A swaption (swap option) in which the strike price of the option is less than the forward rate (in the swap). This in-the-money option (in which the underlying is a swap) can be exercised with a profit (it has moneyness).

In the money swaption: swap rate > strike price

The option’s holder has the right to enter into an interest rate swap over the course of its life including maturity date or only at maturity. The swaption might get in the money and considered as such during its life including maturity date (for an American swaption) or only at maturity (for a European swaption).