An option on an underlying asset swap. It gives the holder the right, without the obligation, to buy an asset swap with a preset strike asset swap spread for par. There is a wide variety of underlying assets on which an asset swaption can be based. For example, an asset swaption may take the form of a synthetic lending facility, i.e., a credit spread option that involves the exchange of a credit spread between an agreed reference rate and the specific asset underlying the swap.

This asset-swap spread-based option is mainly classified as a call asset swaption and a put asset swaption.