is typically determined by the weighted average price movement of the underlying commodities in the basket. These instruments are often used for hedging risks or speculating on the price movements of multiple commodities, offering diversification benefits and tailored exposure to specific sectors or themes within the commodity markets. 

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