DBC 2437 - Swaption

 

The Banking Tutor 

                Daily Banking Concept -  2437 

Swaption

 

 A swaption (swap option) is a financial derivative providing the right—but not the obligation—to enter into an interest rate swap on a specified future date. Buyers pay an upfront premium for this flexibility to hedge against or speculate on rate changes. They are primarily used for managing interest rate risk on anticipated debt.