Longevity swaption
\lɔnˈʤɛvəti\ swaption
A longevity swaption is a derivative contract allowing the owner the option (the right but not the obligation) to enter into an underlying longevity swap.
With a defined floating leg and fixed leg of the underlying longevity swap,
- A swaption that allows the original payer of the floating leg the option to pay the fixed leg and receive the floating leg is known as a payer swaption or put swaption.
- A swaption that allows the original payer of the fixed leg the option to pay the floating leg and receive the fixed leg is known as a receiver swaption or call swaption.