The most famous options pricing model is known as Black-Scholes. Swaps Swaps are, as the name suggests, an exchange of something. They are generally carried out on the interbank OTC market. Swaps are generally done on interest rates or currencies. For example a firm may want to swap a floating interest rate for fixed interest rate to minimise uncertainty.
Swaps come in all shapes and sizes.
The most basic variation being a swaption - which is an option on a swap. The BBC is not responsible for the content of external internet sites.