Swaption Law and Legal Definition

Swaption is an option to enter into a swap. It is the right, but not the obligation, to enter into a specified type of swap at a specified future date.

The following is an example of a case law on swaption:

A swaption is simply an option to enter into an interest rate swap at a future date. [Ala. Pub. Sch. & College Auth. v. JPMorgan Chase Bank, 2009 U.S. Dist. LEXIS 62247 (M.D. Ala. July 21, 2009)].