Call swaption

Call swaption

A swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The writer therefore becomes the fixed-rate receiver/floating-rate payer.

Call Swaption

An option in which the buyer of the option has the right to enter into to an interest rate swap as the fixed-rate payer. That is, the seller becomes the floating rate payer if the buyer decides to exercise the option. 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: Put swaption, Plain vanilla swap.
References in periodicals archive ?
The buyer of a call swaption earns a profit when the interest rate rises relative to the strike on the swaption.
Credit spread options appear to have given way to swaptions on CDS, which give the buyer the right but not the obligation to buy (put swaption) or sell (call swaption) CDS protection.
IFCo has entered into natural gas call swaptions for the first seven years of the project to moderate the risk of a reversal in gas pricing trends.