how do you handle dv01 delta risk for a european swaption that is physically settled?the delta risk in the optionality part of a swaption, whether vol is stochastic or not, can be nicely handled by expressing all delta (i.e. delta and vega-delta) with respect to the forward rate of the underlying swap. however, what about dv01 delta risk? it is always possible to express dv01 delta in terms of discount curve delta buckets for example, but do people also have a more concise measure?in particular is it possible to have a measure of dv01 sensitivity to the underlying forward swap rate?thanks

Your last question is the answer. The delta of a swaption is just the delta of an option on the forward swap rate adjusted by the annuity factor and notional.

well a fwd swap can be replicated using vanilla swaps. a 10y fwd 10y swap can be replicated by a 20y swap and 10y swap. Obviously, assuming you are rec 10y 10y then you would rec 20y (PAR) and pay 10y's (likely to be off-market). If you know how the DV01 of these swaps is on your 'current' curve then it should follow easily...