A short position in a payer swaption. This position gives the holder the right and opportunity to pay the floating rate and receive the fixed rate if interest rates move down 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 short payer swaption is financially equivalent to the long receiver swaption.