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What does the following statement mean: "after accounting for levels of market volatility, we favor receiving outright in 6-month forward-starting 2-year swaps."? Specifically, what does "receiving outright" mean? Is there a way for you to receive only the forward points? Thanks in advance!

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Receiving outright simply means receiving the fixed rate versus LIBOR on the 6 month forward starting 2 year swap. The term 'outright' is unnecessary here - it is probably being used to compare with a potential strategy of receiving the fixed on a 6 month forward starting 2yr swap versus paying fixed on a spot starting 2yr swap.

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I've heard this phrase thrown around in the Forex market. There is a locked-in exchange rate and delivery date in these cases.

In terms of companies, large purchases are made from foreign business that utilize outright forward contracts to cover costs. For instance, when a US company buys materials from a Mexican supplier they could be required to make a payment for half of the total value of the payment and the other half in about six months. In order to minimize currency risk exposure, a spot trade is used to cover the first payment. An outright forward is then used to lock in the exchange rate and the agreed-upon rate can be used in six months.

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  • $\begingroup$ In FX outright refers to the actual purchase (or sale) of the currency, as compared to a swap where you agree to buy the currency on one date and sell it on another. Outright trades can be outright spot or outright forward (which is sometimes abbreviated "outright" and more commonly "forward"). $\endgroup$ – noob2 Apr 11 '16 at 16:13

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