Swap option


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Related to Swap option: swaption

Swap option

See: Swaption. Related: Quality option.

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.
References in periodicals archive ?
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.
The authority benefited by financing $800 million in bond swap options in exchange for $35 million in payments several years ago, which was leveraged on the difference between variable rate bonds and fixed municipal rate bonds.