Can anyone explain me the following core reading statement from CMP section 3.3: "A swaption can be regarded as an option to exchange a fixed-rate bond for the principal amount of the sawp - a put option in the case of paying fixed and receiving floating, a call option in the other direction" Can anyone elaborate on this because I am unable to visualise swaptions as put option and call option? I asked one of my friend on this who is suggesting that paying fixed and receiveing floating should be a call option. Can this be wrong explanations. Please explain.
