Swaption

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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 ?
The IndusInd Bank CEO, Romesh Sobti, said that with tenure of borrowing and hedge matching, the flexibility to raise one-year funds to avail swap options has also reduced in risk.
But Occupy leaders said yesterday the MBTA is paying $26 million for swap options that went bad.
Liverpool would have to pay about pounds 15m and have several fringe players as swap options. City have fought off previous interest in Richards, but with takeover talks and doubts about Pearce's future they may feel it's time to cash in.
O'Leary knows AC Milan's money and the attraction of Serie A may turn Viduka's head and he is preparing for the worst by doing his homework on the swap options now.
that is trying to put and keep Iran out of business, is that other than the existing Russian pipelines, Iran offers the most cost-effective oil transport and swap options for Caspian basin oil for the world market.
Many derivatives with written options, such as the sale of swap options, are important to interest rate risk management.