A structured financial product (structured product) that combines a guaranteed payoff with a bonus equal to some accumulation of the capped periodic returns of a reference portfolio or index. The bonus is path-dependent on the price movements of a bunch of assets and is the summed or compounded series of capped quarterly or monthly returns. This structure allows investors to benefit from favorable stock market performance while placing a floor on downside potential. The guarantee is paid for by the caps placed on to the returns used to calculate the bonus. Because negative returns count fully, while positive returns are limited by capping before they are summed or compounded ,the valuation of these contract is particularly tedious.

The global floor is the payoff offered by the product at maturity, whilst the local cap is the bonus equal to some accumulation of periodic returns where each of which is capped at some maximum level. The returns can be accumulated either through summation or compounding of the periodic returns. The guarantee is a global floor because it covers the entire life of the contract, while the cap is a local cap because it applies to the returns of each period.

The simplest version of this contract has only one period and can be viewed as a portfolio consisting of a zero-coupon bond positions in two call options on the underlying index. More complex features may include return caps applied to each month or quarter, interest payments and call provisions, etc.