Is writing a receiver swaption the same as buying a payer swaption? Is writing a payer swaption the same as buying a reciever swaption? I beleive yes, with the one exception that writers have an obligation to enter the swap whereas buyers/holders have the right and can not exercise.
Let’s see, if I write a receiver swaption I am hoping rates go up. If I buy a payer swaption, I am also hoping rates go up. So they are equal in those terms. I’m not sure what you mean in your last statement, but buyers/holders have the right to exercise the swaption and enter int o the swap. The writer/seller is only obligated if the holder exercises.
sounds true, bu that’s not true with options in general…i.e., writing a call is not same as buying a put.
bpdolog: you’re exactly right. everything you said is what i meant and what i was trying to confirm. see this question below for reference (this is what made me think of this): The writer of a receiver swaption has: A) the right to enter a swap in the future as the floating-rate payer. B) an obligation to enter a swap in the future as the fixed-rate payer. C) an obligation to enter a swap in the future as the floating-rate payer. Your answer: C was incorrect. The correct answer was B) an obligation to enter a swap in the future as the fixed-rate payer. A receiver swaption gives its owner the right to receive fixed, the writer has an obligation to pay fixed.
the show NY Wrote: ------------------------------------------------------- > bpdolog: you’re exactly right. everything you > said is what i meant and what i was trying to > confirm. see this question below for reference > (this is what made me think of this): > > > The writer of a receiver swaption has: > > A) the right to enter a swap in the future as the > floating-rate payer. > > B) an obligation to enter a swap in the future as > the fixed-rate payer. > > C) an obligation to enter a swap in the future as > the floating-rate payer. > > > Your answer: C was incorrect. The correct answer > was B) an obligation to enter a swap in the future > as the fixed-rate payer. > > A receiver swaption gives its owner the right to > receive fixed, the writer has an obligation to pay > fixed. Cool, now that we’re on the same page why did you pick C?
I also forgot to mention, are you taking the NYSSA 3 day intensive course? I’m finding it pretty useful to tie up loose ends.
no idea why i picked C–a “floating rate payer” doesnt even really exist in swaptions. im not taking nyssa–i wont even have time to do all the materials i have as it is. but ill be off work last 2 weeks before exam, we can try getting together for some review if you like. i’ll email you.