Cap and Floor Position 434, equivalent, understand, completely

dandman

Can anyone provide a clear/simple summary of the "Interpretation of a Cap and Floor Position" concept found in the CFAI books? Book 6, pg. 434.

I understand the concept with the cap and floors (rate above cap equals payment...etc) but where I'm completely confused is when they talk about interest rate caps/floors being equivalent to a "package of interest rate options".

Hope someone can clarify this. Thank you.