An interest rate swap giving the holder the option to choose to enter into either a receiver swap or a payer swap. In another version of this swap, the user is allowed to elect when to fix the floating rate during an observation window. In this case, the chooser swap has a range option payout in its floating rate leg. And hence, the floating rate receiver is given the choice to specify the midpoint of the range on each reset date.

The chooser swap is also called an arrears option swap.