Definition of swaption in English:



  • An option giving the right but not the obligation to engage in a swap.

    • ‘How the hell was anyone even supposed to understand all this with its ‘puts’ and ‘calls’, ‘options’ and ‘swaps and ‘swaptions’ in currency, bonds, stocks and interest rates?’
    • ‘What we use are pretty simple things that are called interest-rate swaps, where we turn a short-term instrument into a longer-term instrument, or options or ‘swaptions.’’
    • ‘It was charging an option premium of 2.83 per cent to enable a borrower to enter a swaption agreement at 3.5 per cent, fixed in a year's time for five years.’
    • ‘I've called thirty people, and still only have the vaguest idea about how to tell a swaption from a volatility smile, or even if I should.’
    • ‘But at least I could read up on swaps, options and swaptions while I was delayed.’


1980s: blend of swap and option.