Interest Rate Swaption

Interest Rate Swaption

 

 

The buyer pays the seller of swaption to have the option to excise an interest rate swap

 

Has American vs European

 

Payer swaption: Buyer has the right to be a fixed rate payer

 

Receiver swaption: Buyer has the right to be a fixed rate receiver

 

Use Swaption to cancel an interest rate swap

 

 

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