A swaption (option on a swap) that gives the holder the right, without the obligation, to enter into a swap as the fixed-rate receiver (receiver of the fixed interest rate) at or by a pre-determined date. This party to a future swap will pay floating and receive fixed. The other leg of the swap will be a counterparty known as the fixed-rate payer (floating-rate receiver).

A receiver swaption is the functional equivalent of a put option on interest rates, as the holder has the right to exercise whereby entering into a receive-fixed swap if the floating rate moves down.