A cross-currency derivative which constitutes an option giving the holder the right, without the obligation, to enter into a cross-currency swap, whether as a fixed rate receiver or payer. The option’s expiration date precedes the first reset date of the underlying swap agreement. For example, an investor sells or buys the right to enter into a currency swap with a counterparty on a specified date. The investor pays a stated fixed/floating rate in a given currency and receives a stated fixed/floating rate in another currency. The two parties have to specify the amounts of the two currencies for the final exchange of principals.

This swaption is also known as a differential swaption or a circus option.