Which one is more valuable, cap or payer swaption? Intuitively, I would think that cap is more valuable because the swaption is locked into paying a fixed rate unlike a cap holder who can still benefit if rates fall. Are there any other reasons?
the question doesnt make sense really, they are different products completely.
A swaption is a more conservative strategy, and more expensive, than a cap (typically). Swaption vol is less erratic. This is definitely material that won’t be on the exam.
+1 No way this is on the exam gooner7 Wrote: ------------------------------------------------------- > A swaption is a more conservative strategy, and > more expensive, than a cap (typically). Swaption > vol is less erratic. This is definitely material > that won’t be on the exam.