# Basket Option

*Derivatives & Options — Finicade finance glossary*

An option on a weighted group of assets rather than a single one — paying off on the basket's combined value. Diversification within the basket makes it cheaper than buying an option on each name.

**Also known as:** rainbow option

**Related terms:** [Correlation](https://finicade.com/glossary/correlation), [Exotic Option](https://finicade.com/glossary/exotic-options), [Diversification](https://finicade.com/glossary/diversification)

Source: https://finicade.com/glossary/basket-option