Swaption

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Related to Swaptions: Interest rate swap, swaps

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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
Equity options (such as contingent value rights), long-term currency options, currency warrants, and swaptions have maturities longer than two years.
In addition to its interest rate swaps and swaptions, the Company held a $(0.4) billion net short position in U.S.
Schwartz, 2001, "Throwing Away a Billion Dollars: the Cost of Suboptimal Execise Strategies in the Swaptions Market", Journal of Financial Economics, 62:39-66
Although the Board's attention has been primarily focused on interest rate swaps and "swaptions" (the option to enter into a future swap) associated with debt transactions, this does not mean that other types of derivatives will be ignored in this project.
Most over-the-counter interest rate options are caps and floors on the level of interest rates; the remainder are swaptions, which are options on swaps contracts.
First Nationwide Mortgage closed out many of its Treasury-based hedges and bought up some CMS floors and swaptions, which are options on interest rate swaps.
To get a better idea of how fast the market for derivatives has grown over the last decade, consider the chart, which displays the total worldwide notional value of all privately negotiated interest rate swap, interest rate option (including caps, floors, collars, and swaptions), and currency swap contracts outstanding over the period from 1987 to 1996.
Even sophisticated individuals can feel overwhelmed confronted with concepts such as digital and embedded options, "swaptions," caps and collars, and the seemingly endless variety of clever new combinations.
In order to mitigate duration risk and interest rate risk associated with the Company's RMBS, Cherry Hill used interest rate swaps and swaptions. At quarter end December 31, 2015, the Company held interest rate swaps with a notional amount of $300.3 million and swaptions with a notional amount of $85 million.
Legal & General Investment Management snagged that award for the firm's rapid growth in, and commitment to, the American LDI market following the establishment of a leading UK-based business, and for its thought leadership in the use of swaptions within LDI portfolios.