Payer Swaption/ Receiver Swaption

Shouldn’t a Payer Swaption be equivalent to a call option because you’re committing to pay a fixed rate … and therefore … calling the current fixed rate? Why is it a put option? J.

lots of discussion on this tonight, look it up

Payer = long interest rate call AND short interest rate put Receiver = long interest rate put AND short interest rate call

Soxboys 21: Exactly: that’s my logic. So a Payer Swaption should be equivalent to a CALL on interest rates NOT a put. But CFAI says a put!! How come?

no, its a call on a bond not an interest rate, look up the thread

The Show NY Beautiful: got it: makes sense now. Thanks buddy!! J.

A payer swaption is a call on a stock and a put on a bond. A receiver swaption is a call on a bond and a put on a stock.

Think about how the cash flow can be replicated and go by that