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Options on Interest Rate Swap futures are a valuable addition to the risk management toolbox of investment and risk managers, especially those with portfolios exposed to the optionality of mortgages, mortgage securities and certain corporate bonds. Covering futures on the 5-year, 7-year, 10-year and 30-year tenors, these contracts offer corporate treasurers, asset managers, mortgage traders, mortgage servicers and bank treasurers an effective vehicle for accurately controlling medium- and long-term interest rate exposure. For hedge funds, these options offer a flexible, efficient way to express opinions about LIBOR-based volatility while incurring less exposure to basis risk and fewer administrative costs than OTC alternatives. This fact card will give you a quick snapshot of who uses these contracts and why, plus the contract specifications you need to know to begin trading.
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