Cap strike

[Hanka]

Hello,

could you please explain what "cap strike" means?
It should be something like the highest interest rate, but why "strike". What does the term "strike" stand for here?

Thank you very much

Hanka

[Ouisch]

There's no particular reason the word "strike" is used; it's just one of those terms that is used in the financial industry. It describes an instrument that has a payoff if interest rates go above a preset level. The preset level is known as the "cap strike" and is not necessarily constant.