An embedded Bermudan option in a cross currency swap. More specifically, it is a contract in which the holder of a cross currency swap is long or short an option to put the swap at certain cash flow payment dates. For example, suppose a fixed leg cross-currency swap payer is long a Bermudan swaption. Then the payer makes periodic payments based on a fixed rate in a certain currency and receives floating rate payments based on the interest rate of another currency. At certain payment dates the payer can cancel the swap, or equivalently, can enter another swap to pay the floating rate and receive the fixed rate, thereby effectively cancelling the original swap. Some deals charge an exercise fee.

Most cross currency swaptions are fixed-for-floating swaptions. However, fixed-for-fixed and floating-for-floating cross-currency swaptions are also popular. Typical swaptions have fixed notionals for both receive and pay legs, and a single fixed coupon rate for the fixed leg and a single spread for the floating leg. Trades with amortizing or variable notionals, and/or variable fixed leg coupons, and/or variable spreads over floating legs are also common.