S
Swaption
S
Swaption
Swaption-Effects of Rate Changes (2 graphs)
An option to enter into a swap
contract
either as an
opening
transaction or as an
offsetting swap
which cancels an existing swap position. A
payer's swaption
is the
right
to be a
fixed rate payer
and a
receiver's swaption
is the right to be a fixed rate receiver. The
settlement
of a swaption will be entry into the nominal
exchange
called for under the swap agreement. The strike will be a specific (fixed)
swap rate
. Alternatively, a swaption can be described as an option on a portfolio of
forward rates
. Also called
Interest Rate Swaption
,
Swap Option
. See
Contingent Swap
, Payer's Swaption, Receiver's Swaption,
Option on a Swap
. See also Contingent Swap.
Glossary
*
S