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  • January 31, 2022
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Contingent Premium Swaption

An option contract which grants the holder the right to buy or sell a swap, conditioned on fixed terms. That is, the holder doesn’t have to pay any premium unless the option is in the money at the time of exercise or on expiration date. However, the contingency feature means the premium on a contingent premium option is higher than that on an otherwise identical option.


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