A capped option, as the name suggests, is an option with a predetermined maximum profit limit. This limit is determined by the option's strike price, along with an additional cap interval for a call option or a reduction in the strike price for a put option. It is worth noting that a capped option is automatically exercised when the underlying security's closing price reaches or exceeds the cap price for a call option, or falls at or below the cap price for a put option.
