A swaption (a combination of “swap” and option”) is a highly structured derivative product through which we give our customers a number of alternative ways in which to protect themselves from the interest rate risk incurred on their long-term cashflows.

As its name implies, a swaption is an option on a swap: that is, it gives the buyer the right to engage in (or not to engage in) a swap agreement under certain conditions and within a specified period of time in the future. When a swaption contract is entered into, the buyer pays the seller a fee for the right, in return for which he gets the ability to manage his investment costs more flexibly.

For detailed information about the tax consequences of swaps trading in Turkey please click here.

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