A capped-style option in which a cap interval is subtracted from its strike price in order to establish a modified strike price (cap price). When the underlying price/rate closes at or below the cap price, the option will automatically be exercised. For example, if the strike price of a capped-style put is $50, and the cap interval is 10$, an automatic exercise will take place as soon as the underlying price trades at $40 or below.
December 16, 2024
