An option that allows the holder to enter into a participating swap. In other words, the holder has the right to be a party to a participating swap during the option’s life. If this right is not exercised by expiration date, the option expires worthless. With this swaption, an investor can decide whether or not it is worthwhile to activate full protection if prices move above a specific strike price while still having the ability to participate in a certain percentage of the benefit from downward moves in prices.

It can also be viewed as a participating option in which the option is a swaption.