Tag: interest rate

  • Investing

    Swaps

    “Contracts for Difference” are popularly known as “swaps”, with the most common types being Equity Swaps and Interest Rate Swaps. All contracts for difference have as their basis an exchange between two parties that allows each party to realize a benefit, not necessarily a profit, from the exchange. It may be that one party seeks to reduce their level of risk engendered by their ownership of ...

  • Swaps

    Option

    Option swaps are more commonly known by the acronym “swaption”. The concept is relatively simple, in that by participating in a swaption, a trader has acquired the option to enter an interest rate swap. They key factor is that the trader is not obligated to enter into the swap, but he does have the right to do so should he so desire.

  • Swaps

    Interest Rate

    Interest rate swaps are a type of Derivative transaction in which two participating parties swap, or exchange, positions in interest-bearing financial instruments for mutual advantage. The reasons for doing so are typically that one trader is seeking to reduce their exposure to interest rate fluctuations on the equity they currently own, assuming that equity (a bond or other interest-bearing ...