A combined option position that consists of a capped call and an up-and-in put or a floored put and a down-and-in call. Typically, the capped call is subject to an early exercise trigger whereby the holder can get a maximum payoff if the underlying price/ rate upwardly breaks through the cap (the instrike is triggered). The same applies to the floored put which constitutes a standard put that pays off on the downside provided that the underlying price/ rate performs favorably over the option’s life.
August 20, 2024
