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Hi all,I'm looking at standard interest rate swaps which have an "early termination option". The option allows either party to terminate the swap early. Cash settlement is applicable, which means that if you decide to terminate the option, the settlement amount is the PV of the trade at the time of termination. Just to be clear, if you terminate and the PV is -ve, you pay the c'party, if +ve you receive cash from the c'party.Now, my initial understanding is that this option is effectively worth zero - upon termination you are merely exchanging one asset for an another of equal value I.e the payoff is zero. However, having revisited this, I can see the potential value from a credit perspective - it allows me to realise the PV immediately, instead of over a longer period of time. Is my revised intuition correct here? If so, how would one quantify this?Thanks in advance for comments,Cheers,Donal

One main benefit is the legal right to force the counterparty to unwind the trade as this may be triggered by loan covenants, credit limits or the bank might just have revised its credit limits (which all banks are doing - usually downwards unfortunately), especially with Basel III.The other version of early termination is to embed an offsetting OTM swaption so c/p can close out the swap at a prefinied fixed cost.You pay for this by folding the option cost into the swap rate - exactly the same principal as buying a stock and long OTM put.