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   Swaption
   















 

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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.

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