Swaption


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Related to Swaption: Put swaption, Call swaption

Swaption

Options on interest rate swaps. The buyer of a swaption has the right to enter into an interest rate swap agreement by some specified date in the future. The swaption agreement will specify whether the buyer of the swaption will be a fixed-rate receiver or a fixed-rate payer. The writer of the swaption becomes the counterparty to the swap if the buyer exercises.

Swaption

An option in which the buyer of the option has the right to enter into to an interest rate swap. The terms of the swaption specify whether the buyer will be the payer of the floating rate or the payer of the fixed rate. It is called a swaption because it is an option on a swap. A swaption is useful if an interest rate swap may be useful for the buyer's investment strategy, but there is still some uncertainty as to whether that will be the case. See also: Call swaption, Put swaption, Plain vanilla swap.

swaption

An option taken on an interest-rate swap. A swaption buyer has the right to enter into an interest-rate swap agreement by a specified date.
References in periodicals archive ?
Called swaptions for short, these interest rate agreements are usually designed to cushion debt payments in case interest rates rise.
A swaption would give the holder the right but not the obligation to enter into a swap on specified terms.
Aloisi said the Standard and Poor's rating agency's downgrade of AMBAC, which insures the turnpike bonds, triggered the termination notice on the swaption contracts that provide for the one-time contract termination fee.
In conjunction with the announcement of the two acquisitions on May 10, 2012, the Partnership entered into certain swaption contracts for each acquisition, providing the Partnership with the option to hedge crude oil volumes listed below at the indicated NYMEX WTI prices.
Loss) gain on interest rate swap and swaption agreements
If the state puts its credit behind the Turnpike debt, however, it is expected that the agency could readily refinance the debt and eliminate the burdensome swaption payments.
The district entered into a swaption in 2009, receiving a $9.
Based on swaption volatility jumping, 10 year treasury futures contract dropping sharply and a possible ending to the 25 year secular bull market, it may be time to "carefully review your portfolio and balance sheet sensitivity to rising rates.
The turnpike had hoped to refinance the $126 million in swaption bonds insured by Ambac Financial Group Inc.
Swaption Volatility Cube (volatility cubes and surfaces with multi-curves)
If the swaption is exercised in 2013 at the option of the counterparty, the city's debt profile will consist entirely of variable-rate bonds with a swap that has a very large negative valuation.