A capped option limits, or caps, the maximum possible profit for its holder. When the underlying asset closes at or beyond a specified price, the option automatically exercises. For capped call options, the option exercises if and when the underlying closes at or above the predetermined level.

What is a capped call overlay?

A call option overlay (call spread, capped call) is a transaction executed between a reporting entity issuing a convertible debt instrument and an investment bank.

What is a capped call convertible note?

Capped Call Transactions means one or more call options referencing the Borrower's capital stock entered into in connection with the issuance by the Borrower of any convertible note, including but not limited to the Convertible Notes (or, in each case, any replacement thereof) with a strike or exercise price (howsoever ...