An index is an interest rate that is publicly published, such as the interest paid on a government bill or note, the cost of funds for a Federal Reserve Bank district, the prime rate, and so on.
The interest rate on your loan may be higher than the index rate. For example, it could be 2% over the rate of the index used. You may have heard phrases such as 2% over prime, which means the lender is using the prime rate index and charging 2% more for the loan. The amount over the index rate is called the margin.
Your protection against skyrocketing interest rates is called a ceiling, or more commonly, a cap. For example, if your original interest rate is 5% and your cap is 5%, your rate can never go higher than 10%. You should also have a cap on an adjustment. This means that your rate cannot be raised by, for example, more than 1% per year (or whatever period is used for adjustments).