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Swaption

• An option on an interest-rate swap.

• Options on interest rate swaps. The buyer of a swaption has the right to enter into an interest rateswap 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 thecounterparty to the swap if the buyer exercises.

• Is an option on a swap. This option can be a put, call or myriad combination of option features.

 
 

Follow this link for all the terms related to swap.

 
 Embedded terms in definition
 Call
Combination
Future
Interest rate swap
Interest rate
Interest
Options
Option
Payer
Put
Receiver
Right
Swap
Will
Writer
 
 Referenced Terms
 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.

 Put swaption: A financial tool in which the buyer has the right, or option, to enter into a swap as a floating-rate payer. The writer of the Swaption therefore becomes the floating-rate receiver/fixed-rate payer.

 Swap option: See: Swaption. Related: Quality option.

 
 Related Terms
 Call swaption
Put swaption

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