Cap and Payer Swaption benefit, unlike, paying, because

xiaotutu

Which one is more valuable, cap or payer swaption? Intuitively, I would think that cap is more valuable because the swaption is locked into paying a fixed rate unlike a cap holder who can still benefit if rates fall.

Are there any other reasons?

mnieman

the question doesnt make sense really, they are different products completely.

scr879

A swaption is a more conservative strategy, and more expensive, than a cap (typically). Swaption vol is less erratic. This is definitely material that won't be on the exam.