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标题: quiz: Non-Callable to Callable [打印本页]

作者: Viceroy 时间: 2011-7-11 19:52 标题: quiz: Non-Callable to Callable

If a company issues a non-callable bond and would like to make it callable, what is the best strategy using a swaption?

Answer : TO add the call feature, the company should purchase a receiver swaption .

If the company issued a callable bond and wants to remove the call feature, whats the best strategy using a swaption?

Answer: Sell a receiver swaption.

Ok so now whats confusing me is, when u sell a receiver swaption its the same thing a buying a payer swaption right?

作者: Iginla2011 时间: 2011-7-11 19:52

Buying options cost me. Selling options receive money.

You are selling the option for someone else to force you into a swap as the fixed rate payer.

You would buy an option that would give you the right to force someone to let you be the fixed rate payer.

The ability and volatility is what makes the option worth more.

作者: zwjy 时间: 2011-7-11 19:52

Yup makes sense. Thx Paraguay .

Same thing goes for puts but with payer swaptions.

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