All capped account options in Indexed UL products are hedged by buying a call option at the floor and selling a call option at the cap. As it turns out, the implied volatility for those two options can be markedly different, a phenomenon called volatility skew. Using data from a major IUL seller, since 2009 the average implied volatility for the cap option has been just 84% (and as low as 74%) of the floor option. In other words, capped accounts require buying an expensive option and selling a cheap option - exactly the opposite of what you'd otherwise want. This creates a structural disadvantage for Indexed UL that manifests itself in both the pricing and performance of the product, a point that has been commonly missed in IUL analysis that does not incorporate volatility skew.