Mon. Jun 21st, 2021
    Swaption, Free TON House, Free TON, Wiki

    Swaption is an agreement to make a future deal on pre-agreed terms. However, it is rather an opportunity to conclude a transaction at a certain point, but not an obligation.

    Depending on the terms of the transaction in the future, swaptions are divided into: 

    • American — a deal can be made within the agreed period of time;
    • Bermudan — a deal can be made on specific dates;
    • European — there is an agreed day to make a deal.

    Call swaption is a swap that provides the buyer the right to be a payer at a fixed rate (exchange rate); he will be paid at a floating rate.

    Put swaption is a swaption that provides the buyer the right to be a payer at a floating rate; at the same time, he will be paid at a fixed rate.

    Straddle swaption is a swaption that provides the buyer the right to choose whether to be a payer at a floating or fixed rate in the future.

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