Derivatives- Interest rate options

[aparnake]

Someone please explain this to me----

When interest rates increase, would you buy call option or a put option to hedge against that risk?

Call Option- Pay fixed, receive floating

Pay option- Pay floating, receive fixed

Thanks

[avannoord]

Call option - you would receive what is floating and pay a fixed rate, which is now lower than what the market offers.

[S2000magician]

@aparnake

Someone please explain this to me----

When interest rates increase, would you buy call option or a put option to hedge against that risk?

Are you paying the interest rate or receiving the interest rate?

[oakwood42]

@S2000magician

@aparnake

Someone please explain this to me----

When interest rates increase, would you buy call option or a put option to hedge against that risk?

Are you paying the interest rate or receiving the interest rate?

S2000magician,

Is that something you like to ask yourself while solving for these type of problems?

Thank you,

oak

[S2000magician]

@oakwood42

@S2000magician

@aparnake

Someone please explain this to me----

When interest rates increase, would you buy call option or a put option to hedge against that risk?

Are you paying the interest rate or receiving the interest rate?

S2000magician,

Is that something you like to ask yourself while solving for these type of problems?

Always.

@oakwood42

Thank you,

oak

My pleasure.