Previously known as bookout, it refers to the closing out of a swap transaction, whereby the net debtor’s pays the market value of a swap to the net creditor.
In other words, it is the cancellation of a swap or an over-the-counter derivative contract which takes place before maturity. A party to a derivative transaction may bookout by selling a long position, buying a short position, or simply paying the market value of the derivative to the other party. For example, the parties to a forward contract can mutually agree after the trade day to settle their physical delivery obligations with a payment based on a price difference.
