A type of barrier options which is associated with a strike price and a cap barrier above the strike price. The payoff of this call is similar to that of a normal call with the same features, except that in a capped call the buyer will receive, at maturity, a cash amount equal to the difference between the barrier level and the strike price if the underlying reaches or penetrates the barrier from below. This call is deferred, i.e., the holder doesn’t receive cash straight away, but rather at maturity.
January 17, 2024
