Globally-Capped Contract

A capped contract represents a financial instrument tied to the performance of some other asset or index, where the gains are capped. So...you might buy a capped contract tied to the S&P 500. It pays off the same amount as the S&P...so if the S&P rises 3%, you earn a 3% return on the contract.

However, your gains are capped. Your contract has a 10% cap, so if the S&P rises 15%, you still only get 10%. These contracts make up for their limited upside by providing a floor...there’s also a limit to how much you can lose.

The two versions of this system are globally-capped and locally-capped. It has nothing to do with geography. Instead, the locally-capped version sets a cap for some time limit (say, a fiscal quarter), while global caps apply to the length of the contract.