An interest rate cap (particularly, a flexible cap) that gives the holder the right to choose a specific number of caplets to exercise, from amongst a broader set, over the life of the cap. On each reset date, the holder will decide whether to exercise the caplet or not, depending on the level of 3-month LIBOR. The holder can go on exercising caplets on reset dates for the number of times it would be permissible to exercise under the contract.

An example is a 50% chooser cap on 3-month LIBOR in which the cap rate is 5% and the maturity is 4 years. The holder has the right to exercise 50% of the caplets, i.e., any 8 of the 16 caplets that form the regular cap (vanilla cap). The holder will wait until reset dates to see whether a given caplet is worth exercising or not. Once the holder has exercised any 10 caplets (not necessarily in a row), the contract will expire, regardless of the stated maturity.