A long position in a payer swaption. This position gives the holder the opportunity to pay the fixed rate and receive the floating rate if interest rates move up before the option‘s expiration date (in which case the option will be exercised in order to enter into the swap). However, if interest rates followed an opposite route, the holder would not exercise the option, which expires worthless.
The long payer swaption is financially equivalent to the short receiver swaption.
