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the products discussed earlier. However, in this case, there is a maximum that the 
c,1.,;h value can be worth: 20. In other words, there is a ceiling on the value of this 
1tructured product at maturity. It is exactly like a bull spread with two striking prices, 
one at 10 and one at 20. In reality, this structured product would have to be evaluat-
using both striking prices. We'll get to that in a minute. 
There is another way that the underwriter sometimes states the terms of the 
structured product, but it is also a bull spread in effect. The prospectus might say 
something to the effect that the structured product is defined pretty much in the 
standard way, but that it is callable at a certain (higher) price on a certain date. In 
uther words, someone else can call your structured product away on that date. In 
effect, you have sold a call with a higher striking price against your structured prod­
Ut1:. Thus, you own an imbedded call via the usual purchase of the structured prod­
uct and you have written a call with a higher strike. That, again, is the definition of a 
bull spread. 
When analyzing a product such as this, one must be mindful that there are two 
calls to price, not only in determining the final value, but more importantly in deter­
mining where you might expect the structured product to trade during its life, prior 
to maturity. An option strategist knows that a bull spread doesn't widen out to its max­
imum profit potential when there is still a lot of time remaining before expiration, 
unless the underlying rises by a substantial amount in excess of the higher striking 
price of the spread. Thus, one would expect this type of structured product to behave 
in a similar manner. 
The example that will be used in the rest of this section is based on actual "bull 
spread" structured products of this type that trade in the open marketplace. 
Example: Suppose that a structured product is linked to the Internet index. The 
strike price, based on index values, is 150. If the Internet index is below 150 at matu­
rity, seven years hence, then the structured product will be worth a base value of 10. 
There is no adjustment factor, nor is there a participation rate factor. So far, this is 
just the same sort of definition that we've seen in the simpler examples presented 
previously. The final cash value formula would be simply stated as: 
Final cash value = 10 x (Final Internet index value/150) 
However, the prospectus also states that this structured product is callable at a 
price of 25 during the last month of its life. 
This call feature means that there is, in effect, a cap on the price of the under­
lying. In actual practice, the call feature may be for a longer or shorter period of time, 
and may be callable well in advance of maturity. Those factors merely determine the 
expiration date of the imbedded call that has been "written."