Swaption (Swap Option)
The option to enter into an interest rate swap. In exchange for an option premium, the buyer gains the right but not the obligation to enter into a specified swap agreement with the issuer on a specified future date. Investopedia Says:
The agreement will specify whether the buyer of the swaption will be a fixed-rate receiver (like a call option on a bond) or a fixed-rate payer (like a put option on a bond). Related Terms:
Commodity Swap
Currency Swap
Interest Rate Swap
Option
Swap
Total Return Swap |