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A capped option is an option with an established profit cap. The cap price is equal to the option's strike price plus a cap interval for a call option or the strike price minus a cap interval for a put option. A capped option is automatically exercised when the underlying security closes at or above (for a call) or at or below (for a put) the option's cap price.
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Keywords
Capped-Style Option
Derivatives
derivative
option
capped option
profit cap
cap
cap price
strike price
cap interval
call
call option
put
put option
exercised
underlying security
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