You may want to make some assignments optional, but do not want the points possible for those assignments to count against students on the final grade. You can set the maximum points possible for an individual item, but this is not allowed for categories.
For example, you might require students contribute to five of the ten discussion topics in your class but let your students decide which five topics. Each topic is worth 5 points, but you want the points possible for discussion to be 25, not 50. The other items in the course (quizzes, exams, and papers) add up to 375 points, so you want the points possible for the course to be 400.
The solution to this problem involves two grade formulas - one for the optional assignments and one for the final grade. Start with a new grade item (on the Manage Grades page, choose New Item and then click Formula). Set the Max. Points equal to the points that these optional assignments can count toward the course grade. Then click the link Edit Using the Formula Editor and make your formula a simple sum of all the points possible for the group of optional assignments. Make sure you do not choose the Can Exceed option.
Continuing the example above, the new formula item sums the points possible for all ten discussion topics but has a maximum points possible of 25. If a student were to earn full points for participating in more than five topics, the points for that student for discussion would be no more than 25.
Then make your final grade a formula (not points or weight). Chose the Calculation Options tab on the Grades Settings page and select Formula for the Grading System. Then go to the Manage Grades page and click on the name of the final grade item (the default is "Final Calculated Grade") to edit it. Click the link to Edit Using the Formula Editor and create a simple sum of all the items in your grades area, including the formula item you created above but not including any of the items included in your formula item. The Max. Points for the final grade should be the total points possible for your class.
The final grade formula for the discussion example sums all of the other items in the class (quizzes, exams, papers) and the discussion formula item but not any of the discussion topics. The Max. Points for the final grade would be 400.
The formula final grade is still hidden from students until it is released, just like the points and weight final grades. Note that the option to drop ungraded items from the final grade calculation will not work with a formula final grade, though you could change the Max. Points for the formula final grade periodically as you update students' grades.