CALL SWAPTION
A type of option between two parties that can be exercised on a swap where the buyer of the swap has the right, but not obligation to, receive an agreed upon fixed interest rate. The buyer pays a premium for the right to swap at this fixed rate. Short for a call swap option, a call swaption can be used as a hedging tool to avoid risk if a bond issuer believes interest rates might decrease.
Also known as a payer swaption.
When a buyer feels it will be beneficial, he may enter into a call swaption, which will allow him to swap interest rates. Regardless of whether the buyer of the option is the rate receiver or the payer, the interest rate will be fixed, based upon terms of this agreement.
This type of swap occurs in forex trading as a currency swap where the interest paid is also agreed upon.
- call swaption—call swaption translation A swaption in which the buyer has the right to enter into a swap as a fixedrate payer. The writer therefore becomes the fixedrate receiver float...Financial and business terms
- call swaption—Call swaption translation A swaption in which the buyer has the right to enter into a swap as a fixedrate payer. The writer therefore becomes the fixedrate receiverfloati...Financial and business terms
- call swaption—фин. payer swaption Свопцион коллОпцион на заключение операции своп обеспечивающий покупателю право на участие в свопе в качестве плательщика с фиксированной ставкой. ...Англо-русский экономический словарь