A variance swap in which the underlying’s price should fall within a specified range or corridor if its squared return is to be included in the floating rate leg of the swap payout. The fixed rate payment is typically made at expiration, as in a standard variance swap. Corridor variance swaps allow investors to take exposure on a specific level of volatility provided that the underlying has traded in a given range. In this type of swaps, the accrued variance is divided by the total number of days in the observation period.